Nov 3, 2009
How To Prepare Your Retirement In A Failing Economy
Don’t get caught in the herd mentality. If you are uncertain as to what to do find out what the herd is doing and then do the exact opposite. Following are a few tips and hints you may find useful to prepare your Financial Future in a failing economy:-
What You Shouldn’t Do In A Failing Economy
Bail out. If you are like everyone else and running around selling your stocks and equity mutual funds now you are being really silly. Because the values are very low all you will end up doing is guaranteeing that you will a turn paper loss into a real one. After every recession there comes the next boom. Just like the sun rises in the east and sets in the west you can’t change it so you are far better off staying the course during times of economic uncertainty.
Stop saving. Dollar cost averaging into your making periodic contributions into your investment accounts, despite where the market is heading is still excellent advice. By making regular contributions to your retirement or savings accounts you are still following a sound strategy and keeping good financial discipline, so there is no reason for stopping them now.
Speculate. While lower prices for investments are around opportunities will abound. Betting against the market can very easily get you into deep trouble. Especially as we are experiencing wild swings now. It is usually far better to make small, measured investments rather than large, hasty ones which are intended to make a quick killing. If you are on the internet be especially wary of tips by e-mail, to sell certain stocks, commodities, and other goldmine opportunities
Take on new debt. Be careful about acquiring new debt. Economic downturns can affect job stability and investment income, making it difficult to determine how much debt you can handle. If you must borrow, say, to put a child through college or make an emergency repair to your home, be doubly sure that you’ve examined all the options and risks, especially if you’re planning to use the equity in your home.
Stop living. Although these times demand extra caution, there’s such a thing as over-reacting. Whether it’s buying gifts for the holidays or taking your family on vacation, life has to go on. And some cutbacks can have negative consequences for your wallet, such as putting off maintenance for your house or car or canceling insurance policies. So don’t overreact. Instead reflect carefully and, where necessary, adjust.
To create a stable financial future you need to do something different. Do you have a Plan B? I am not talking about working an extra job. Think smarter. I am encouraging you to not scared but to look at starting or ramping your Plan B. It has never been more critical than it is right now to really plan how you earn your income.
