How to Prepare for Recession 2013

U.S. President Barack Obama recently met with congressional leaders in attempts to carve out a way to avoid falling off the quickly approaching fiscal cliff.

If no deal is reached, President Obama and scores of economists warn, the U.S. is destined to plummet into a recession in 2013.

Money Morning Global Investing Strategist Martin Hutchinson cautions that even if lawmakers avoid the fiscal cliff by the most likely scenario of raising taxes on wealthy Americans while leaving the majority of the budget deficit status quo, the short-term outlook for the health of the U.S. economy is far from rosy.

"U.S. economic growth has been held back in the last few years by the blizzard of regulations coming out of Washington, and there's reason to believe there is an especially heavy storm of them in the next few months, having been held up before the election," said Hutchinson.

And despite the easy monetary policies of Fed Chief Ben Bernanke, and the latest round of QE3 (dubbed QE Forever), "the U.S. economy is not going back to robust growth in 2013," Hutchinson added. Creating more money, he said, will just increase inflation.

"In the long run, a recession is coming," Hutchinson warns.

Investors: Here's why Peter Schiff thinks we need the fiscal cliff - do you agree?

Five Ways to Prepare for Recession 2013

As Americans get ready for recession 2013, along with the largest tax increases ever imposed on U.S. taxpayers, here are five ways to prepare.

  • Take Advantage of Special Dividends

In anticipation of the dividend tax hike in 2013, several companies are paying "special dividends" in December or moving up their dividend pay date.

A few who are presenting shareholders with an end-of-the-year bonus are Wal-Mart Stores Inc. (NYSE: WMT), Wynn Resorts Ltd. (Nasdaq: WYNN), Tyson Foods Inc. (NYSE: TSN), Carnival Corp. (NYSE: CCL), Franklin Resources Inc. (NYSE: BEN), and Sturm Ruger & Co (NYSE: RGR).

  • Buy Gold and Silver

With loose worldwide fiscal policies devaluing paper currency, and the threat of inflation heating up, gold and silver (money alternatives) offer not only a safe haven, but both metals stand to provide more bang for the buck with the potential for some shiny capital appreciation.

Pure plays include precious metal exchange traded funds (ETFs) like the SPDR Gold Trust (NYSE: GLD) and iShares Silver Trust (NYSE: SLV). Mining ETFs such as the Market Vectors Gold Miners ETF (NYSE: GDX) and Market Vector Junior Gold Minors (NYSE: GDXJ) are other options.

  • Bargain Hunt

Hunt for beaten down, oversold equities that have suffered at the hands of the current economic woes both here and abroad

Money Morning Chief Investment Strategist Keith Fitz-Geraldexplains, "Because history's rearview mirrors show that fear, panic, crisis and stress are all classic signs associated with opportunity -- and profits."

He advises looking at stocks in the energy, resource and select technology sectors, "all of which the world needs, as opposed to wants, and all of which are backed by billions of dollars flowing their way whether we go over the fiscal cliff or not."

Two stocks to consider are Duke Energy Corp. (NYSE: DUK) and Freeport McMoRan Copper and Gold Inc. (NYSE: FCX).

Check out more of Fitz-Gerald's fiscal cliff opportunities here.

  • Save More

Americans should save 6%-10% of their income after taxes to build wealth, provide a cushion and prepare for retirement. However, the current savings rate stands at a measly 3.4%.

Pay yourself first and stay liquid before you succumb to the urge to splurge.

  • Ditch the Dependency

The White House rode in like a knight on a white horse during the Great Recession handing out copious amounts of federal and taxpayer dollars in bailouts and subsides. But federal reserves have reached their limit, and state and local governments are slashing services while increasing taxes.

As lawmakers attempt to reduce the swollen U.S. deficit, Americans can't assume the government will help. It's time to be more self-sufficient.

That's why it's the perfect time to make an affordable investment in education. Check out this presentation on how you can learn the best ways to handle your money ahead of recession 2013.

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