Recession

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How do you achieve financial independence?

General, Uncategorized

Believe you can, and pair that belief with a plan.

The equation to achieve financial independence, is simpler than you might think.

Investing and time are a powerful combination.

– The Missing Second Semester

It takes discipline and saving a few bucks each day. 

Compound interest is an unbelievable concept.

You have to see it, to believe it! Troutwood’s stock market calculator is one place, to “see it.”

Once you understand compound interest, your financial goal(s) becomes not just believable, but achievable, and you have taken an important towards financial independence.

Make this 👇 fact, YOUR financial reality.

Consistently invest, in a diversified long-term portfolio, beginning at an early age. Make it automatic, like brushing your teeth!

a woman brushing her teeth
Photo by Miriam Alonso on Pexels.com

But it’s not that easy . . .

“I want to open a Roth IRA, but I keep been hearing about a potential recession and was wondering if I’ll just lose all my money?”

A student of mine at the University of Pittsburgh asked this 👆 question. It’s a valid fear, and one I hear frequently, across different audiences.

Which makes the first step, the most difficult.

There is a great deal of media, social, and mainstream finance and investing content, that emphasizes:

  • Timing the stock market
  • Picking “the right” individual stocks
  • The next recession
  • Get rich quick schemes.

Forming a long-term investing perspective will help you avoid financial traps and stay on track with your financial plan.

Tune out the noise.

Own the companies that comprise the “stock market” – all of them – for a long time.

The cumulative returns of the stock market as measured by the S&P 500 from 1950 – 2022 is 228,508.39%. That’s a BIG number, that includes EVERY recession over that 72-year period.

I don’t know what’s going to happen, next week, next month or next year. I do have a great deal of confidence in long term investing.

Own your financial future.

Investing and time are a powerful combination.
– The Missing Second Semester

Gene Natali<br>
Gene Natali

Gene is Co-founder and CEO of Troutwood, a software company founded out of the Carnegie Mellon University Swartz Center.  He is a Chartered Financial Analyst, board member of CFA Society Pittsburgh, Executive in Residence at the Black School of Business|Penn State Behrend and a part-time lecturer at the University of Pittsburgh, where he has taught Personal Finance since 2015.

Prior to founding Troutwood, Gene spent 17-years personally working with some of the largest and most sophisticated institutional investors and retirement plans in America.  He is an award-winning author (The Missing Semester), has spoken in over 1000 unique high school and college classrooms, and regularly keynotes investment and education conferences across the country. 

Gene holds an MBA with a concentration in finance from Carnegie Mellon University and a bachelor’s degree with a concentration in economics from Allegheny College. 

đź“– The Missing semester
đź“–The Missing Second Semester
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A short lesson on navigating YOUR FIRST recession

Risk Management

Recession is a scary, but ordinary word. 

According to the International Monetary Fund, any given economy is in a state of recession 10-12% of the time. Consider that within the context of 195 countries, each with its own economy. Recessions aren’t rare! What is rare, is knowing in advance, when one occurs.

What is a recession? The formal definition is two consecutive quarters of negative real Gross Domestic Product (GDP). But, when its raining, you don’t need someone to tell you “it’s raining”, just look out your window. A parallel can be drawn. The formal definition of a recession may not apply to your personal situation or the industry within which you are working.

man with laptop on desk terrified by stock market chart
Photo by Karolina Grabowska on Pexels.com

What does the frequency of recessions mean for you? It’s not a matter of “if,” but “when” the next recession will occur.  Knowledge allows you to make informed decisions, and recognizing this reality is an important first step towards preparing for it.

The BBC released an October 14, 2022 article, “Why Gen Z are right to be worried about money.” YES, there is much to be concerned about at the moment. Inflation, rising interest rates, an uncertain job market, financial insecurity and global conflict. Adversity comes in different, shapes, sizes and colors – but in some form, it is a constant companion on our life and our financial journey. Worrying is ok, doing nothing about it, is not.

In the face of adversity, we are measured by how we respond.

Let’s look at 4-steps you can take today.

Build an emergency fund: Understand your essential costs, and begin to build an emergency fund that will cover 3, 6, then 9 months of living expenses. Don’t panic if you don’t have one. Big gains in your financial well-being don’t occur with a single step. They occur through the successful completion of many small steps. Take that first step, no matter how small.

Build your human capital: Make yourself less likely to get fired and more hirable in the event that you do. In a recession companies may lay off employees as sales slow and revenue drops.  Take steps today, to maximize the likelihood of keeping your job when the economic environment does worsen.  Examples include on the job training, pursuing professional certifications or higher education.  In the event that you do experience the loss of your job, this step will still be of BIG value.  Why?  Because , no one can take away YOUR human capital. You are more qualified for that next job which you are now pursuing.

Build a financial plan: When something you want to own for a long time goes on sale – in the case of a recession, the stock market, the prudent thing is often to buy more. This is easier said than done when in the midst of difficult circumstances.  Build a plan that recognizes recessions as a reality and write down what you will do when one occurs.  For example, “I will cancel these three subscriptions and use that money to continue contributing to my Roth IRA.” This IS NOT the time to invest a little bit less to “try and time the bottom.” It IS the time to buy a little bit more each contribution period. 

Get ahead and stay ahead: This financial approach isn’t talked about as often as it should be. Use good times or good fortune to get ahead financially. For example, record homes sales created a boom for realtors. Rising interest rates have made homes more expensive and now reversed that reality.

To stay ahead in bad times, you’ve got to get ahead in good times.

Own your financial future.

About the Author

Gene Natali
Gene Natali


Gene Natali is Co-founder and CEO of Troutwood, a software company founded out of the Carnegie Mellon University Swartz Center.  He is a Chartered Financial Analyst, board member of CFA Society Pittsburgh, Executive in Residence at the Black School of Business|Penn State Behrend and a part-time lecturer at the University of Pittsburgh, where he has taught Personal Finance since 2015.

Prior to founding Troutwood, Gene spent 17-years personally working with some of the largest and most sophisticated institutional investors and retirement plans in America.  He is an award-winning author (The Missing Semester), has spoken in over 1000 unique high school and college classrooms, and regularly keynotes investment and education conferences across the country. 

Gene holds an MBA with a concentration in finance from Carnegie Mellon University and a bachelor’s degree with a concentration in economics from Allegheny College. He, his wife, four children and chocolate lab, live in Pittsburgh, Pennsylvania.

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