Message Font: Serif | Sans-Serif
 
No. of Recommendations: 9
I've been asked several times in the last week by other retired folks about what I'm doing to avoid the potential for a total economic collapse. Some have asked, "Do you have gold?" Others have asked, "Do you think you and your wife can survive a meltdown in Europe and the US." My normal response is that I'm doing nothing different from what we've been doing since before I retired, which is buy and hold a reasonably conservative portfolio of mutual funds with Vanguard. We've got about 55% in short and intermediate term investment grade bonds, mostly on the short end, plus about 45% in mostly large cap index funds with Vanguard. I don't know what else to say or do. If there is a total economic collapse, then no paper investment will survive, and gold likely won't have any value either. Guns, ammmo, food, medicine, and the ability to grow/raise a sustainable food source are likely to be the only things with any real value, plus a few other things I'm sure. But, as far as investments, if our Vanguard equity and bond funds become worth little or nothing, then I'm sure almost everything else will be worth nothing. I do think current times are a little different from the past, because I'm not sure there's been a time in modern history where virtually every country in the world has been so far in debt and had such huge unfunded future liabilities. on the other hand, if I had to have my money somewhere, I would choose America over everywhere else, so I still sleep reasonably well even if the rest of the world is coming apart at the seams. Good luck to us all, and may god save us from politician of all sorts in DC and at the state and local levels.
Print the post Back To Top
No. of Recommendations: 0
ResNullis: I do think current times are a little different from the past, because I'm not sure there's been a time in modern history where virtually every country in the world has been so far in debt and had such huge unfunded future liabilities. on the other hand, if I had to have my money somewhere, I would choose America over everywhere else, so I still sleep reasonably well even if the rest of the world is coming apart at the seams. Good luck to us all, and may god save us from politician of all sorts in DC and at the state and local levels.

Good post. My portfolio and my musings are similar to yours, except I don't like bond funds, even Vanguard's. Also, I have opted for a wide offshore exposure. Our portfolio is mostly American Funds, so offshore-ing can be automatic. Besides which, our major US companies are all heavily involved in overseas investments, so you have off-shore exposure whether you know it or not.

I calculate we have seen inflation rates of ~5% a year since 1974, when I finished my PhD. This rate seems to be increasing.

We have more than DC pols to fret about. The world is increasingly interdependent, so that a pipsqueak nation like Greece can have serious impacts in the rest of the world. Also, our economy has largely been off-shored in any case.

We may be doomed. Like the 1930's doomed. The Great Depression was world-wide, not just the US.

Have a nice day!

Count Upp
Print the post Back To Top
No. of Recommendations: 0
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"
Print the post Back To Top
No. of Recommendations: 7
[A major economic downturn is] the only thing Americans have encountered on American soil in the past 200-300 years . . ..

You should have stayed awake during American History class. Or maybe the evening news.

The US was established via a war fought here less than 300 years ago

We here in Maryland happen to be marking the bicentennial of the War of 1812 at the moment. You know, the Brits burning down the White House, the Battles of New Orleans and Baltimore, Ft. McHenry, the Star Spangled Banner. Trivial stuff like that.

There's also the teensy disruption of the Civil War. The nation marked the sesquicentennial of its start just last year.

Sadly, we seem to have collectively forgotten what it's like to live amidst war. That forgetfulness comes in handy when you want to pick fights halfway around the globe.

Phil
Rule Your Retirement Home Fool
Print the post Back To Top
No. of Recommendations: 0
ResNullius:

Good reply.

I agree, generally. However, most of my IRA money is in equities like AT&T, GE, B&G Foods, and some others. I'm not fond of mutual funds or bonds.

Gold? We have some gold and silver, safely stashed away, but what good will ANYTHING be if everything goes to hell? For that matter, I even have some coins so we'd have "hard money", too, but would anything be useful?

Finally, we live way out in the country on a ridge, have a good supply of nonperishable foodstuffs (mainly because we buy on sale), can heat with wood (which we have plenty of) if need be, and even have our own well water (and a generator and fuel).

No use fretting too much about "the end of the world". Hell, if the asteroid comes, so be it. Or a super volcano. Or a humongous earthquake.

When we used to live in a populated area, near a likely target, we used to say that, if we heard the Russians had launched their nukes at us, we'd just pour a couple of good drinks, sit on the step and wait.

Vermonter
Print the post Back To Top