Global View Investment Blog

How to Recession-Proof Your Investment Portfolio in 2024

You've worked hard for your money, and your experience shows that even the best-laid financial plans can go awry. The economic buzz about a potential 2024 recession is gaining strength as increasing numbers of investors express concern about the U.S. economy and the world. 

If the current economy and global events are a concern, you may be looking for ways to insulate your assets from the tumultuous times that could impact us in 2024. You may even be asking the same question that many other investors like you ask: "How do I protect my assets if there is a recession in 2024?"

That's where we come in. As financial advisors based in Greenville, SC, we specialize in crafting defensive investment strategies that position your assets to combat excessive market volatility caused by economic events and an unstable world. 

In this article, we’ll look at five investment risk management techniques. We believe that you can benefit when we develop plans and investment strategies tailored to your specific needs.

Diversify Your Investments to Minimize Large Losses

One of the most effective ways to guard against the magnitude of individual losses is to ensure you have a diverse portfolio of investments. Concentrated positions can potentially produce significant losses when you have too many eggs in one basket. Your number one strategy for combating large losses is diversification - it really is that important.

That’s why we recommend, when appropriate, incorporating a variety of asset classes—including alternative investments like real estate or commodities, that can provide a viable hedge against volatile markets. 

But diversification isn't just about buying several stocks or buying stocks and bonds; it is also about geographical diversification by investing in several countries. This strategy is very straightforward: different economies can respond differently to the same global events -some countries may thrive while others struggle.

By allocating your investments across several geographic regions, you reduce your risk of economic downturns by country. For sophisticated investors like yourself, with $1 million or more in assets available for investment, global diversification can be an essential part of your risk management strategy.


Always Maintain a Cash Emergency Fund 

Want to reduce stress during turbulent times? We recommend that our clients maintain at least a three to six-month liquid cash reserve for unexpected events. For example, if you are laid off due to a recession. 

It can also be viewed as a buying reserve in case there is an investment opportunity so good you just can’t pass it up. Your goal is to take advantage of an investment opportunity without impacting the other parts of your strategy.

A recession can present attractive valuations, but if your capital is tied up in illiquid assets, like real estate, you may miss the chance to capitalize on these opportunities. 


Don’t Set It And Forget It: Schedule Regular Reviews of Your Portfolio

Being complacent can impact your financial well-being, especially in a recession. During these negative markets, many of the impacted asset classes can shift. Losers become highly appreciated winners and vice versa. What was once a top-performing asset class becomes a liability, and a weak investment class becomes one of your better investments.

The "set-it-and-forget-it" portfolio strategy can backfire during a recession, putting your substantial assets at undue risk. By not regularly reviewing and adjusting your investments, you're essentially gambling with market conditions rather than strategically positioning your assets to withstand economic downturns.

As an investment management firm in Greenville, SC, we conduct periodic portfolio reviews with our clients to ensure that their investments align with their financial goals and are poised to handle market volatility. 


Focus on Sectors That Are Not Prone to the Impact of Recessions

Sector investing is another tactic to consider using during a recession. Not all sectors respond to the same in a recession; for example, some are counter-cyclical, while others may be more resilient. 

For instance, utilities, staples, and healthcare usually perform better because they provide necessities and not discretionary items that can be deferred later. 

Investing in these sectors can offer protection when other market sectors are faltering. As an investment management firm in Greenville, we closely monitor sector behaviors, trends, and alternatives to provide you with recommendations that are based on our in-depth research.


Partner with a Greenville Fiduciary Financial Advisor

In a recession, the risks are higher, and room for error is limited, especially when managing a substantial investment portfolio. Partnering with a fee-only fiduciary financial advisor in Greenville can be a game changer during periods of market volatility, inflation, and recession.

You want to work with a financial advisor who also is a fiduciary. The fiduciary standard is a legal requirement to always act in your best financial interest. This is the highest ethical standard in the financial service industry.

But why is this so important, specifically during a recession? 

  • First, a fiduciary advisor's recommendations go beyond recommending more conservative allocations in stocks and bonds. Other asset classes should be considered during turbulent times. 
  • Second, a fee-only compensation structure is designed to align the advisor’s interests with yours. Unlike commission-based models, they are not paid by third parties to sell their products regardless of need or circumstance. This reduces the potential for conflicts of interest and increases the advisor’s focus on strategies most appropriate for your financial goals and risk tolerance.


Next Steps 

At Global View, we've built our foundation on one central idea: you deserve quality advice from a trustworthy source to do what is best for you. 

We take the time to listen, understand your unique financial situation, and always prioritize your needs. Our goals are aligned with yours; we would like to build a long-term partnership with you versus selling you investment products to earn a quick commission. 

We're confident in our ability to help you grow your wealth more effectively than you could on your own. 

We are a Greenville, SC, independent, privately owned Registered Investment Advisory firm that's owner-operated. Our fiduciary duty is non-negotiable; we're legally bound to prioritize your best interests—no exceptions. We're a fee-only firm. Just like your accountant or lawyer, we're paid solely by our clients. This means no hidden commissions or third-party incentives impacting our recommendations. We are proud of our independence to ensure we're always squarely in your corner.

Matthew Crider

Written by Matthew Crider

Matt is a CERTIFIED FINANCIAL PLANNER™ professional who has been in the financial advisory business since 2008. He holds a BA in Marketing and Management from the University of Cincinnati and his MBA from Clemson University. Prior to Global View, Matt began his career with Fidelity Investments. His specialties at Global View include asset accumulation and investment strategies; college funding strategies; budgeting discipline and analysis; multi-generational planning; and life event changes, such as marriage, kids, home purchase, retirement, etc.

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