"We learned valuable lessons in 2008 about the importance of diversification in investments and the value of maintaining reserves in savings," says Robert Allsbrook, CFA, chief economist for Regions Bank. "Many Americans were using debt imprudently to finance consumption. Now, we are seeing the outcome of using debt in this way."
Lessons from the Depression
Seventy years ago, Americans were living through the Great Depression. "People who became adults during those years learned to avoid excessive debt because of its ability to get people into negative situations," Allsbrook says. "As the generations have passed since the Depression, people began to believe it was wise to take on extreme debt loads. Now, people are moving away from that assumption again."
The government's role in the 2008 economic downturn—including the economic stimulus package and Wall Street bailout —is another lesson taken from the Great Depression era.
"Since the Great Depression, we have learned to protect the security of assets stored in our nation's banks and the importance of government involvement in extreme situations," Allsbrook says. "Even though every part of the economy is being affected by this climate, economists are using lessons learned during the Depression to lessen the impact of this downturn."
Preserving Business
Most of the lessons individuals can take away from our current economic situation—including keeping funds in reserve and ensuring that your interests are always diversified—also apply to businesses.
"Regardless of whether you are speaking about an individual or an organization, many of the principles that apply to remaining financially viable during an economic downturn apply," Allsbrook says. "Businesses should also consider putting assets into cash reserves to enhance viability during difficult times. Diversification of investments and ventures is also a very helpful strategy for ensuring success."
Would you like to take a fresh look at your portfolio? Talk to your Regions banker about savings options, or call the Morgan Keegan Investment Center at 1-866-951-9511 to speak with a licensed Morgan Keegan professional about your investment options.
Morgan Keegan and Company, Inc. is a subsidiary of Regions Financial Corporation and a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC). Investments offered through Morgan Keegan are not a deposit, are not guaranteed or endorsed by Regions Bank, or its affiliates, and are not insured by the FDIC, Federal Reserve Board or any other government agency. Purchase of non-deposit products involves risks, including possible loss of principal.