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Author: StockGoddess Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Re: What To Do? Date: 6/14/2012 12:00 PM
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I don't know what to do with people who try to prepare for things that have never happened - I try to expect what has happened, historically. That means that while I may not be prepared for the alien/zombie apocolypse, try to think what you'd do in terms of flood/famine/war/pestilance.

If you live on a hill (and America has never had a famine) then just think of what you'd do in war-time, or more likely (we're hard to fight because we're so spread-out) in a major economic downturn such as we've experienced lately. It's the only thing Americans have encountered on American soil in the past 200-300 years, so it's all you really NEED to plan for.

Since that down-turn has up-turned, what did you learn from it? Basically to keep enough liquid or near-liquid to live off of for a year or two, and stand-pat on the rest. Even the great depression ended eventually. Diversification. DH had family in Columbia which experienced huge inflation in the 80's due to drug dealers throwing around wads of cash sent to them via Americans with a yen for nose-candy. Damn coke-snorting yuppies destroyed their economy. How do you survive a worst-case 100% inflation? Buy stuff that matches it. TIPS, or perhaps rental properties if you don't mind managing. They lived off of rentals, whose rent they could raise as prices went up. Rentals as inflationary hedge. Some moved, too, to a more stable country (here).

Global stock diversification (which could be just US companies that sell globally), bonds, TIPS, real estate.

I have one rental - it cost me less than a car. $15K down, rent it till it's paid for. It's not rocket science, really. In 3 years, when it's paid for, might get another. Rentals are a pain, granted, but unless you buy something pricey during a bubble or buy an iffy neighborhood they're pretty secure. Just vet your tenants thoroughly.

SG "musings"
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