De-risk Your PortfolioEliminating risk from your investment portfolio is no longer as easy as moving money from stocks to high quality bonds. Investments that were once considered safe now appear vulnerable.
A perfect example is American International Group. Formerly the world’s largest insurer, the once-AAA rated company nearly brought down the banking industry when it found itself on the cusp of bankruptcy.
When a crisis hits, bond and equity markets can become irrational. In order to combat this, avoid these investments and move your cash into liquid instruments like an FDIC-insured money market account. You also want to make certain that your deposit does not exceed the insurance limit.
If you have significant assets, you may find it difficult to withdraw your entire balance in cash. Many banks are only obligated to pay you an equivalent of cash. For instance, if you ask for $50,000 in cash, banks can deny your request and instead offer you the same amount in the form of a bank check.
If you believe that you’ll need hard currency, it would be wise to get a head start and accumulate funds over time.
Diversify Your AssetsOne of the most overlooked aspects of financial disaster planning is diversifying currency. History is littered with examples of nations whose currency was devalued into oblivion.
Fiat money is only as strong as the government that backs it. For example, if you believe that the United States’ excessive borrowing could become a serious problem, it would behoove you to open banking accounts that would allow you to exchange your dollars for another country’s currency.
Another way to hedge yourself against a devaluing currency is to buy a hard asset that can be used as a medium of exchange, such as gold or silver coins. One thing to be cognizant of is transportability. It may be difficult to travel with significant assets across borders, especially by airplane.
If you believe that you may need to leave the country, you should open accounts abroad. Many foreign banks will allow you to open an account online as long as you can meet minimum deposit requirements and send copies of personal documents such as a valid passport.
In addition, programs like the Perth Mint will sell, store, and ship to you either your precious metals or its value.
Find a LifelineDisaster planning begins with creating an emergency fund. However, when the cost of an unexpected event depletes your savings, you may be left to choose between car payments, mortgage payments, and food.
The best solution to plugging a temporary gap is to utilize a financial supercenter such as Tracy Rawle’s Check City. Express cash loan centers allow you to turn future paychecks into cash today. In addition, you can use your assets or current employment as leverage to obtain short-term loans on the same day that you apply. This strategy should not be viewed in the same light as a credit card. Rather, this source of funds is an excellent way to solve cash flow issues that you expect to be resolved in the near future.
How To Find the Right BalanceDetermining how to best protect your finances can be emotionally draining. Protection usually requires that you take something away from another area. It could mean saving instead of spending on a vacation, or forgoing the possibility of an early retirement by moving money out of the stock market and into safer assets.
Nothing feels better than the peace of mind in knowing that your loved ones are protected in the event of a disaster. Focusing on how you would like your family’s future to look, and that of generations to come, can help guide you in making the right decisions today.
Meghan Belnap is a freelance writer who enjoys spending time with her family. She loves being in the outdoors and exploring new opportunities whenever they arise. Meghan finds happiness in researching new topics that help to expand her horizons. You can often find her buried in a good book or out looking for an adventure. You can connect with her on Facebook right here and Twitter right here.