Turbulence in the financial markets is prompting talk of the dreaded "R" word-recession. Experts say recent bond trends are troubling.
An inverted yield curve means you can get the same or higher interest rate off a short term bond than you can on a longer term bond, like ten years. In that case: it wouldn't pay off to loan your money longer.
"Inverted term structure of interest rate is never good for the economy," said Kamran Afshar, a DeSales University professor.
"If people are willing to loan you money for ten years at a lower interest rate than for two months, there is something wrong with this."
Kevin Brosious, the founder of Wealth Management, says an inverted bond yield curve is not an absolute indication of a looming recession and certainly not an immediate one.
But your financial planning strategy should differ slightly depending on where you're at in life.
When stocks drop, "Younger folks, that have a longer runway, this is the best thing that could have happened to you" because you can buy more stocks for less, Brosious said.
Those most at risk are people who retire in a recession, he said.
However, he cautions against selling off all your stocks.
"You're just locking in your losses if you sell your stocks right now," he said.
He said some Americans may have 30 years of retirement. That's' enough time to go through several market crashes and corrections. Those corrections are often when investors have the most to gain.
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