Be Prepared for the Worst

That was my hard lesson learned from the 08/09 Great Recession.  The stock market was doing great, hitting new highs in October 2007, the month of my early retirement. My company stock had also hit a new high. 

Rather than paying off our mortgage, I stayed mainly invested in equities, assuming the stock market would continue to deliver gains greater than the interest on our mortgage.   It was the "smart" financial decision.

Needless to say, I wasn't prepared for the stock market crash of 08/09.    Our retirement funds were reduced by about 60%.   Fortunately, we had enough cash and CDs to tide us through for a couple years.  That plus some part time work for a few years, and some deferred compensation payments enable us to recover completely by 2017.

However, I never forgot the anxiety and financial challenges of the 08/09 Great Recession.   I was much more prepared for the recent bear market decline, by keeping more funds in cash and cash equivalents, foregoing some of  the gains in the stock market.  If the market should decline further, it will still be painful, but I anticipate the financial challenges to be much less daunting than the ones we had in 08/09.

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This is not financial nor invesment advice. Please consult a professional advisor.

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