How I’m preparing for a global recession

How I’m preparing for a global recession

“Everybody has a plan until they get punched in the mouth.”

-Mike Tyson, former heavyweight boxing champion.

I mean, how is that for a quote?

I love it personally.


This quote is useful for this time (really any time in our lives), because I think it speaks to the universal truth about risk. It’s something you can plan for but you cannot control. That means while plans in general are very good and we should keep making them, they can and will likely change.

But there is power in planning

Now, unlike our troubled Mr. Tyson, hopefully you never find yourself striving to recover from bankruptcy, incarceration or other tragedies, let alone all three.

With your uncertain future now framed, I feel there is some power in planning to provide some ability and agility to react when then time comes.

Leveraging my post earlier this year about our 2020 financial goals, and what our best-laid plans were at the time, today’s post will highlight how I’m trying to accommodate during this current market turmoil, including what I’m learning from it for any pending global recession. Or, maybe we’re there already…

  1. Ultimately, health is wealth.

Money comes and goes but ultimately health is wealth, for you, your loved ones and dear friends. Health and happiness are far more important than any amount of money. Even though I’ve written about this in the past, including a few months ago, it couldn’t be truer now.

As any pending recession comes our way, I’m going to try and continue to mature my physical and mental health. This should help me become more resilient with time, including times of extreme change. In doing so, I feel it will be an important set of muscles that should serve me well in the financial future.

  1. While some debt is good, lots of debt can be crippling

Airbnb hosts looking for bailouts due to over leverage. Various companies drastically cutting their dividend and slashing spending plans.

With any pending global recession, there will be losers on the way down and winners coming out on the other side. The ability to manage debt will be key to these success stories and to our own.

When it comes to our debt-load, I’ve always been a bit cautious. I’ve believed taking on some debt for wealth-building is generally fine and a necessary evil. Taking on lots of debt just always seemed downright foolish to me. Best to manage debt before it manages you.

Our debt load is manageable for now. We’ve worked hard to reduce it over the years and we’ll continue to do so during any global recession while working. With recent interest rate cuts, our mortgage borrowing costs are now near a paltry 1.5%. That would be considered unthinkable by me years ago. Again, life happens and things change.

Should anything catastrophic happen to both of our jobs, for an extended period of time, I know we have enough saved up in our non-registered account to clear all debt. Now, that would certainly be far from ideal to liquidate that account. But drastic financial times do sometimes call for drastic measures.

In liquidating our non-registered portfolio, that would mean giving up years of passive income building but it would be something we could do and eventually recover from.

  1. Watching and lower your expenses is always a good option

It likely goes without saying that cutting unnecessary expenses are a great way to keep more of your hard-earning money – but I just wrote that anyhow!!

With lower operating costs in your household, you should have less to worry about to make any ends meet.

While some of our fixed expenses will never go away as long as we live here (fees, property taxes and condo utilities to name a few), we will do (and have recently done) other things to reduce our expenses in any prolonged crisis:

  • Be more selective with grocery shopping and discretionary purchases.
  • Cut back on dining out or take out food.
  • Reduce our car use. (Actually, I haven’t filled up my gas tank in six weeks; it remains near full).
  • Walk or bike to amenities as much as possible (doing this now, see above to avoid the car).

If we had to, we’d reduce our mortgage payments back to the basic amount (removing our prepayment payments).

I also think it goes without saying during any financial catastrophe we wouldn’t be setting aside any savings for our financial future either – we’d focus on the here-and-now only. All contributions to registered accounts (i.e., TFSAs, RRSPs) would stop immediately. 

I would think for anyone striving to reduce their expenses, it would be essential to look at your housing and transportation costs as your primary saving areas first. If you get those two expenses right-sized in your life, as much as possible, your financial health will benefit.

Two expenses stealing your early retirement dreams (that are not coffee)

I’ve made money mistakes with housing and transportation in the past. I’m certainly not perfect.

  1. Remain invested as much as I can

While a high savings rate can act as a tremendous margin of safety, it does very little if you cannot save money at all. 

Right now, 100% of my portfolio beyond cash is in stocks (when you exclude any future workplace pension on the books). My investment approach over the last decade or so, can be distilled into the following:

While it remains my hope to keep a modest savings rate for investment purposes while working, there are no guarantees. This means should a massive global recession occur, I will do what I can to remain invested and live off any dividends or distributions as they come in. There are no guarantees with dividends of course. And this is another reminder that a dollar of dividends paid is the same as a dollar earned in capital gains by investors. A dollar is a dollar.

