Who would have guessed that Hostess Twinkies would be a victim of the economic turndown?
The theory of “Too Big to Fail” has been proved wrong by both the banks and many people’s favorite snack food company.
How can an individual feel secure in today’s economy when icons of American culture are disappearing? Here are three tips you need to know in order to lessen the chances of your having to file a bankruptcy claim:
- You may feel tempted to look for short-term trades or follow some technical trading program to make a quick buck. But remember, when the markets rock, the con men start to roll. Resist investing in deals that guarantee high returns. There is no such thing! In today’s economy, with ultra-low interest rates, you cannot get guaranteed high returns. Ask yourself if you are falling for a Ponzi scheme and be careful where and how you invest your money. Remember the fundamentals about savings and diversification and build your nest egg slowly. The path to wealth is never quick and easy.
- Does it look too good to be true? The bubble you invest in now could pop any minute. Do you know why people bought internet stocks hours before the crash in 2000 and why they took huge loans to purchase properties right before the collapse in 2007? They went into these markets because they looked good. They really looked good! Even today, if you see an investment that has jumped in the last 12 to 36 months, dig deep in your inquiries to confirm that you are not investing at the end of the party.
- Worry about inflation because it can really hurt you. Even 3% inflation will cut your buying power in half over 20 years. A 65 year old who pays $5000 per month for living expenses will need $10,000 to buy exactly the same goods and services when he hits 85. Invest your money in assets that can at least keep pace with inflation if not outperform it.
Chances are you spend a lot of time researching options for your vacation, hotel deals, rental cars, and restaurants. You owe it to yourself (and your future) to do just as much due diligence, if not more, before you invest your money. The financial crisis manifests itself in the economy in different ways, if you properly prepare yourself you may be able to minimize the challenges a negative economy has on your pocketbook.
A good defense is a good offense.
By following these three tips, you can contain the effects of an economic meltdown on your personal finances. For more tips on how you can help build a a secure financial future, read “Five Top Tips for Making It Through a Financial Crisis.”
Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.