What Do I Do Now?

This article was originally published for RC Peck’s Fearless Wealth Newsletter in October 2008.

It may be hard to believe, but you can make money in the current financial situation.

Yeh, right! You’re kidding me. The bottom’s falling out!

It’s true that we’re experiencing unprecedented times, and I admit that the situation is extremely stressful. It can be really, really scary to make choices and decisions right now, and the temptation is to be passive. “What can I do? There’s really nothing I can do right now.”

I think it’s dangerous to cling to those thoughts and feelings of helplessness. It’s not the time to be stepping aside and letting things just unfold.

Remember. Making no choice is a choice. The stress is high right now because of multiple pressures. Take the normal stress of having to make decisions about money, add the urgency caused by deteriorating housing and stock markets, and you’ve got a real pressure cooker.

What happened to get us into this mess? I’ll put 90% of it on government and Wall Street. Government was looking the other way while Wall Street was borrowing and leveraging to the moon. The financial markets were completely out of control.

I think we’re looking at a bad recession, at best. The symptom of the pain we’re in right now is falling housing prices, falling stocks and falling available credit.

I said I put 90% of the cause of our situation on government, and I put the other 10% on you and me—on Main Street. I include ‘Main Street’ because I sometimes have the feeling that Americans will do anything to avoid short term pain, which only leads to long term suffering.

The best quote I’ve heard so far that kind of describes what’s going on right now is from Bill Bonner He said,

“A correction is equal and opposite to the deception that preceded it.”

There are four steps you can take right now to protect your money:

  1. Make all future 401(k) contributions to the most ‘cash-like’ investment choice your 401(k) has to offer. For most this will be a money market choice.
  2. Do not add to any stock positions. Do not attempt to go bottom fishing. This is not the time. Bear markets have a habit of falling much farther than anyone could have imagined.
  3. Get a position in gold. Put (at least) 5% of your portfolio in gold. Yes, I know it’s down but this is only temporary.
  4. Horde Cash! We are going into a long cold winter. You will need liquid money when Spring arrives.

These are four steps you can take right now to help build your net worth in this market.

The fifth thing you can do is join me at my upcoming webinar “Really Smart Money.” It happens the second Tuesday (7:00 p.m. Pacific Time) of every month. The link is here; www.FearlessWealth.com if you are not already on the ezine.

To building your net worth during bear markets,
RC’s Signature