By investing the way I do though, I don’t care as much about looking at portfolio values. In fact, although I always have a rough idea of what my stocks are trading at, I must say I don’t monitor them much.

What’s always been important to me as an investor is how much my portfolio can generate meaningful income. 

To keep that cash flowing in from my portfolio and growing over time, I must remain invested in good times and in recessions.

Should I continue to be employed during any catastrophic global recession, I’ll be ready to “back up the truck” per se. That means buying equities where I can afford it, when they’ve been crushed for the strong belief that, eventually, this too shall pass. Stock prices will return at some point…

Every few generations, there seems to be a handful of massive market declines. Knowing when they occur is rather unpredictable. Knowing markets will eventually recover at some point is very predictable.

This means as a long-term investor, not only do I hope to remain invested during any global economic crisis, I hope to be a purchaser of equities.

I hope to own more of the following companies in these sectors in particular, for the following reasons:

  • Utility companies – because people will always want to heat and cool their homes, enjoy electricity, use the internet and technology, and enjoy clean water.
  • Healthcare companies – because people will always strive for (or least want to have) health.

How you can prepare for a global recession

In many respects, I can’t offer lots of financial advice to you.

What I mean is, I won’t be saying anything new.

You probably don’t need any more financial advice whatsoever.

But I still think it’s important to highlight some considerations, at least for me, as reminders about what’s worked to date in my financial life and reminders for my future self. So, here they are:

This is time-tested advice I remind myself about in The Millionaire Next Door.

This is boring money advice that never goes out of style.

Here’s how to benefit from a stock market crash.

Why I need to stay invested.

Why I will continue to strive for financial independence, and largely forget about retirement.

The most important financial decisions you and I can make are the next ones. Whatever your income level is or whatever your financial situation might be, I hope a significant, prolonged global recession does not occur. I’ll still plan for one anyhow.

Thoughts? How might you plan for a global recession? Got ideas for me? Fire away in the comments section. I read every one. 

Please stay well and safe,


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

44 Responses to "How I’m preparing for a global recession"

  1. Hi Mark, I just started these last covid months investing myself and trying to learn as much as possible. Its worth it. I appreciate the reply and will look into owning each. They both seem like good buys, although I feel a little better w Sunlife.

    I was looking at Reits and bought some Chartwell Retirement reit yesterday. quite happy with it. What are your thoughts on this one. The other is CAR.UN which does not want to drop a little to where I like.


    1. Good stuff Spyros. DIY investing, including dividend investing, is challenging since I think you really need to train your investing brain to hold on when things get really rough. You also make mistakes which can be frustrating vs. just buying an indexed ETF and sticking with the program.

      FWIW, many big ETFs own SLF and MFC in their top holdings in Canada. I would think if your plan is to own either for >10 years, really a toss up which one will perform better. But, they should both pay you dividends going-forward…

      In terms of REITs they’ve been hit hard including RioCan and Chartwell. As they say, best to buy low. CAR.UN is one of my personal favourites and given people always need a roof over their heads I’m happy to own this one well into retirement (30+ years from now) for income and growth.

      All the best,

    1. I don’t choose, I own both! Both seems to be poised to earn more revenue in the coming years from Asia – a growth area for them.

      I’ve owned a few hundred shares of each for about 10 years now. DRIP > 1 share of each every quarter.

      Hope that helps share my thoughts!

  2. The best thing that ever happened to my wife was getting laid off early in her career. It made us much more aware of how life can change in a heart beat and in many unexpected ways. So my best advice to prepare for a global recession is always plan for a worse case scenario, what happens if you lose you job, if you get sick or any number of bad things that can happen. Doing this has helped us to make better decisions. With covid not only did my income drop off a cliff but one of our tenants just gave notice. So our finances have taken a major hit. But we’ve been planning for this for this (long story how) and we’ll be ok. Remember plan for the worse, hope for the best!

  3. in my post I used: CSCO, EBAY, IBKR, MDLZ, BMY and as you can see the options call premiums is there to give you the 8 to 10 % under scenario A, also personally these are stocks that I like trading and hold in my long term portfolio.
    ETFs – especially Canadian ones, don’t have options and the one that have options like XIU, XIC, ZCN in low volatility environment are yielding $0.20 to $0.30 premium for OTM calls… which is like peanuts

    1. Yes, I could see going for higher premiums for sure.

      Well, I wouldn’t rule out using covered calls in the coming years but it’s just not aligned with my slow and steady strategy for now.


