JP Morgan CEO Warns 'Banking Crisis Isn't Over' — 5 Steps To …
Selena FragassiUpdated April 5, 2023, 7:05 PM
As if the banking crisis recently caused by the collapse of Silicon Valley Bank and Signature Bank last month wasn’t alarming enough, now one financial insider is revealing the downfall isn’t over yet. See: Here’s How Much Americans Have in Their Savings Accounts in 2023
Find: How To Guard Your Wealth From a Potential Banking Crisis With Gold JP Morgan CEO Jamie Dimon shared as much in a letter to the bank’s shareholders earlier this week. “The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” Dimon divulged, as reported by Reuters.
Because of recent banking developments, as well as the unstable economy, Dimon also believes the “odds of a recession have increased.” He softened that perspective with the thought that any upcoming economic windfall won’t have the same effects as the 2008 financial crisis — however, he indicated it will greatly affect the banking industry. As he wrote in the letter, the current environment “will clearly cause some tightening of financial conditions as banks and other lenders become more conservative.”
Dimon’s perspectives also take on greater weight considering the dire April 5 jobs report, one that came in far below expectations. Per CNBC, private sector jobs rose only by 145,000 in March, which is far below projected estimates for 210,000 jobs and down significantly from 261,000 new jobs reported in February. As the news outlet suggested, the numbers show “another potential sign that U.S. economic growth is heading for a sharp slowdown or recession.”
Take Our Poll: Are You Concerned About the Safety of Your Money in Your Bank Accounts? Though experts warn there’s no cause for panic at the banks — finance guru Suze Orman hosted a webinar last week echoing the general consensus that your money is safe in banks and withdrawing will only accelerate problems — there still are some things you can do now to prepare for fiscal turmoil ahead.
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Build up your emergency savings fund now. Orman reiterated that having a financial safety net is more important than ever given signs of a recession. Ideally, you’d want six months of savings set aside — but whatever you can allocate is better than nothing.
You might consider depositing your tax refund, getting a side gig and cutting out any unnecessary costs.
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Keep your investments where they are. If you are not nearing retirement any time soon, it’s best to keep your retirement savings portfolio and other stock market investments intact for the time being. While the markets may fluctuate and hit a low point in the near future, long-term strategies are still the best when it comes to the market — so plan to ride out the waves. However, if you are retiring in the next decade, Orman suggested removing money from the market and investing in dividend-paying stocks instead.
There may not be enough time to allow your money to rebound if held in traditional market investments.
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Plan to buy more stocks. Yes, buy more. When the market takes a hit, it’s actually the best time to invest in more shares at a cheap cost. The market will likely rebound, if history is any indication.
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Rollover to a Roth IRA if you don’t have one yet. CNBC pointed out this is ideal because of how taxes are applied.
Before you retire, you’ll pay taxes on the contributions but withdrawals during retirement will be tax-free. “Rolling over to a pre-taxed Roth IRA will cost 20% less if your retirement account is down 20%,” CFP Clark Kendall told the news outlet.
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Reassess your spending habits and tax burdens. Of course a recession will make anyone want to tighten their purse strings. See where you can make sacrifices. Maybe it’s cutting Netflix, Apple Music and other subscription services, or walking/biking more to save on fuel costs.
Make an itemized list of all your expenses, your average costs and where you can make cuts.
The other item you’ll want to look at is any tax advantages you can tap into during a recession — especially if you’re doing No.
2 and No.
3 above, which could offer perks when it comes to tax bills. “Using tax-advantaged accounts and tax deductions will help you reduce your overall tax liability and accumulate more wealth,” claimed Harvard Business Review.
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This article originally appeared on GOBankingRates.com: JP Morgan CEO Warns ‘Banking Crisis Isn’t Over’ — 5 Steps To Prepare Now
Originally published April 5, 2023, 6:53 PM
