The old joke goes if you aren’t panicking you just don’t understand the situation. We can all relate to that and more so now than ever. The cat is very much amongst the pigeons and chaos is certainly abroad.
It might never happen but most of us know that doing nothing is as poor an answer as planning to flee. We are most likely already in the best place to be, if the owrse came to the worse, but for many that doesn’t help them stop gnawing on a bone of worry.
So is there a masterplan that can offer comfort from the stress of unpredictable times one that won’t disrupt lifestyles while retaining the upside of business as usual.
But first lets first look at a couple of sobering things that crystalise why we might be concerned about the future. The past provides some good examples.
The first is an image from Wikipedia. It’s a 1-yen gold coin. Yes the 1 Yen coin used to be gold not aluminium. There used to be 100 Sens to a Yen too. So, you can see given enough time, pretty much anything can happen economically and usually it’s the erosion of value set off by politics. We know this which is why we are all lured into reading the news. For sure bad things happen.
Take this history of the French 5 Franc. You can see the tempo of dramatic change can be quite fast even in a highly developed country like France. Even the US one cent has gone from a big thick copper coin in the early 1800s to a tiny copper clad coin, and on to today’s rumoured discontinuation. The $1 was also a gold coin once.
So while these examples are just monetary it underlines that preparing for an uncertain future is based in an historical reality of never-ending and painful disruption and not just some pathology picked up from too much media consumption.
So is there a way to copper bottom your life and finances from bad times and emergencies without going off grid and learning how to build log cabins in remote locations with your bare hands. Happily there is.
You can cover your rear whilst behaving as if nothing can possibly go wrong in the following manner. Its all about how you configure your assets, because in the end its financial flexibility that protects.
The configuration is this: 25% in cash locally. 25% in locally held equities. 25% offshore 25% in productive assets. You can see the principle. That might be 25% of your wealth as cash in the bank, 25% in stocks, 25% in a bank somewhere far away but convenient, 25% in rental property.
You are free to play with the idea as its only really productive assets that or not liquid. Cash can be pure cash but that can also be assets that you can liquidate in a trice like stocks. Anything that can be cashed in a few days without a ‘haircut’ is as good as cash, because nothing will happen so fast that you don’t have plenty of time to adjust your liquidity profit in assets that can be cashed in, in days.
If you were comfortable with near-cash being cash, you could have 50% in stocks knowing you would liquidate chunks if the going got bumpy. Likewise, you could have an offshore broker, if you are lucky enough to find one that would take on US citizens if that is who you, and hold 25% of your offshore capital in stocks too. That would mean a huge exposure to stocks, yet retaining that ‘get out of jail’ card you may feel you need when the wrong folks win the ballot.
You might find an offshore provider happy to vault 25% of your wealth in precious metals or you might get a rental property abroad and mix and match the offshore segment with your productive asset allocation. The whole system is meant to protect you from inflation and retain your flexibility in the worst case outcomes.
With this structure in mind, even if you don’t exactly follow it, you can put the pieces in place so that if you suddenly get skittish you are prepared to ameliorate your stress because you have the infrastructure to adjust your comfort levels to the circumstances.
Of course without this structure you’ll probably be just fine, but as many people stress over the future its good to know you can arrange your affairs in such a way where you can cover the downside without going to extreme lengths.