How to protect yourself from the next global economic collapse
1. Have a “Start Over Again” (SOA) Fund
These are liquid assets that cover the costs of starting your financial life over again if all your intangible assets (stocks, bonds and cash held in banks) disappear. The amount of money depends on your personal situation. As an employee, you should have at least the amount of 1 year’s salary. If you own a business, you should have enough to start it all over again. Your fund should consist of gold coins and cash stored in local safe deposit boxes or home safes. Don’t rely on assets in a bank account or even bank safe. The banks might not be open.
2. Invest in “Earth”
If you can afford to buy rental real estate, you should do so. Rental real estate is an excellent source of regular income. When the purchase price is right, it can be very attractive.
3. Get rid of your risky stocks in a portfolio
Review your stock portfolio to make sure that it is safely invested. This is not the time to be overly speculative. Try to buy only big, cash-flowing businesses sure to weather any “black swan” event in the markets. Investing this way will ensure that your equity holdings will survive a large-scale financial collapse. And if there is a collapse, the decreased stock prices of these companies will present a great opportunity to pick up more shares on the cheap.
In principal reduce risk. Focus on quality and income and use diversification, position sizing, stop losses and insurance. But do not panic and get out of your stocks, bonds and real estate completely. And don’t put all your money in gold or bitcoin, or even do nothing!
Do not rely on the government to fix the problem. The only person you can rely on is yourself. By taking action now, you won’t have to worry about being caught off guard. In the highly unlikely scenario of a total financial meltdown, you will already have most smart decisions made.
Sven Franssen