  4. Yes, it does work with ETFs as well, VIX is currently in 40 this makes the options premiums to be high enough for this to work
    Let’s look at ZCN
    Friday’s close $19.11
    Sell Jun 19.50 C this is 0.90-ish credit
    Buy 100 shares @19.11 & Sell Jun 19 $19.5 Call(-1) for $0.90-ish CR, ACB price is $18.30
    Scenario A) Stock is over $19.5 then call gets excercised:
    Return: $1950 – $1830 = $120 on 1830 invested
    Scenario B) Stock is under, Sell Sep $20 Call to furhter reduce the ACB
    DTE = 69 days

    or Sell Jul 20 C this is $0.90-ish Credit

    Buy 100 shares @19.11 & Sell Jul $20.0 Call(-1) for $0.90-ish CR, ACB price is $18.30
    Scenario A) Stock is over $20.00 then call gets excercised:
    Return: $2000 – $1830 = $170 on 1830 invested – this is close to 8% retun for 97 days
    Scenario B) Stock is under, Sell Sep $20 Call to furhter reduce the ACB
    DTE = 97 days

  5. Hi Mark,

    I am a long time follower of your blog,
    Have you consider selling some cover calls for the current positions or buy new positions and sell cover call right from the start?
    I am trader with the strategy for the long term and here is my strategy –>
    I think it all depends on your view on the markets, if you think this is a V-share recovery selling cover call might not make sense but as you can see some stocks are returning close to 10% in 69 days.

    Looking forward for you input,

  6. Mark:
    I did sell some things – some companies that this current crisis showed me didn’t seem to be weathering it well but I reinvested in KMB – Kimberly Clark – my fave brand of Kleenex! And PG maker of Clorox wipes (this was on my want column for a long time as you had revealed you own it!) Also, a random comment on CBS Sunday Morning ( I tape it while at church – normally) said number one sales in current crisis was a 23% in market sales of orange juice! Googled and found that Tropicana number one N. American brand and owned by Pepsi Co. – which I already have shares in because it makes 2 of my fave products – Pepsi – which I rarely indulge in and Bubly. My number one rule of investing is research. My number 2 rule is buy things you like and would be in your market basket! Also, when I can get it (I live in Northern Alberta) I enjoy the Saturday edition of the Globe and Mail…….. especially Stars and Dogs. In it for the long haul and enjoy your column immensely. Thank you for the book recommendations. Thank you ! Thank you! Thank you for your column.Stay well and stay healthy – mentally and physically!

    1. I think KMB, PG, and other consumer staples are smart companies to own. People like snacks for PEP seems smart. Good to be an owner of what you consume!

      Stay well and have a good long Easter weekend Dinene!

  7. Hi Mark, I feel like we dodged a bullet getting out of the housing market at the level we were at. I’m beginning to believe the days of housing as a good investment are gone. Maybe you can explore the comparison between renting long term and buying, especially through the lens of maximizing within reason ones ability to invest. When I think of the money I spent on lawn mowers, snow shovels, bedding out plants, not to mention a second car (and at one point a ’56 Farmall to plow the driveway and mow the ditches), I would have had a pile of cash invested long before I actually did! Home ownership is not cheap, when you add up the extras. What about it..a side by side on rent versus buy but with the real life impacts (i.e. the Farmall) factored in?

    1. You might have Bill! Really hard to know until 20-20 hindsight vision sets in.

      I know we’ve made some money mistakes with housing ourselves but I wouldn’t change those decisions because they tend to shape your future for the better…if you know what I mean?

      Home ownership is definitely not cheap. I consider it a lifestyle decision. As is renting. There are definitely pros and cons to each!

      Stay well and will consider that for future posts. In the meantime, check out my short series here Parts 3 to 2 to 1.


  8. Great points Mark and you’re right about the benefit of having a plan. Stress causes people to make bad decisions. A plan helps to avoid that.

    Of course, it all sounds good on paper but I’m at the point where I’m second guessing everything I do.

    Still, right now one has an opportunity to build a portfolio of dividend growers yielding 4, 5, 6%.

