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We’d all like to believe that it’s impossible for the financial market to collapse again so soon after our last recession, but all factors point to a crash coming soon. While 2008’s financial crisis was linked to subprime mortgages, John Weeks, economist and professor emeritus at the University of London, predicted in a recent Vice article that the next bust will be in the commodities markets, like oil and gold. Overinflation in the stock market isn’t helping matters either. What can you do to prepare?
Manage Pension Plans
Pension funds are invested under the assumption that value will continue to increase. In the market crash of 2008, many lost 40% or more of their pension value because that wasn’t the case. In the interest of hedging your bets this time, consider transferring funds to safer investments like bonds and CD’s, rather than keeping your nest egg in stocks.
Invest Only What You Can Lose
The thing about investing is we all know it’s a gamble to a greater or lesser extent. Much like when you visit a casino, it’s important to only put what you’re willing to lose on the table. If you’re close to retirement or already in retirement and depend largely on investment return for your income, consult with a financial planner to figure out how best to protect and maintain that income for years to come.
Avoid Export Investments
One of the biggest global contributors to the pending slump is the development of the Chinese economy. China’s demand for global imports is rapidly decreasing as their market becomes saturated. Where will we export to next? This is a question which might not have an answer; however, understanding that the demand for exports is decreasing can inform your investments in certain securities and companies.
Keep a Safety Net
Under no circumstances should your entire savings be in investments, nor should you be completely dependent on investments for your income. Why leave your well-being up to chance? If you’re looking for funds to keep in reserve, or want a little extra money to play with, consider a life settlement. In a life settlement, you can sell a life insurance policy you no longer want or need for a lump sum of cash that’s usually greater than the cash value amount. Visit our calculator to see if you qualify.