{"id":186467,"date":"2026-01-12T11:05:25","date_gmt":"2026-01-12T18:05:25","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=186467"},"modified":"2026-01-12T11:14:57","modified_gmt":"2026-01-12T18:14:57","slug":"financial-risks-investors-should-watch-for-in-2026","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/financial-risks-investors-should-watch-for-in-2026","title":{"rendered":"Investors Still Face Plenty of Financial Risks This Year\u2014Here’s What You Should Watch Out For"},"content":{"rendered":"\n

Entering 2026, there\u2019s no shortage of risks on the table. From asset bubbles to geopolitical instability, here are the threats I see\u2014and how I\u2019m protecting against them. <\/span><\/p>\n\n\n\n

Asset Bubbles<\/span><\/h2>\n\n\n\n

A few months ago, I wrote about how nearly <\/span>every asset type appeared at risk of a bubble<\/span><\/a>. And in fact, one of those asset classes (cryptocurrencies) did in fact collapse.<\/span><\/p>\n\n\n\n

Stock valuations still look frothy, and I\u2019m certainly not the only investor raising concerns about artificial intelligence (AI) bubble risk. Gold and silver keep pushing to record prices, leading many to wonder if a crash is coming. <\/span><\/p>\n\n\n\n

Home prices continue hovering around record highs nationwide. That said, they look likely to flatten out in most markets where they\u2019ve been dropping. <\/span>But housing markets have <\/span>spent<\/span> the last 18 months <\/span>softening in many markets,<\/span> and may continue to do so.<\/span> <\/span><\/p>\n\n\n\n

The one asset that is clearly <\/span>not <\/span><\/em>in a bubble is <\/span>multifamily<\/span><\/a> real estate. How do we know? Because it was in a bubble in 2021-2022, and that bubble burst. Multifamily property values fell 25%-30% before bottoming out and <\/span>starting to rise<\/span> again in late 2024-2025. <\/span><\/p>\n\n\n\n

I plan to keep investing $5,000 each month through my co-investing club, as a form of <\/span>dollar-cost averaging<\/span><\/a>.<\/span><\/p>\n\n\n\n

A Softening Labor Market and AI Job Cannibalization<\/span><\/h2>\n\n\n\n

The job markets steadily weakened through 2025, with the latest (November) <\/span>jobs report from the BLS<\/span><\/a> clocking the unemployment rate at 4.6%. That\u2019s up from 4.2% a year earlier.<\/span><\/p>\n\n\n\n

It may, in fact, be worse than that. After the White House fired the previous BLS Commissioner because they weren\u2019t satisfied with the numbers, more analysts <\/span>fear the current <\/span>data coming out of the BLS<\/span> may not be accurate<\/span><\/a>. <\/span><\/p>\n\n\n\n

Then there\u2019s the problem of AI taking over entry-level jobs. <\/span>A <\/span>Harvard study<\/span><\/a> found that entry-level job openings fell 22% over the last two years <\/span>among firms that adopted AI<\/span>, <\/span>but<\/span> saw virtually no change <\/span>in job openings for senior-level positions<\/span>.<\/span>  <\/span><\/p>\n\n\n\n

You can feel the recession jitters among many working- and middle-class households, as the slowing job market and sustained inflation keep eating into their purchasing power. <\/span><\/p>\n\n\n\n

Recession Risk<\/span><\/h2>\n\n\n\n

The December <\/span>Wolters Kluwer Blue Chip Economic Indicators<\/span><\/a> survey shows that economists foresee a 35% chance of recession in the next 12 months. That\u2019s more than two bullets in a six-round revolver, if you\u2019re playing economic Russian roulette. <\/span><\/p>\n\n\n\n

You\u2019ve heard the term \u201cK-shaped economy\u201d thrown around by pundits and economists. The top 10% of earners in the U.S. (earning over $251,000) accounted for nearly <\/span>half of all consumer spending<\/span><\/a> as 2025 progressed. That\u2019s a record-high percentage, and shows the economy has become more fragile and dependent on a small minority of consumers. <\/span><\/p>\n\n\n\n