  9. Hello Mark

    Good lessons in your post! Thanks
    was looking into buying a house over the next 6 months but with all the uncertainty, it seems I am going to wait a little. I am wondering if real estate will soften over the next year in the Golden Horseshoe?. In the meantime, save and invest every 2 weeks (Automatic – Pay Period) is what I am doing

    Stay Safe

    1. Smart to continue saving Carlos. I really wish I could tell you when to buy…but my experience is…buy when you have a sizable down-payment and are emotionally ready. This way, no regrets.

      Hopefully in the coming months prices will stay lower for you.

      Stay well yourself!

  10. Good read Mark, thanks. With all the “worst case scenarios” being shot out, it’s good to read some solid advise, and confirmation, of what we can do to stay the course and ride this out.

    1. This is not to say I don’t worry Paul, I do, but having a plan is helping me worry a bit less!

      Stay well and thanks for the kind words,

  11. Great post 🙂

    I am trying to back up the truck and not make the mistake of worrying if I’m deploying too much cash too soon. It’d be nice if we had a crystal ball but we can’t time the market.

    Your mortgage rate- 1.5%, amazing!

    1. Yes, can’t time the market for sure….but you’re doing very well with your dividend income. Will highlight in my Weekend Reading!!

      Yes, lucky with mortgage. Should be dead in 5 years or less ideally.


  12. Mark,
    love the Tyson quote – it’s going into the collection.
    Hate to bring up an old chestnut but this time it’s going to be different.
    The global impact is, to use that currently much overused term, unprecedented. For one, how the oceans of money being firehosed out the door are going to accounted for is a total mystery, at least to me and I’m guessing anyone else too.
    Social impacts such working from home (no or vastly reduced commuting) alone will have major trickle down effects. And the travel industry, I feel, is going to take years to recover. Pull any thread and all the things attached to it are remarkable.
    How this will play out is still, at best, anyone’s guess particularly as it now seems politics (US) seems to be rearing its ugly head.
    The 4 points in your plan above are all good ones, numbers 1 and 3 being paramount, imo.
    Keep safe and to quote Red Green – “Keep your stick on the ice”

    ps. New picture to for new times? 🙂 Brave new world.

    1. Ya, new pic, more casual for now 🙂

      Yes, a good Red Green oldie but goodie as well…

      I have no idea where our tax base will find the money for this, other than raising taxes of course. I’ve long since predicted I’ll pay more in taxes over time. Looks like I will get my wish!!

      The U.S. is a nightmare with that orange monster at the helm. I’m out of words to describe him…

      I think #4 is very important right now. I have no plans to sell anything.

      Stay well,

  13. Hi Mark,
    It is a great reminder to keep investing on Dividend paying stocks. In the market meltdown, i was able to buy few shares. I am talking abut couple of hundred dollars invested. My bank charges flat rate for every trade. So, what is your suggestion? Keep money to make it a minimum of $1000, and buy or invest whenever money comes?

    1. For what it’s worth, I tend to buy when I have a few thousand to invest. This is because I try and keep my transaction costs low and by doing so, I also avoid doing anything knee-jerk not aligned to my plan with investing in CDN and U.S. dividend paying stocks and low-cost ETFs. I think that approach is a good blend for me and my behaviour.

      Will more dividend stocks make some cuts? Potentially! Time will tell.

      I will remain invested as much as I can. No intentions to sell anything at all.
      Stay well!

  14. Great advise as usual, Mark. Today, it’s great to see the great rally on the markets. Who knows what tomorrow will bring. I am tempted to invest more but it is like catching a falling knife. Always wondering where the bottom is or will I miss any quick and sharp bounce back.
    In the midst of this Covid-19, lots of folks are updating their wills as nobody knows what the future holds. Hopefully, we will survive. This brings to mind what is the best strategy to maximize returns on stocks and on real properties and to minimize taxes on one’s passing. For example, for a married couple with two grown-up adults, is it better to have the wife and the two adults who have moved out on the title of the principal residence as joint tenants or tenants in common? If the wife is not on title but only the two adults as tenants in common, will the principal residence be part of the estate and no income tax paid when house is sold and proceeds go to the two adult children? Any advice would be greatly appreciated. Thanks a lot.

    1. Yes, I’ve seen lots of will-talk on the Twitter machine. Certainly these times are unprecedented and have folks thinking about that…I guess a crisis brings that out into the open!!

