Suze Orman Says This Is the Smartest Move in the Current Economy
- Inflation is surging and there are signs the economy is headed for a recession.
- Suze Orman has some advice on what to do in this current economic climate.
- Heeding her advice to "do nothing" is likely a smart decision.
Listening to Suze Orman on this move could be very smart.
Inflation is on the rise and many people are concerned about the current economic conditions as a result of surging prices. But finance expert Suze Orman has some advice on the smartest move you can make when things are uncertain -- and heeding her advice could be a good idea.
Here's what Orman suggests doing.
This is Suze Orman's advice for coping with the economy
Orman advised doing one simple thing right now: Nothing.
"It’s totally natural to think you need to 'do something' given what is going on in the economy," Orman said. "But the truth is, doing nothing is likely your smartest move. Making changes to your long-term saving and investing strategy based on current events is never a wise move. The key is to stick with a plan that is built for long-term success."
Orman went on to explain that you should continue investing in stocks if you are doing so already, even though the stock market is currently in a bear market, which means it is down 20% off recent record highs.
You should do this because stocks have a consistent track record of providing great "real returns," which are returns after inflation. And even if your stocks temporarily go down, you can't really time the market perfectly. Consistently investing, even during downturns, is the best move to avoid missing out on the chance to earn generous returns over time.
She also advised continuing to build an emergency fund until you have eight months of money saved for surprise expenses. If your costs have gone up due to inflation, she said then it might make sense to increase your savings account balance to account for this but otherwise you don't need to adjust your savings rate. And she indicates saving up for big purchases such as to pay cash for your next car is still a good idea if you were doing that already or if you want to have more financial freedom in the future.
All of these steps are sound financial moves and there's no need to change course if you're already doing the right things with your money, even if economic conditions are not ideal right now.
Should you listen to Orman?
Orman's advice about doing nothing and staying the course right now is absolutely right.
The economy goes through periods of high inflation and periods when the economy is in a downturn or even a recession. That's just a natural part of life and overreacting to it could end up costing you in the end since there's very little you can do right now that's going to change any of the economic conditions that are affecting your finances. Continuing to make the same responsible moves that you're always making is better than trying to adjust to short-term trends since you don't know when things will turn around.
So, while it may be hard to just keep at it -- especially if you see your investment balances going down temporarily and you get scared of the losses that you're seeing on paper -- you should try to heed Orman's wise words. In the end, you will most likely be glad that you did.
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