If even the thought of a coming crisis keeps you hypervigilant day and night, it’s hard not to conjure up fantasies of watching investments crash and burn as you sit by helplessly when the economy acts up. But you can insure against the most catastrophic outcomes by playing it safe when you invest. That stated, ask yourself this question frequently: What is safe today? If you can answer without hesitation, you should sleep just fine.
Safest of the Safe
If a crisis looms, count on standard-bearers of investment products that are secure, although they may not make the most amount of profit over time. Savings accounts, money markets, savings bonds, certificates of deposit, Treasuries and 529 investment plans are bedrocks of the U.S. savings market and there’s virtually no risk involved since the nation has never defaulted on them, according to the financial resource Money Crashers. Crisis-minded investors can stay liquid by sticking with these types of accounts to be ready for whatever may come.
U.S. Real Estate
Home and property values go up and down like yo-yos, but if history teaches anything, it’s this lesson: What goes up must come down and back up again. Even real estate market crashes have an upside: Amazing bargains are usually to be had in real estate holdings when the dust settles -- even in cities known for sky-high property costs. Foreclosures, short sales and values may ebb and floe, but people are still going to buy homes after dips in the housing market. The wisest of the wise are often prepared to pay cash for a place and live mortgage payment free.
One of the reasons everything from precious metals to petroleum has remained the darling of investors over time is because commodities have traditionally provided hedges against inflation with low correlations to equities, says Murray Coleman, writing for “The Wall Street Journal.” To play it safe, become a quasi market commodities expert ready to pounce on price drops before they bounce back up. If commodities decouple from equities over time and you amass a tidy portfolio of them, you may be able to face a coming crisis with less trepidation.
Overseas Real Estate
Bone up on the King’s English, French, Spanish or Greek. There’s always a nation or two on the planet that’s become a real estate Mecca for foreign and domestic investors. For example, at one point London attracted wealthy Greek, French, Spanish and Italian investors, many of whom bought up homes in trendy neighborhoods, writes Paul Milligan of the “Daily Mail.” Tomorrow, New Zealand or Rio could be trending. Find real estate agents in cities around the globe after doing a little research to figure out where tomorrow’s property deals are to be found.
According to Ozier Muhammed, writing for "The New York Times,” a rush of money from U.S. investors periodically floods into countries like Norway when life gets dicey on Wall Street. It’s anybody’s guess which nation’s bonds will be declared the next safe haven, but if you keep tabs on Scandinavian, German, Japanese and Australian bond markets, you can observe which nations' financial products are safe buys. What to look for? Nations with comfortable surpluses, thriving economies and low unemployment. To test this investment niche, you can explore international stock markets and look for bonds issued by stable countries.
If you’ve visited websites and retail stores dedicated to selling supplies to survivalists anticipating apocalypses, you already know that this segment of society sees safe investing as exercises in accumulation. According to The Survivalist Emporium, “The Difference Between a Survivor and a Statistic is Preparation.” Investors in crisis mode likely agree. If the crisis you fear comes to fruition, the amount of food, supplies, gear and equipment you own could separate you from the rest of society, at which point cases of beans could easily become more valuable than any financial product in your portfolio.
- Money Crashers: 5 Safest Investments for Your Money
- U.S. News and World Report; Education: Consider 3 of the Safest Investments Within 529 Plans
- The Wall Street Journal: Commodities Funds Not What They Used to Be
- Daily Mail Online: Wealthy Europeans Flee Euro Crisis and Invest Their Cash in Upmarket London Homes
- The New York Times: Investors Seek Out Safer Shores
- The Survivalist Emporium
- Ten dollar bill, gold card and coins image by Elzbieta Sekowska from Fotolia.com