How to Prepare for Economic Recovery

The best thing about any recession is that, at some point, it will end. But you don't want to be caught unprepared when this happens. Stock markets historically recover in the midst of a recession--and it can be easy to miss the upturn. Here are steps you can take to prepare for recovery.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• A watchful eye on the markets and economy

1. Knowing your time horizon is critical. Be sure that your investment objectives correlate with your time horizon; if you are five years from retirement, then your portfolio should be gravitating away from equities and into a mix of conservative equities and fixed-income investments.

2. Lock in your mortgage rate if it is competitive. Rates often drop during periods of market uncertainty. Refinance if you can to take advantage of the low-rate environment.

3. Take advantage of low rates in another manner by paying off as much debt as possible. Higher payments than normal will reduce your principal more than when rates are high.

4. Create a budget. This simple tool can help save you hundreds or even thousands of dollars a year, as you begin to see where your money's going.

5. Stay in close contact with your broker or financial planner. He/she is able to spot investment opportunities that you don't have time to find (e.g. Bank of America stock when it was trading below $4 per share in February 2009).