The major news right now is the so called credit crises. Banks aren't lending to each other so the government is going to spend close to A TRILLION dollars to fix the problem. It's depressing but we can't dwell on it. (Just remember if your congress(wo)man voted for it in November, voting is the best revenge.) What we need to do now if re-focus on the financial matters we can control.
I know you're either upset, scared or confused right now. I understand that completely. The media (old media) wants you to think the next Great Depression is around the corner. I believe the likelihood of that is low. However, we should prepare for it.
We should save and invest like the Great Depression is around the corner. Why? Because it will keep our financial lives in order.
If you knew the Great Depression was coming in 5 years, would you buy a house with an adjustable rate mortgage that you couldn't afford, with the hopes of being able to pay for it in 5 years. Of course not, you know the depression is coming. Now do you see my point?
You need to keep a good share of your wealth in fairly liquid investments. For me , my comfort zone is 10 to 20% of my total assets. By liquid I mean CD's, Bonds and savings account. Anything that can provide ready and safe cash in times of trouble.
Invest Cautiously. Keep speculation to a minimum. Remember, if you know a depression is coming, you want your money in good strong companies with a proven track record. Internet IPO's (or IPO's in general) are out.
You don't have to be Warren Buffet. You just need common sense. Invest safely and wisely. Save as much as you can. Don't spend foolishly.
I'm not really worried. I have a pretty good job, a lot of savings. My stock market investments may go down, but they'll recover at some point.
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Comments
1 Comment so far
All good advice…for the vast majority of people following a debt reduction and savings scheme (ala, Dave Ramsey) is the best way to go right now. I know I am. Like Warren Buffet (with his most recent investment in Goldman), I am also on the look out for undervalued assets right now…assuming that I feel reasonably sure that I can hold them long term.
For me, the jury is still out on the bail-out bill. Only time will tell if this is a blantant cash grab or beneficial to the US taxpayer.