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11 Ways to Recession-Proof Your Stock Portfolio

If you've been listening to the news of late, you've probably noticed that President Trump has started to enact some seriously damaging kinds of policies. Economic experts have shown that lax regulations to financial institutions like banks and lenders are linked to major recessions, including the Great Recession of 2008. Trump's policy on taxes isn't much better.

As time passes and regulations continue to be put forth, more people are beginning to worry about a looming recession. That being said, there's some good news along with this bad news. Knowing that there will be a recession means you can recession-proof your stock portfolio before things hit the fan.

Wondering how to trim the fat? You're not alone. History and research suggest that doing these things will minimize the shockwave of a sudden (but not really so sudden) recession.

First off, don't stop investing

Here's something that you might not have realized about the last recession—the stock market recovered before the jobs market did. Though you might see the value of your investments dip, once the recession ends, chances are that they will recover after a couple of years. The ones who lost the most were the ones who decided to stop investing altogether after the market crashed. 

Come up with a strategy and stick to it

This is important. If you fail to plan, you really do plan to fail with stocks. A good way to handle a recession is to stick with a nice variety of funds (rather than individual company stocks) and to continue buying them throughout the recession. As the market picks up, you will notice that any losses you took will average out.

Think about what people need the most during a recession

If you want to minimize loss, you will need to invest in things you know people will want to buy. For example, investing in companies that deliver food, clean water, or transportation would be a wise choice. 

Start saving up a nice, large wad of cash

The best deals and the best investments are often the ones that happen during a recession. Saving up cash, or taking time to prune your investments, is a wise choice. The more cash you have, the better prepared you are.

Keep an eye on other income routes, in case your job gets cut

For an investor, the worst thing that can happen during a recession is to lose your primary source of income—and that can happen pretty quickly. If you haven't already, start looking at multiple streams of income in a variety of different industries. It will help a lot, even if you do keep your job.

Micro-investing apps could be your saving grace

If you need to figure out how to recession-proof your portfolio and don't have much time to actually read every little prospectus on your desk, you might want to consider micro-investing apps. These allow you to invest your spare change into funds managed by professionals who spend their days finding good investments. Better still, a lot of them could let you invest with as little as a dollar.

Consider looking towards an investing mentor

The easiest way to mimic the success of the successful people out there is to copy what they are doing. Warren Buffett and other major billionaire investors have weathered the storm many times. Taking a cue from him would be a wise decision.

If you're thinking about investing in a stock that's been around for a while, make sure that their marketing is up to par

Historically, the companies that are most aggressive with marketing tend to fare the best during a recession. Companies that don't advertise, on the other hand, tend to belly-up during times of trouble.

Consider buying inverse market ETFs

With most stocks and funds, you'll see their value go up as they go up. With inverse market ETFs, the value is inversely proportional to the market. So, during a recession or a crash, these stocks will go through the roof. 

Avoid peer-to-peer lending during times of recession

Investments like peer-to-peer lending only work if the borrower will pay back the money they owe. During recessions, even the most willing borrowers might lose their job and be unable to pay. This leads to higher defaults, which in turn, can be a pretty nasty loss.

Finally, if you are really risk-averse, stick to bonds and other government-backed investments

When in doubt, go for low-risk investments that you know have guaranteed returns. It's the easiest way to make sure you won't end up losing money during an economic downturn.

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The Pros & Cons of Raising the Minimum Wage

In 2014, President Obama suggested raising the minimum wage to $10.10 an hour and Americans have been arguing about the issue ever since. A vast majority of the country is in favor of the increase, irrespective of their party affiliation.

However, ethnicity seems to be a bit of a dividing line when it comes down to how much the minimum wage increase should actually be. The majority of African Americans and Latinos support a $15 an hour minimum wage, but a significant portion of Caucasians do not.

