The new year is around the corner. For sure it’s significant as a new decade is ushered in, a presidential election awaits, and the unfinished business of this year will spill over to the next. Put your seat belt on for a ride -- nobody knows where it will take us. But that doesn’t keep folks from crystal-ball gazing.
Here’s what experts say are among the biggest financial risks in 2020 and how to protect yourself.
Reckoning with debt
Americans are increasingly saddled with unsustainable levels of consumer, auto and student debt, driven by multiple factors, ranging from the low interest rate environment, student debt and our collective amnesia about the lessons of the subprime crisis, says Erik Stettler, a partner at Firstrock Capital in Manhattan.
“Should interest rates reverse their downward trajectory, then the inability to make payments could ruin lives, and drive the freezing-up of consumer spending that is critical to the U.S. economy. The economic impact of this cannot be overstated and must be addressed,” he says.
What to do: “Prioritize paying off debt over investing, even if it seems you might make a better return by investing the capital,” says Stettler.
Overreaction to the political climate
The presidential election will create uncertainty that will cause the market to thrash around, predicts Colleen Weber, a certified financial planner in Chanhassen, Minnesota.
What to do: The key to investing during volatility is discipline. Says Brian Cohen, principal, Landmark Wealth Management in Melville, “Don’t change your asset allocation based on concerns about the market. Stick to your long-term plan.”