Protect Your Money: How to Prepare for the Long Term

© Fantasista - Fotolia.com - protect your moneyYou want to protect your money.  You’ve cut your expenses and grown your income.  You are accumulating money and now want to know what to do with it.

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:

  1. having a home that is debt free and as low-cost as possible.
  2. diversifying my assets across geographies into different countries, if possible.
  3. 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!

xxxxxxx

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.

  • Sharon,
    WoW, this post is very helpful! I also believe in your financial beliefs, must especially #1, having a home that is debt free.
    Thanks for the share.
    -Seun

    • Seun, some feel they should keep a mortgage if the rate is good and they can take a deduction for interest paid. I personally feel better owning nothing on the house … or on anything else. But that’s just me. 😉

  • Alexandra McAllister

    Thank you Sharon for sharing such helpful info. I an single, a senior and am starting from zero so I doubt that I’ll have a home. Mind you, I don’t really want one. I am however, very careful where and how I spend money! I appreciate all your wonderful blog posts. Very helpful!

    • Alexandra, whether or not you have a home is a personal decision. I think we need to re-examine our old beliefs about owning vs renting, size, function, etc., of a home. So much has changed … and the old American Dream (Canadian too, I guess!) has been rewritten!

  • Yetunde Daramola

    Thank you for this really helpful post. Really practical advice. It would be nice to have a debt-free home.

    • Yetunde, we all have different priorities regarding what we do with the money we do earn … and spend. For me, owning a (simple) home outright was an integral part of my definition of peace of mind. But it’s so individual. The good news is that YOU get to define it!

  • jennyshain

    Appreciate your advice on what works & what doesn’t work anymore. Love the “My Financial Beliefs” part!

    • Jenny, so many people talk in generalities! These beliefs may not work for everyone … in fact, there’s no way they can … but at least I put my stake in the ground!

  • Barbara Becker

    Great article Sharon. Debt free feels wonderful. Thank you for sharing your financial beliefs too.

  • Susan Schiller

    Invaluable wisdom and advice about the manipulated economy and possible consequences, Sharon… information worth more than gold – THANK YOU!

    • I thought of you as I wrote this, Susan. You had asked those questions a few time, as had others. Not that my financial beliefs are gospel in any way … they’re simply mine … but I think people who read what I write about money and finance deserve to know what my beliefs are … 😉

  • Marilyn Arriaga

    I am not sure where the economy is headed but I am preparing either way.

    • My sentiments exactly, Marilyn! Few people really understand that you can do that (prepare for either way) if you’re willing to look at all options and blend the types of action you take … Good for you!

  • Janie Lalande

    Great post, thank you for the advice

  • Jessica Stone

    Great advice! I’ve learned a lot… thanks for sharing your insights and suggestions!

    • Glad you were able to find value in it, Jessica. I get so many requests for my thoughts on where things are headed, and decided it was easiest to simply “proclaim” them … although I recognize my “beliefs” are skewed for my particular situation. But most of it applies to everyone …

  • Sandi Coryell

    Great advice!

  • Carele Belanger

    Thank you for this great advice. It is important to prepare ourself.

    • You’re right, Carele, especially as our governments continue to play with the rules … 😉

  • Thanks for these great insights and information. I agree that awareness is key and that diversifying is a great way to feel prepared and connected to possibilities.

    • When you don’t know what’s going to happen, Moira, putting all eggs in one basket is a form of financial suicide. I decided that at my age (in fact, for anyone over 50) you really should be leveraging the upside and the downside. You may not win as “big” as you could, but you also won’t “lose” badly.

  • Cindy Taylor

    Thanks for your insights….indeed, it is very confusing out there in the world of money! We really do need to think creatively!

    • You’re welcome, Cindy. I hope some of that led to another round of creative thinking when it comes to YOUR finances!

  • JanetLouise8

    About 10 years ago, I had more interest in financial affairs. Going through a divorce took the wind out of my sails and I haven’t quite bounced back yet. Your article reminds me that i might want to bring my awareness back to my relationship to money. Thank you!

    • Janet, we’re all allowed to take a “time out” for awhile … but to let it go too long makes it hard to be in a good, safe place in later years. Which we all deserve. I hope some of what I write motivates to you rebuild a healthy relationship with money!

  • Daniele Holmberg

    Thanks for all of the great information about how to stay financially sane. It is always best to be prepared:)

  • Love your blog. All of this is so timely for Patrick even. He will be retiring in a couple years.

    • Hope you will share it with whoever could benefit, Anita. As you can imagine, my beliefs are just that: mine. But stating them will at least give others an idea of what theirs should look like, structurally.

  • Katrina

    Wow! This is fantastic advice. I have known for years what I should be doing but have not. So now I am working on creating the right financial place for myself. Looking forward to your blog posts!

    • Katrina, I know we just crossed paths. I’ve been writing about personal responsibility and our relationship with money for quite some time. Feel free to peruse the “Archives” tab and see if anything else grabs you! 😉

  • Angela Kay Giles

    Sharon, once again a fabulous post! I believe in everything you said. it is all about diversifying. I am especially intirgued about what you said about having your money spread in different locations.

    • Happy to talk to you about geographic diversification, Angela. Just tweak me some time on Skype, or wherever … you know where to find me!

  • Robin Strohmaier

    This is excellent advice, Sharon! I absolutely agree with you about diversification. My husband and I have definitely given thought to where the economy is headed and diversification is part of that plan. Thank you for continuing to share such useful tips!

    • Glad to see you are thinking that way, Robin. Especially as our businesses start to grow, we need to think about how to protect the fruits of our labor! 😉

  • Yvonne Heimann

    We’ve been looking into setting up a family trust to secure our assets.

  • Robin

    Great article! We’ve been diversifying our finances a bit lately, some real estate, gold and silver… but this makes me want to diversify even more, other countries is something that I’d like to look into for sure because you’re right, we need to be able to start all over, if need be.

    • I love seeing people taking proactive steps, especially stretching beyond the more obvious forms of protection. Congratulations!

  • Alexandra McAllister

    Excellent article! So helpful! Thanks, Sharon. I always learn something helpful when I visit your blog.

  • Robert Manea

    We have some money invested, but its not what i would diversified..