With scary headlines in the news every day and the stock market on a roller-coaster ride, if there’s one thing we’re all thinking about these days, it’s the economy. Are we in a recession already? Are we headed for one? Are things going to turn around after we get a new president in office?
While we’re all waiting for the answers to these questions
to materialize, here are a few proactive things you can do to shore yourself up
financially for the coming storm.
- Diversify! If you haven’t already, there’s never
been a better time to review your portfolio. Are you overly weighted in technology,
or hold too much real estate? Do
what you can to shift this around to create a portfolio that you’re going
to want to stick with for at least the next five years.
- Don’t
panic. You want to make sure you
don’t panic when things get rough, because “panic time” is when fearful
investors lose their money. Put
everything in place, then forget it! Listen, if you’d had money in the stock market during the Great
Depression and you left it there, you’d be a MULTI-BILLIONAIRE by
now. Which just goes to show, all
you need is time
- Refinance
your mortgage. If you’re in an investment property and
are planning on (or are being forced to) hold for awhile until markets
rebound, definitely use this opportunity to get OUT of your interest-only
mortgage, especially before it re-adjusts. With the Fed continuing to cut interest rates, you might be able to
get yourself into a 30-year situation with the same or lower payments. And, in case you’re wondering, thirty
years is DEFINITELY enough time for you to get your money back on your
investment.
- Buy on
sale! If you’re one of the lucky
few who still have disposable income, you are just on the cusp of some
really great deals, both in real estate and in the stock market.
- Learn
and Grow. If you made a misstep
during the bull market, now is certainly not the time to beat yourself
up. Remind yourself that next time,
you will have “been there, done that,” and will make the right decision! If lack of education was your problem
this time around, then by all means take this opportunity to enroll in a
course or get some books. Next
time, YOU’LL be one of the ones who know!
- Keep
Your Job. If you’ve got a
high-paying job in a secure sector of the economy (meaning you’re not a
mortgage banker), think about staying there for awhile, in order to build
up savings. If you’re thinking of
retiring but can wait t a little longer, definitely wait until your
portfolio is worth more.
- Take
the Money! That said, if you’re 65
or over, we would definitely recommend taking your Social Security
allotment, and not taking the ever-so-tempting option of deferring it so
you’ll get more money. Since no one is sure how long Social Security
is going to be around, we would recommend taking the money! If you don’t need it, stick it in an
interest-bearing savings account, or buy some no-load iShares mutual funds
with it. Or, heck—sew it into your
mattress! At least you’ll have it
and not Uncle Sam!
- Think
About Gold. Ken Smalz recommends putting 10-20% of your
portfolio in gold to ballast against economic turbulence (like what's
likely on the horizon). Also, it’s
cool to say “I have gold in my portfolio.” http://www.money-zine.com/Investing/Investing/Insuring-Your-Finances-with-Gold/
- Pay off your debt. Hey, if the economy's going to be going up and down, what you want is STABILITY. Review your expenses, and get rid of anything that looks like it's dragging you down (like a too-expensive car, or real estate misstep). Pay off high-interest credit card debt. Get yourself in a good position to wait things out!
