An economic collapse can be a recession or a depression.
A recession is a period of temporary economic decline, that’s 2 quarters of consecutive fall in GDP. It can last from 6 months to 4 years.
A depression on the other hand is much worse, with an intense negative impact on people and businesses.
The only people that won’t really feel these 2 negative economic conditions are the politicians and bankers(even though they’re the major cause).
They both have cash reserves and would continue to earn money legally irrespective of the economy.
Nevertheless, we can also join them if we plan effectively for the potential menace ahead.
Here is a list of what you can do to plan for a recession or depression – according to a new book I read titled, “The Creature from Jekyll Island: A Second Look at The Federal Reserve.”
How to prepare
These are what we can do to prepare financially:
1. Get out of debt. A mortgage on one’s home is a logical exception, provided the price is right. Borrowing for one’s business is also an exception if based on a sound business plan. Speculative investments are not a good idea in these times unless they are made with money you can afford to lose.
2. Pick a sound bank. Maintain accounts at several institutions. Do not keep over $100,000 in any one bank. Remember that not all types of accounts are covered by FDIC. Some institutions now offer private insurance. Make sure you know to what extent you are at risk.
3. Diversify your investments: You can do this across blue ribbon, over-the-counter, growth, income, large, small, mutuals, bonds, real estate, bullion coins, mining stock, and tangibles. Industries that do well in hard times are gambling, alcohol, and escapist entertainment. Study the fields and companies in which you invest. Personal knowledge is indispensable.
4. Avoid the most recent “best” performers. Their great track records are historical. They have no bearing on future performance. On the contrary, they may now be overpriced and poised for a fall. See how an investment fared over the long run—at least fifteen years—and particularly how it performed
during periods of economic downturn.
5. When investing in coins, avoid those with high numismatic value—unless you are prepared to become an expert. As with other types of investments, seek advice but don’t depend on it. The same is true for diamonds, art pieces, and other collectibles. Stay with what you know. Otherwise, you will be vulnerable in shark-infested waters where even the most experienced traders can lose money.
6. Maintain a stash of cash, including some old silver coins. The currency should be enough to provide your family with
necessities for about two months. The coins are for more severe and prolonged conditions. There is no “correct” quantity. It is a matter of personal judgment and financial ability.
These are very insightful tips and I hope you would make good use of them and prepare for what could occur anytime soon.
You can send me a DM or shoot me a mail if you want to know how I’m preparing for it in Nigeria.