The Upsides

Those advocating a higher minimum wage argue that this measure would help alleviate some of the recent problems caused by inflation. After all, housing costs are taking particularly large bites out of people's salaries these days. Raising the minimum wage might help workers cover their basic expenses and provide them with more discretionary spending. This would presumably create more jobs as the extra money gets spent.

It might also relieve some of the governmental burdens in caring for individuals who can’t cover their own expense on their salary alone, which would subsequently help lower taxes. Employees may even stop job hopping because they would be more financially stable and the lower attrition rates would benefit employers.

The Downsides

Yet for all the good a minimum wage raise might do, there are still some downsides. This legislation might place some employers in a budgetary bind. Their most obvious choices to keep their companies afloat would be to lay people off, reduce employee hours or benefits, avoid hiring anyone new, outsource their work to cheaper countries, and raise prices on their services/products.

An example of this took place in American Samoa. The government there had mandated significant raises in cannery workers' minimum wages, which resulted in the use of the questionable coping tactics in one factory and the closure of the second. Instead of improving things, this action hurt the local economy and resulted in higher unemployment levels. The governor himself went to Congress to ask for an intervention, which they granted.

Increased service costs could contribute to higher living costs, which would invalidate the salary raises shortly after they are implemented. Hiring could also become a far more competitive process than it currently is, edging out less qualified or younger workers who need these positions to use them as stepping stones to better or higher paying careers.

Who Would The Law Affect?

A lot of states have already caved into public pressure over the past year and bumped up their minimum wage without any government prompting. However, only about 3 percent of Americans currently make minimum wage.

One economic analyst went so far as to claim that raising minimum wages would be more beneficial for middle-class teens and college students, who have family support systems than it would be for disadvantaged adults and youngsters.

These middle-class workers normally wouldn’t apply for jobs with low wages, but unskilled adults or teens who are struggling financially presumably would. In turn, these affluent teenagers would receive the experience that they need to keep moving ahead.

Minimum Wage & Poverty

Some studies suggest that poverty is not directly caused by the minimum wage but by how many hours an individual works. After all, a full-time worker on a minimum wage salary can keep themselves above the poverty level. But they cannot singlehandedly support an entire family of four.

Another problem that has come up is that poorer individuals would lose a good percentage of their governmental assistance and would have to pay much higher taxes when their salaries increase. Therefore, it's uncertain if increasing the minimum wage will ultimately help or hurt them.

Yet in D.C. and around the country, the debate rages on…

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What is GAP Insurance

If you have gone to a dealership to get your car and get it financed, then you were probably asked if you wanted GAP insurance to be part of your loan. Most car salesmen won’t be able to tell you what it is, and some might even tell you it’s a rip-off.

However, if you’re a fan of finance, you already know that things aren’t always that easy. GAP insurance is a real thing for good reason. So, what is GAP insurance, and why should buyers be getting it?

What is GAP insurance?

GAP stands for Guaranteed Auto Protection, and it’s a form of optional insurance that allows you to cover the difference between your car’s actual value and the amount that you owe on a car. GAP is the insurance that allows you to avoid having to pay off a loan if your car gets hit before you finish paying it, and gets declared a total loss.

Why should I get GAP insurance?

GAP insurance is great for people who are financing a car, or for people who are leasing a car. It can, in many situations, help people avoid thousands of dollars in debt due to an accident that was not their fault.

If you end up in a car accident while you’re paying off a lease or a loan, GAP insurance will cover the difference. This leaves you with a clean slate so that you can continue on with your life and get a new car fast.

Why do people say GAP insurance is a rip-off?

People say it’s a rip off because it’s often overpriced. Car dealerships tend to profit heavily off of GAP insurance policies. Some premiums can have commissions as high as 50%, which means you’re literally paying the dealership to offer up GAP. Most people don’t realize they could just go to their insurance company and buy it for a discount. So, they end up paying way more than they should, simply because they assume a dealership is the only place to get it.

When would GAP insurance not be worth it?

If you have already paid off your car, GAP insurance clearly wouldn’t be worth it. In many cases, people who only have a couple of months to go before they finalize payment might also find it to be a waste.

