How to Diversify Your Wealth in a Recession

How to Diversify Your Wealth in a Recession

A recession can be very terrible if you aren’t prepared for it. But instead of being like Chicken Little running around and yelling “the sky is falling, the sky is falling!” there is something you can do about it. In this article, I’ll give an idea of how you can diversify your wealth in a recession. This can also be applied even when you’re not in a recession.

Difficulty: Moderate

Instructions

Things You'll Need:

·       Discipline

·       Patience

1.      Step 1

Prepare your short-term (which I define as anywhere less than 1 year) assets for emergencies and great opportunities. These would be cash under your pillow, your bank checking account, savings account, money market account, etc. that you can take out anytime you need it. Put around 10% of your total assets/wealth in a checking + high yield savings account. Check out Bankaholic.com, Filife.com, or Moneyaisle.com for the highest paying bank. I’m currently using Washington Mutual bank as my high savings account of 3% APY currently. An alternative to this is a credit union paying 6.31% APY for a checking account if you meet the requirements. Go to midwestreward.com to check it out.

2.      Step 2

Build your second short-term (less than 1 year) assets for diversification. To do this, either open another bank to buy CDs (Certificates of Deposit) where you don’t have to deposit longer than 1 year & the bank pays higher than your high yield savings account, a Treasury Direct account (at treasurydirect.gov) to buy Treasury Bills from the U.S. Government (which is safer than FDIC and there’s no tax), or have small FDIC insured banks bid for your money at moneyaisle.com. I tried them all and I like to buy the 28-weeks Treasury Bills from the U.S. Government the most. Put around 10% of your total assets/wealth in your second bank account to buy CDs, Treasury Direct account to buy T-bills (Treasury Bills), or Money Aisle account for live auction bank CDs or high yield savings account.

3.      Step 3

Invest around 15% of your total assets/wealth in precious metals (gold, silver, platinum, palladium, rhodium, etc.) for the mid-term (1-5 years). Did you know that the Federal Reserve just prints money out of thin air? This means the dollar has practically no value once the majority of the people find out about it and thus, you should put some of your wealth into precious metals. Also, as more money is printed out of thin air, the dollar loses value and precious metals go up in value. So start investing in precious metals today. Check out my article “How to Invest in Gold and Silver” to get started.

4.      Step 4

Invest around 25% of your total assets/wealth in stocks (individual stocks if you’re an advanced investor, ETF (exchange-traded funds) or Hedge Funds if you’re intermediate, and Index Funds or Mutual Funds if you’re a beginner) for the mid-term (1-5 years). You can also hold the stocks for the long-term, but since stocks are easy to sell it’s fine for the mid-term. Start today by opening either a non retirement account or an IRA (Individual Retirement Account). Cheap brokerages for investing in stocks are Zecco.com, MBtrading.com, and Successtrade.com. Some decent brokerages for investing are Tradeking.com, Scottrade.com, and Just2trade.com. Very known and safe brokerages are Fidelity.com, Vanguard.com, and Troweprice.com. Read my articles “How to Investing in Stocks” and “How to Start an IRA” to get started.

5.      Step 5

Invest 25% of your total assets/wealth in real estate for the long-term (6+ years). You can do this by buying your first home, second home, more houses, apartments, land, and other real estate development. Try to get the cheapest mortgage rate that you can. Go to bankrate.com, smarthippo.com, or a local credit union to get the best/cheapest mortgage rate. You should also check your credit score and see if you need to improve it before you apply for a mortgage loan. Go to annualcreditreport.com, open a Washington Mutual credit card at wamu.com, or go to creditkarma.com to get your free credit score and report.

6.      Step 6

Invest around 15% of your total assets/wealth in your business(s) or yourself for the long-term (6+ years). I believe that everyone needs to start a business in their lifetime. You can start when you’re in high school, in college, after you graduate college, or even when you’re in your 50’s or 60’s. Starting and running a business will learn a lot, which means you are investing in yourself. You should also invest in yourself by buying books, personal development CDs/tapes, going to seminars & workshops, experimenting personally, and many other ways. I believe that learning is a lifelong lesson, meaning you should constantly learn & improve yourself as a lifestyle and not just when you’re still in school.

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