With the US and global economy heading into a bear market with no end in sight, homeowners and those nearing retirement are at their wit's end trying to make end's meet. Life savings in the form of home equity and retirement accounts have shrunk, for some, more than 50% over the past couple years. With almost all middle class Americans scrambling to reassess their retirements, many younger Americans are having difficulty securing jobs and fear losing the jobs that they have. Unemployment jumped to 6.5% in October 2008, the highest level for over a decade, but for those younger workers that still have jobs, and are able to keep them, the recession might just be the key to building long term wealth.
During the 90's and early 2000's the going wisdom was that owning a home and a diversified portfolio of stocks was the way to grow wealth. With the recession in full swing, and home prices plummeting, this wisdom may seem to have outgrown its usefulness, but from a long term perspective, there's no reason to believe the housing and stock markets won't eventually recover and assume their usual upward trend. So, for young workers who do not have many assets, a recession is an opportunity to find a home at a low price, with a low interest rate mortgage, and begin investing while stock prices are cheap. It is tempting to try to wait until the economy bottoms out to find the best prices on homes and stocks, but it is impossible to guess when a recovery will begin. Young people should be investing for the long haul so it doesn't matter as much when to buy during the recession so much as that they do buy sometime while prices are low. Jumping into a barren market is scary, but the upside might just be the key for young workers to solidify their financial lives.
