My investment advice for those who ask “what should I do now, knowing the economy is going over a cliff in the near future?” – outlined below is what I feel is the safest bet for all. It’s extremely high level and given the nuances involved, feel free to comment below or PM me for specifics. Of course, depending on your personal risk tolerance(s), you of course may choose different percentages than those outlined below…
1) up to 50% of your cash reserves (including retirement planning): put it in whole life insurance (specifically *cash-rich policies* that stretch the cash value as high as possible legally without MEC’ing) using a mutual life insurance company like Northwestern Mutual. If you are not in good health or over 45 years old, then you do NOT want to take out policies on yourself; you want to take them out on individuals with high life expectancies and non smokers. Also to be clear, this is NOT technically an investment but is a wealth preservation tactic that more than keeps pace with inflation and more so is a hedge against the coming recession. It’s then also possible to practice IBC if you wanted to later—major perk! NB: this fund will be denominated in dollars though so all gains/principal subject to inflation (which will be a MAJOR issue in the next 5-10 years once the fed begins to monetize the debt). So to counter this see next 2 steps…
2) move to international funds. 20-30%. get out of US equities. Completely. This means no small, mid, or large cap US funds or any major American companies unless you are open to speculation and only if they have large dividends. But my advice is to exit the market completely or at least more than 75%+ and put reallocation into funds that are not subject to the risk of the USA market collapse. Meaning international funds are actually safer (contrary to popular opinion/belief) than USA markets. If you don’t agree with that approach then at least put $$ in international bond funds (eg EPIBX). Other good international mutual funds include EPASX, EPDPX, and EPIVX
3) remaining assets: precious metals. 20-30% – buy physical gold. Store it yourself or with a holding company; I personally use the Perth Mint in Australia and once you have your money in there it’s remarkably easy to use. Where and when possible (re)allocate your mutual funds so you don’t have to take a hit (vs pulling out of a 401k for example) and allow for gold and silver etfs (this is often allowed with certain mixed fund allocations). If not permitted then stick to strategy in #2 for your 401k and also invest “on the side” in physical gold and silver (40% of the total allocation) and a 60% mix of gold/silver etfs and gold mining companies. Reason: when the dollar collapses and/or becomes subject to hyper inflation commodities and precious metals will skyrocket and be worth significantly more—yes I know some will say historically they have under performed; well we are going into a recession of historical proportions.
4) 5-20+% (based on time to retirement and risk tolerance): Speculation. Feel free to speculate and gamble on USA funds or US mutual funds if you want (“roll the dice” at the wall street casino). But this should be a minority of your money not with retirement funds. I personally choose to speculate (as I’m still a fair ways away from retirement) at a percentage closer to 20% but that’s just me. I also don’t speculate on US markets at all but bet against them by shorting. But that’s just me and it’s not really part of my retirement planning…
As a sidenote, the book “the Dow of Capital” is terrific (well specifically chapters 9 and 10) for laying out a very specific path for “Austrian Investing” which allows for strategies like “tail hedging” using short term puts with 0.5% of your portfolio while riding the wave of the crest with some or or the rest of your portfolio. This is a far more dangerous, but more lucrative, method for profiting on the coming collapse without having to worry about the specifics of “timing the market” as it were.
Oh, lastly: the other thing you may do in periods of uncertainly is invest using a partial side fund in “recession proof” stocks like those below. I personally am choosing to wait until AFTER the market collapses to do this, but a prudent investor may demonstrate the downside to waiting may outweigh the risks. That said, while this strategy may allow for less of a blow in the coming collapse, it will not completely insulate you. https://www.simplysafedividends.com/intelligent-income/posts/939-20-best-recession-proof-dividend-stocks
NB: read the articles penned by me—posted prior to this one—which cover how to best short the market for maximum profit AND why the economy is currently poised for disaster.
