Money Fix: Lessons from the 2008 Financial Crisis

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There are many lessons in life if you are still and studious enough to grasp them. The past is always a road map to the present. The last time things got so bad economically in this country was in 2008.

What can we learn with a look back, and how can this help us in the current chaos? Experts share their views.

Stay invested, but diversify

“No matter how dark and dire a situation can be, the markets are very resilient and as long as you have the patience and a little time to overcome the volatility, in the longer term the markets have always come back,” said Christopher Congema, a financial planner at Landmark Wealth Management in Melville.

He explains that if an investor had the worst timing in the world and invested in the S&P 500 Index in September 2007 (which would have been like stepping on the Titanic just before it hit the iceberg), if he didn’t had done nothing else and stayed invested, they would still have made an average annual return over the next 10 years of 7.2%. And that’s having the worst timing.

But what was essential then, as today, is to diversify. While the S&P 500 index was down 55.3% and took 37 months to return to equilibrium, a diversified portfolio of 60% stocks and 40% bonds fell only 36, 8% and took 13 months to return to balance, points on Congema. If you hit the panic button and sell during the pandemic, you potentially create permanent losses. “Don’t sell into a temporary decline. Successful investors always act according to a plan, while all failed investors always react to current news and events, ”says Jonathan R. Blau, president of Fusion Family Wealth in Woodbury.

Borrow wisely

Subprime lenders played a huge role in the 2008 financial crisis. Be careful now, greed has not gone away and with the economy people can look for everything from expensive payday loans and other loans for which they are not equipped.

“Avoid the predatory loans that will crop up in this new economy. Pay attention to the interest rates and the terms of the loans and mortgages you plan to take out. In short: really take a look at how your payment will be compared to your current income and expenses. Not what you think the future holds, but what you can comfortably afford right now, ”says Renee Vitullo, personal finance consultant at Valley Stream.

Seize the moment

The advantage of the crisis is the opportunity.

“One lesson we can take from 2008 is how, in the worst of times, we can still make money and get rich at the same time. Now is the perfect time to invest, whether it is stocks, housing or any other form of investment. It’s because prices are at an all-time low, ”says Andrew Roderick, CEO of CreditRepairCompanies.com.

He cites an example: “Investing in travel agencies can be a real boon! We can’t travel as often as a year ago, some companies are losing out, but within 12 months the travel industry will be booming again, and this could grow even more than in the past in because of the restrictions we have in place today. “

You want to be that person who sits with a ton of money and can take advantage of the sales on everything. Those with stellar credit will also be very helpful. Adam Rauch, president of One Line Agency, a sports and entertainment marketing company in Huntington, started his business during the 2008 recession.

He was able to get a loan in part because of his ability to prove that his business would be financially viable. Best of all, he had strong personal credit and a long-standing financial relationship with a bank.

The moral of the story: do the right things at the right times, like paying the bills on time.

“When things are going well, saving seems like a boring and unnecessary use of money, but it’s a critical aspect of financial well-being,” says Julie Ford, certified financial planner at Ford Financial Solutions in Manhattan.

But constant saving and investing can put you in a position to turn a profit when the economy is bad.

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