How am I investing to protect against recession risk? With <\/span>recession-resilient real estate investments<\/span><\/a>, of course. <\/span>In our co-investing club, we\u2019ve gone out of our way to <\/span>look for<\/span> investments that can weather a recession <\/span>well<\/span>.<\/span> Examples include rent-protected affordable housing, industrial seller-leaseback deals with an order backlog of several years <\/span>into the future<\/span>, mobile home parks (with tenant-owned homes<\/span>, <\/span>which<\/span> are expensive for tenants to move), and more.<\/span> <\/span><\/p>\n\n\n\n

Inflation<\/span><\/h2>\n\n\n\n

Inflation is <\/span>not <\/span><\/em>tamed. The most recent BLS reading for November shows a <\/span>CPI rate<\/span><\/a> of 2.7%, <\/span>far higher than<\/span> the Federal Reserve\u2019s target of 2%. And that\u2019s if we can even trust the BLS numbers (see above). <\/span><\/p>\n\n\n\n

The tariff situation keeps changing week to week, and future inflation <\/span>just<\/span> looks too murky for comfort.<\/span> <\/span><\/p>\n\n\n\n

For anyone who thinks inflation risk is all just hyperbole, look no further than the price of gold. You don\u2019t have to believe pundits, but investment money doesn\u2019t lie. <\/span>Gold <\/span>exploded<\/span> 66.68% <\/span>in value<\/span> over the last year, <\/span>largely<\/span> due to inflation fears and geopolitical instability.<\/span> <\/span><\/p>\n\n\n\n

Geopolitical Instability<\/span><\/h2>\n\n\n\n

Wars, <\/span>invasion threats<\/span>, and<\/span> capture raids on <\/span>other countries\u2019<\/span> heads of state.<\/span> Everyone has their own opinion on any given geopolitical issue. That\u2019s fine. <\/span><\/p>\n\n\n\n

But <\/span>what<\/span> we can all agree <\/span>on is<\/span> that this is not a stable or predictable moment in modern history.<\/span> Again, investors fleeing to a safe-haven investment like gold speaks volumes. <\/span><\/p>\n\n\n\n

Political and Regulatory Whiplash<\/span><\/h2>\n\n\n\n

The speed of regulatory change in Washington has left many investors\u2019 heads spinning. President Trump\u2019s <\/span>HUD Secretary Scott Turner<\/span><\/a> referred to the pace of regulatory change as \u201clightning-speed.\u201d <\/span><\/p>\n\n\n\n

Investors want stability and predictability as they <\/span>contemplate<\/span> tying up their money for years <\/span>into the future<\/span>.<\/span> Whether you\u2019re for or against any single regulatory change is beside the point. The less predictable the regulatory environment, the <\/span>more<\/span> risk for investors. <\/span><\/p>\n\n\n\n

How I\u2019m Investing<\/span><\/h2>\n\n\n\n

I already mentioned I practice dollar-cost averaging in my real estate investments, investing $5,000 a month no matter what. I also dollar-cost average my stock investments into index funds. <\/span><\/p>\n\n\n\n

I\u2019ve always liked real estate for its passive income, growth, <\/span>leveragability<\/span>, and <\/span>hedge against<\/span> inflation.<\/span> And I also think it can hedge against geopolitical risks in a way that stocks don\u2019t. People <\/span>need housing<\/span><\/a>. They don\u2019t need to hold their money in stocks. <\/span><\/p>\n\n\n\n

Some real estate <\/span>protects<\/span> against recession risk <\/span>more<\/span> than others.<\/span> I\u2019ll continue <\/span>looking for<\/span> downside risk protection as I <\/span>look at<\/span> investments.<\/span> This<\/span> means properties:<\/span><\/p>\n\n\n\n