That’s where so many conversations with clients start these days. Women are getting the “money” stage right and are now wanting to move on to the “finance” stage … but have not had the access (or frankly, the interest) in the topic for most of their lives. What to do?
I’ve heard many online marketing “gurus”‘ say that we should totally ignore what’s going on in the economy around us. Instead, we should just focus on what is working and keep making money. That’s good advice as long as it works; it’s certainly better than allowing uncertainty to cause paralysis.
And, granted, some women are looking at recent government statistics that say all is well. After all, the stock market is booming. And unemployment is dropping. (Why those numbers look good—and the manipulation being used to make that happen—is a little more complicated than I can explain here.)
Who Is This Information For?
So the rest of this article is for those of you who feel you might want to protect your money against potential major shifts in the economy, both local and global, because you’ve worked hard to earn it and deserve to keep it.
Today, the most responsible recommendation I feel I can make is simple: diversify, diversify, diversify.
And here’s why.
None of the tried-and-true rules apply any longer. None of what we learned over the decades as economists and students of finance—about action/reaction and about how economies work—gives us the tools to project with any certainty what might happen.
So many qualified economists and financial luminaries have made incorrect projections. Not because they intended to hurt anyone … but because 1 + 2 no longer equals 3. As situations presented themselves around 2008-2009, what “should” have happened did not. Why? Because the level of manipulation of our economies is so great that today the outcomes are more unnatural than we could ever imagine.
For example, I remember monitoring successful “contrarian” investment advisors—those who typically went against the indicators in the past and who succeeded brilliantly—and the same contrarian strategies no longer worked. Why? Again, because the natural patterns of action/reaction were not allowed to take place.
And this disconnect has extended well beyond the United States to Europe and elsewhere. In a world where leaders care more about their political futures than the future of their countries, the printing of paper currency has debased all that made sense in terms of productivity, currency valuation and real competitive advantage.
The results are arbitrary and unsustainable spending behaviors by governments. (Anything to move a crisis beyond their own mandate; let a future administration deal with the consequences.) What should have already collapsed is being shored up by matchsticks. Who pulls out one of those matchsticks—and when—is anybody’s guess.
But regardless where, when and how it happens, the best thing you can do is protect your money in a way that leaves you something to start back up with, in case your economy is one that crumbles. You will need “grist” to put back in the mill to get your business going again, assuming it still provides a product or service that is needed.
So what do I believe in?
Remember, I am not a financial advisor or planner. I cannot give any specific financial recommendations, nor do I take responsibility for your decisions based on what I share. My only goal is to get you thinking and to encourage you to read, study, question, listen … and act.
My Financial Beliefs
I believe in:
- having a home that is debt free and as low-cost as possible.
- diversifying my assets across geographies into different countries, if possible.
- diversifying assets into many different classes:
- some real estate
- some bread-and-butter stocks (such as of multinational corporations whose risks are spread globally and who provide non-durable, non-luxury products that people need every day)
- some physical gold and silver bullion
- some cash
- some other things
If something does happen to the U.S. economy and/or other major economies, and that leads to a shakeout, I always want to be able to start back over with something solid. I cannot get that from government instruments or bank CDs, for example. Except for the few mega power brokers who have a head start on the rest of us, it’s unlikely that anyone will come out of a shakeout unscathed.
But if you have done nothing to protect your money, the impact will likely be far greater.
I want to continue in my place of peace of mind so I can continue to do what I do well and what I enjoy, building more and more each day.
So what if I’m wrong and nothing happens?
If the world economies defy all odds and come out of the present money-printing frenzy without any kind of crash landing, bravo! In that case, I may not have maximized my investment profits, but I will also not have risked suffering devastating losses.
And I will have slept at night in the meantime. That’s good enough for me.
Let us know in the Comments section below if you have given any thought to where the economy is headed and what you’ve done to be sure you and your family will have the greatest long-term chances of thriving!
Bio: Sharon O’Day fixes financial lives. She is a tell-it-like-it-is money expert with a successful career in global finance, plus an MBA from the Wharton School. Today she specializes in getting entrepreneurial women over 50 back on their game so they can have more money, less stress and more joy. With her “Over Fifty and Financially Free” strategies, they take actions that lead to their ultimate goal: financial peace of mind.