How to Protect Your Finances against Another Recession

purse-522622_640What will happen to my savings and wealth if there’s another recession like the one in 2008? This is a question I often get asked, and I wonder about it myself. Just recently, a friend of mine from Europe talked about Brexit. It was so unprecedented and quite disastrous to people like my friend who had retirement savings in British pounds. Brexit, in case you didn’t know, sent pound values into a tailspin.

All families must think hard in advance about how to ensure financial security in the future. When it comes to money, there are some things we can control, like spending. Then there are other things that are beyond our individual control, like economic downturns. I firmly believe that we should protect our wealth no matter how bad the economy gets.

Most people I know think that saving money religiously, in cash, will protect them in the future. This is a major misconception. Of course, you must save money for retirement, emergencies, children’s education, and so on. However, it’s important to keep in mind that if the economy collapses again, the value of these savings will plummet. Currency is highly vulnerable to market fluctuations. That’s why it’s very important to hedge your currency savings against an economic downturn.

So, exactly how can you protect, or even increase, wealth in the face of an economic collapse? Here are several tips:

Diversify Investment Portfolio with Precious Metals

If the economy collapses, some of the stocks, bonds, and other similar currency-based investments you have will lose value incredibly. Some stocks may end up even being utterly useless. However, there’s one investment option that actually increases in value if the market collapses: precious metals.

Precious metals like gold and silver are valued against the currency in an inversely proportional manner. That means that when the value of the dollar goes up, the value of gold goes down. But when the value of the dollar goes down, as in a recession, the value of gold skyrockets. Investing in gold and silver coin therefore is a great way to protect your overall wealth in case the unthinkable happens.

Spend Some Savings on Assets

Do not keep all your savings in the bank. If you have fat savings accounts, it’s worthwhile to invest this money in assets like property. Sure, if the economy goes down, the value of property can plummet. But property has intrinsic value. When you own a house, you can move there or rent if needed. So, think about buying assets that can be of use in case of a recession.

Keep an Eye on Financial News

Don’t forget to read the economic news and monitor financial markets. If the country is headed towards a recession, you will know in advance. When you know, you can quickly trade in your stock and prepare yourself for impending disaster. Don’t let something as important as economic collapse catch you by surprise.

Generally speaking, don’t put all your eggs in one basket. Hedge your wealth against a currency devaluation with precious metals. Above all, have a plan about what you are going to do in case the market crashes or something like Brexit happens.