10 ways to prepare for the next crash
The economy has gradually rebounded since the wheels came off five years ago, but it’s only a matter of time before the next downturn. Here are some ideas for bracing yourself.
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No more living large on borrowed money - time to get real with the numbers!!
2. Pay off your toxic debt? Go ahead and pay off all your debt, toxic or not. The ultimate goal is to retire, right? Retirement is much easier if you don't have any debt.
3. Reduce must-have expenses to 50% of take home pay? Good advice.
4. Identify other costs you can cut? Yeah, and go ahead and cut them until you pay off your debts.
5. Improve financial flexibility? Good advice.
6. Generate multiple income streams? I've been shouting this from the roof-tops for years now. This is the key to financial security and retirement. Wealth is not measured by the alleged value of your assets, but by the consistent cash flow your assets can generate.
7. Review asset allocation? Yes, but not how they mean it. Expand your mind and think about this on a larger scale, not just stocks or mutual funds. Look at all your assets and figure out which ones are making you the most money, and which ones are costing you the most money. Hint: For many people, their house is their largest asset, but it usually doesn't generate any revenue and has a lot of associated expenses. Wouldn't you be better off if your largest asset was actually generating positive cash flow?
8. Stock your pantry? Yup. Get a couple of RubberMaid tubs and fill them up with extra food. If a bag of rice is on your grocery list, buy 2 and stick one of them in the tub. Same with pasta, canned goods, etc...
9. Invest in yourself? Yup. See #6.
10. Have a plan B (C&D)? Yup. See #6 and #8.
This is not preparing for the next crash. This is standard economic advice - save more, pay off credit cards, blah blah. Stuff you can get from Suzy Orman. I want to know when would be the right time to get out, where to pur money outside of equities, what econ segments gained in the last crash. The people who got hammered in the last crash were poor or modest-income investors, as we bailed out the rich.
I already paid off my credit cards and I save as much as possible. But I'm not rich, so I won't get bailed out in the next crash. What can I do to protect myself? That's what I was hoping to hear.
How to prepare for the next crash?
Given that the next crash will be devastating considering the precarious financial house of cards:
Get the cash out of the banks... recall Cyprus. Put into something you can eat, trade or fire with. When you have enough of that stuff, the balance into gold.
Get out of bonds.
Get out of stocks. If you won't do this, then move into defensive stocks, away from the high Betas.
Save up a few months worth of payments for that 120-month Mercedes loan or hide it well.
The rout in the bond market will kick this disaster off. The Fed is losing control and is stuck between a rock and a hard place. Damned if they taper, damned if they continue.
What next crash? We're already in part II, some people just don't pay attention. The massive QE's are killing Main Street with higher inflation and humungous national debt. The stock markets rising and so are estate values, seems we've been through this before....
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