If you choose to get GAP insurance, there’s a couple of things you should know…

If you have a totaled car that’s been paid off, this form of insurance will do nothing for you. Going to a dealership will not be a good idea, either. It’s often cheaper and better to just go through your car insurance company.

Finally, if you’ve ever had a moment where you’ve had a car accident while you were still financing it, you’ll understand why GAP is so important. Sure, it’s pricey, but with the peace of mind it offers, there’s really no reason to avoid it.

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15 Things Wealthy People Do Differently

I grew up in an upper-class neighborhood, filled to the brim with Wall Street execs and ladies who lunch. However, I myself didn’t have much money. When I first started out on my own, I wasn’t always able to afford rent. I often got angry and even jealous of those who had more than I did.

Oh, how things have changed.

It took me a while and a lot of hard work, but eventually, I started to get onto my own two feet. These days, I realize that there are a lot of interesting tricks that the wealthy do that keep their heads above water. People aren’t lying when they say that being rich is a mindset.

Today, much of my time is spent figuring out what makes someone wealthy. Is it luck? Or, is there a way to change that luck? As someone who has been among poor people and the ultra-rich, here are some of the most interesting things I’ve noted about those who gain wealth.

1. Poor people don’t think for themselves, rich people often do.

Maybe it’s the individualist in me, or maybe it’s the type of wealthy people I’ve met, but I’ve noticed this trend a lot. The majority of people I have met who have “followed the herd” with everything from their life choices to their careers aren’t well off.

People often expect success to be formulaic, and that the old school advice on “what you’re supposed to do” should always hold water. The thing is, life doesn’t work that way. By the time advice becomes traditional, it stops being useful—and starts being the way everyone works. Unfortunately, that means that following that advice will make you average at best.

The wealthiest people I know have been extremely individualistic, even if their wardrobe of choice is a suit. They think for themselves and go outside the norm on a regular basis. As such, they also tend to be more tolerant and open-minded about new concepts, people, and opportunities.

2. Poor people do not have ties to wealth, while the rich actively seek them out.

This is often the biggest divisor between the rich and the poor: their networks. When you’re born into money, it’s easier to stay rich. It’s actually statistically proven to be the case, even on a global scale.

The easiest way to get money is to network with the right people. When you’re not born into money, you often have to seek out people who already are wealthy in order to get opportunities, learn from them, or even fund your business.

Studies show that you will statistically make around the same amount of money that your five closest friends do. So, who are your friends?

3. The wealthy invest wisely—in both themselves and in others.

Most people who make up the 1% do not make their money at a job. They make it via investing, or via starting their own company. Most people who get enough money at their jobs to be in the 1% do so because they invested time in networking as well as invested time into improving their skill sets.

The poor invest too, but often do so in items that have low returns or people who simply aren’t good for them. If they do invest in wise decisions, they often do so as flukes.

4. The wealthy invest in appearances differently than the poor do.

One thing you’ll notice is that it’s very rare to find a wealthy person who is bragging about $200 shoes or proudly boasts that they have a Gucci bag. The reason why is simple: they don’t need to say that they can afford those things.

The most financially shaky people I know are the ones who tend to wear the flashy clothing—and it’s a trap I’ve fallen into, myself, back in the day.

A better way to invest like a wealthy person is to have a few good clothes that fit you well and make you appear educated, rather than a pile of designer duds that you went broke paying for.

5, Rich people are also more inclined to marry than poor people are.

Bitter divorcees might want to rethink their outlook on marriage. If you look at the numbers, it literally pays to get hitched.

Studies show that people who marry have higher earnings at jobs and are also likely to have better standards of living. People who are wealthy are also much more likely to pop the question than people who aren’t. That’s not even the worst of it, either! Statistically, being single is more expensive than being married, too. Most people I know who are adamantly against marriage are broke and are worried about “the spouse taking every dollar” in the event of a divorce. Makes you wonder, doesn’t it?

