Financial Term of the Day: Double Dip
In the financial media lately, there's been a lot of chatter around the concept of a "double-dip." In short, this term refers to a situation in which GDP is on the rise out of a recession, but then begins to fall again, signifying another recession.
The chart, courtesy of Macroeconomic Advisers, shows monthly U.S. nominal GDP figures from the first two quarters of 2010. As you can see, nominal GDP rose through April but started to decline in May and June.
So what does this mean? Are we, in fact, heading into another recession? It’s too soon to say–The Economist cautions readers to take the figures with a grain of salt because of the instability of monthly numbers. In the meantime, as always, it’s important to practice healthy long-term investing strategies.
We recommend that you shouldn’t base your investing decisions on near-term worries; it’s better to think about your long-term goals. Betterment’s investment advice tools help you figure out how long your saving for, and how much risk you’re comfortable with. That’s the right way to think about investing, rather than reacting to current events, because current events and future expectations are already reflected in stock prices. What happens next is anybody’s guess, but in the long term, the market tends to rise.
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This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.
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