      I know for us, since we don’t have kids, our estate plans are rather simple: I go, wife gets everything. If we both go, everything goes to the estate.

      For any joint ownership, you might best speak to a lawyer and talk through any legalities. The principal residence is tricky if not currently in the name of a spouse/joint ownership to transfer on a tax-free basis. Death is considered a deemed disposition, i.e., death means you technically sold it. An older reference:

      “If the terms of the Will leaves the property to an adult child who does not have a principal residence for tax purposes, then the beneficiary may claim the principal residence exemption from the date of death forward.”

      I have however written about how to manage various investment accounts here with a legal review provided by Sun Life Financial.

      Stay well Ken!

  15. Well done Mark on creating options for yourself by building assets over time. That gives you lots of flexibility as you’ve so well described. I’m changing nothing at this point and might even tap the HELOC for a small investment. My cash flow won’t change much and debt payments are easily managed.
    Thought: why not stop your mortgage prepayment now and put that into the market? I’m sure you can find a solid investment that would beat your mortgage interest rate? Maybe buy the institution (bank?) that holds your mortgage. Also remember that even if you lose your jobs, I’m assuming you can collect EI. For a couple that’s not a bad chunk of change per month plus all your savings.
    Best wishes and stay healthy. Thanks for all you do.

    1. That’s the plan anyhow – trying to create multiple income streams to combat anything like this in the future. No doubt another big crash will happen eventually.

      “Thought: why not stop your mortgage prepayment now and put that into the market?”

      Well, I prefer not to because it makes me feel much better that I’m killing debt. And I can afford it. If I lose my job or other then I will cut back to basics.

      Yes, if I do lose my job I will get EI and likely some severance but I really don’t want to think about that!! Want to stay positive. 🙂

      Stay well,

  16. Good read Mark: to reaffirm what many of us know but need constant reminding of to get us through these uncertain times.
    One comment that resonated with me was
    “It likely goes without saying that cutting unnecessary expenses are a great way to keep more of your hard-earning money”.
    While I was south for part of the winter, I cut my cable and suspended my internet and cellphone. I also shut off my heat on the water tank, lowered the thermostat and unplugged everything but the fridge and freezer. With no exact figures calculated yet, I estimate I saved $500-800. It’s not much but it helps.
    It made me realize how much money we waste and take for granted. Cheers

    1. That’s smart to turn off the things you won’t need or will not use. Little things can add up to big savings over time.

      Better still, it’s good for the environment.

  17. When I started to get interested in investing beyond Canada Savings Bonds many many years ago, I read The Wealthy Barber. It explained how investing worked and how to get started. I then read The Millionaire Next Door and it changed how I looked at investors and investing. It showed me that anyone could become wealthy with the right knowledge and savings habits. I will never forget the chapter where the firm’s clients with huge savings were invited to the conference room for a meet and greet. The people who showed up did not look like those they expected. It was a powerful image. I highly recommend both books to those who are just starting on their journey to financial freedom or others on their way.

    Stay safe everyone.

    1. The Wealthy Barber was the first complete personal finance book I ever read. Those lessons stick with me to this day. That book along with others informed me many years ago that it’s the mindset and behaviours that are important. The rest is just math. Same goes for diet and exercise. It’s about doing a few things very well over time that should lead to success. You don’t need to be perfect, not by a long shot, but you do need to practice, have some patience and some sustained discipline.

      Stay well,

  18. Followed a strategy which ignored the market and grew my income slowly and steadily over time. Yes, the income has dropped periodically, but overall its been an upward trend. Been through other crisis and expect others, but doing nothing new or changing my perspective.
    Good advice Mark.

    1. Good stuff cannew. I suspect you’ve lived through a few of these crises but it certainly feels a bit nutty right now. I will do my best 🙂


      1. Funny I finally got the nerve to log in to my account and while my overall net worth is down I did notice that in the last quarter I got an extra 3 shares on my DRIP, that’s OK. Same with my wife’s share purchase plan, getting a load more shares each month. Of course when it comes time to cash out I’m hoping for a market topping high ?

        1. Ya, I can’t really buy too much right now since we don’t have the $$ saved up in the RRSP but working on that. We are definitely DRIPping more shares every month and quarter now. I think we’re approaching 550 (more) shares via various DRIPs every year now 🙂


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