6. Wealthy people generally have no problem asking for more.

Call it “entitled” or call it “aggressive,” but it’s true. Most people who get rich are very vocal about their wants and needs—even over tiny little things like discounts and rent. This often leads them to better deals.

A lot of people who are poor avoid asking for what they need and often will avoid walking away from offers, even when they know they’re getting scammed. Getting what you want often will require asking for what you want. Of course, you don’t have to be a jerk about it, but asking still remains important.

7. Those who are very wealthy are quick to cut out toxic people from their lives.

Toxic people are a dime a dozen! And they do a lot more than drain your emotions and time; they drain your bank account, too. It’s scary how many people I’ve met who had passed up serious opportunities or gave up huge swaths of their time to people who don’t deserve it.

Most people aren’t aware of how bad people can be to your bank account until they actually cut others out from their circles. Cut toxic people out, and you’ll be shocked at how much your bank account grows.

8, Wealthy people are way more time-oriented than poor people are.

This is one of the most striking differences between the rich and the poor. When you spend time, you can’t get it back. With money, you can. As a result, wealthy people will value their time much more than they do money.

To save time, they will outsource projects to others. If they feel others don’t value their time enough, they also walk away—possibly even at the risk of losing out on a lot of money. This is also a primary reason why wealthy people charge more for their service.

9, The rich have routines; the poor often don’t.

I speak this from experience. Routines work. By numbers, wealthy people are more likely to have routines. It helps them focus and also cuts down the chances for them to do something stupid

10. Statistically, the rich also hit the gym more often than the poor do.

Whether this is because the poor don’t have time or not is up to debate, but the numbers don’t lie. A survey of the most wealthy people in the world showed that 75% of all millionaire or billionaire individuals have aerobic exercise at least four times a week. It’s also worth pointing out that good-looking people, particularly if they are not overweight, also make more when working a job. Statistically, the “pretty bonus” can add as much as 10% to your salary per year. All things considered, it’s a good investment.

11. The rich read, the poor watch reality TV.

Don’t get me wrong; I love Jersey Shore as much as anyone else. However, studies show that reading is a “rich person” activity. Around 88% of all wealthy people read for at least 30 minutes per day. Meanwhile, only 2% of poor people are said to do the same.

Interestingly enough, the same study showed that around 75% of all low-income people watch reality television. The rich, on the other hand? Less than 10% of them would tune in

12. Rich people are willing to say “no.”

The power of “no” is often underrated. Saying it can help you appear authoritative, and also can help you avoid major financial mistakes. The thing that most people hate about saying no is the reactions they get. Wealthy people are used to it, and learn to shrug it off.

From what I’ve seen, poor people are way more conscious about what others think of them. They have a harder time saying no and are far more likely to worry about appearing like a jerk. As a result, they often suffer from it

13. Wealthy folks are early birds; poor folks sleep in.

You might think of sleeping in as a luxury, but make no mistake about it—it’s not good for you. When you sleep in, you’re wasting time that could be spent doing things like exercising, working, or even just taking time to enjoy the morning. It’s insane how many examples of billionaires are out there that swear by an early morning wakeup call. Richard Branson is one of many wealthy people who gets up at 6 AM so that he can go out and do some exercise. Another? Dwayne Johnson, who gets up at 4 AM. Jack Dorsey, another wealthy guy, waked up at 5 every morning so he can work out.

14, The wealthy are more interested in self-promotion.

Surprised? Don’t be. The reason why you hear about rich people is because they spend a ton of time promoting themselves, their brands, and their products

15. Finally, rich people don’t give up.

I’m not saying that we’re all going to be wealthy if we keep at it, but I am saying that there is something to be said about tenacity. A lot of wealthy people were very close to giving up on their dreams when they finally made it big.

If you’re worried about not making it, don’t stop what you’re doing. Work harder, and maybe one day, I’ll be writing about your habits, too.