By: Zachary Pienkowski
During the last few weeks, several economists have claimed they believe the economic recession has come to an end. However, financial experts warn that this does not necessarily mean individual households will feel any difference for a while yet. Claims that the recession is over only apply to the technical definition of the word, meaning that economic contraction has stopped. Over the last 2 years many people have been forced to learn how to budget and save money in the event of layoff. Despite the beginning of economic recovery, interest rates are very low and the stock market has been steadily increasing, leaving people with the tricky decision of where to keep their extra cash. Since the unemployment rate is at 9%, and is expected to increase to over 10% it is recommended that people have enough cash stashed away in a liquid fund to cover 6 full months of expenses. Right now if six full months of expenses can not be covered, you should continue to fund that account until that goal is met. Investing in money market accounts and 6-month cd's just are not worth return right now for having to have your money locked up for a set period of time. Once your 6 month nest egg is complete, it is a good time to start investing in a stock fund that matches your current level of risk tolerance. The economy is going to continue to feel like a recession for a while, but if you think the economy is going to continue to grow, investing in a growth fund might be the right choice.
Sources:
http://money.cnn.com/galleries/2009/moneymag/0910/gallery.spend_1000.moneymag/5.html
http://www.newsweek.com/id/208633
http://www.marketwatch.com/story/bernanke-declares-the-recession-over-2009-09-15
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