Threat of Double Dip Recession Worries Investors

While the signing of the debt ceiling package removed some economic uncertainty, it has been replaced by the threat of a double-dip recession.

The facts are consumers are spending less and saving more due to job uncertainty, there’s a slow down in manufacturing and the U.S. economy did not meet its expectations for growth in the first quarter.

All this news has created quite a bit of volatility on the stock market. So what do you do if you hold a 401k or other investments tied to wall street? “I wouldn’t panic that’s the very first thing. Don’t panic, talk to your financial advisor,” says Tom O’Brien, a certified public accountant with O’Brien, Miller and Blake, CPAs in Indian Wells. O’Brien believes the current doubt about the health of the economy can actually pay off for investors. “Because higher risk usually means higher return and uncertainty usually means higher return and these feel like uncertain times, usually there’s return when there’s uncertainty.”

Of course when it comes to investment risk, age plays a role. You have to weigh whether or not time is on your side. “If you’re older probably gonna wanna be with some bonds and fixed income investments, less risky. If you’re younger and don’t mind taking the risk you should be right there in the equity side of things,” said O’Brien.

Regardless of where you are in life, despite the tough economy, one investment adage still holds true. “The key to your financial strategy if you don’t have the time to be a day to day stock picker is keep your portfolio diversified, that’s the key. Because utlimately all your returns come from a well diversified portfolio,” said O’Brien.