Financial uncertainty comes in many forms. It can be caused by a recession or fiscal crisis rocking your savings and preventing you from reaching financial goals you had saved and planned for, whether it’s retirement, buying a house, starting a business, or helping your kids through school. Financial uncertainty might also be the result of personal situations, such as unexpected illness and medical expenses, unemployment, caring for aging parents, or loans you can’t keep up with.
Your investments can help you survive financial uncertainty. There are a few things you can do today to help prepare you for rainy weather in the future:
- Save up an emergency fund
- Diversify your investments in gold
- Rebalance your portfolio
If you want to learn how to survive uncertainty, learn about the benefits of investing in gold bullion today.
Your Emergency Fund
Financial experts say that your emergency fund should be around three to six months of expenses (but restrict that emergency fund to only $1,000 if you’re paying high-interest debt like credit cards). More than that and it may be overfunded, costing you the opportunity cost of investments you didn’t make. There are some factors that might prompt you to overfund, such as setting money aside for education in order to retrain in case your entire industry goes through a major restructuring.
However, it may make equal sense to put your money into an asset that’s highly liquid, anti-inflationary, and resilient, such as gold. If you never run into a personal crisis, that asset appreciates in a way cash does not, but it’s easy to sell when you need it.
Gold Investments in a Crisis
Gold thrives in a crisis. When the stock markets are down, gold prices thrive. It’s a great investment whether you’re facing personal financial uncertainty or the whole economy is going through a rough patch. Since these two often happen in tandem, allocating a portion of your portfolio to precious metals can go a long way toward bailing you out of a tough spot.
In a personal rather than economic crisis, a precious metal is an easier asset to let go of than other investments. Since it generates no interest or dividends, it makes sense to sell gold before you sell stocks or bonds that provide those benefits. It is highly liquid and easy to exchange, no matter what state the broader economy is in. The last thing you want to happen is be forced to sell stocks at a loss just because you need the money now.
The odds that you personally will become unemployed are much greater in a recession, a time when gold tends to have gained and stock prices have seen deep cuts. Even when you’ve hit hard times personally, you will come out with healthier finances if you keep your head and stick to the age-old maxim: buy low, sell high. There is a big difference between selling stocks during a market panic and selling stocks that are performing poorly in regular economic conditions.
Rebalance Your Portfolio
In the aftermath, it’s time to rebalance your portfolio. It may be needlessly expensive to sell anything to rebalance your portfolio to the allocations you want. Part of your recovery will be saving more to rebuild your portfolio. Replace your emergency fund and any assets you cashed in to bridge the cap first. That can mean also mean rebuilding your gold supplies. Gold can help you through the tough times. Be prepared and invest in gold today.