How to Prepare for Any Financial Disaster

How to Safely Invest, so You are Prepared for Any Disaster  such as The Greek Debt Crisis

photo of greek crisis

People ask me what I think of Greece Debt Crisis? I will answer this as I have done each time skittish investors started panicking because of some kind of global crisis and even here in the US; let’s start with some basic questions.

Q: Are you going to have still to pay your utility bills if Greece goes bankrupt?

A: Yes

Q: Are you and billions of other people going to put gas in your car?

A: Yes

Q: Are you and millions of other people going to pay AT&T or Verizon mobile bill?

A: Yes

Q: Are you and millions of other people going to use still your Visa or Mastercard?

A: Yes

Q: Are you and millions of other people still going to eat?

A: Yes

Q: Do thousands of farmers are going to still grow food? 

A: Yes

Q: Are you and billions of other people still going to drink water?

A: Yes

Q: Do millions of people still have to keep taking their life-saving medications?

A: Yes

Q: Are companies like CVS, Walgreens, and Wal-Mart, still going to need buildings to sell medications and other stuff to people?

A: Yes

Q: Will the freight trains still have to move tons of freight of goods and produce that hundreds of millions of people need across the USA?

A: Yes

Q: And even right down to the very basics; are you and tens of millions of people going to use still the bathroom each day?

A: Yes

Q: Are you invested in companies that offer products and services that I mention above?

A: No! Then you do need to worry!

So let’s summarize; if you invest in companies where millions and millions of people have no choice but to use their products and services, then in the long run you don’t have to worry. It’s really just that simple.

Remember: Warren Buffett invests knowing that they may close the stock market for ten years, and he is right–the government can do this.

But, if all or most of your investments are in mutual funds such as bond or stock funds, then you should worry because most of the armchair investors are going to sell their funds as soon as the media start broadcasting and focusing on any crisis.  And the portfolio manager of your funds has no choice but to sell his underlying holdings to get cash to pay the people who are panicking which, in turn, will drive your portfolio down really fast to where you will lose money.

The irony of being a mutual fund manager is thus; when he/she really needs people to invest so they can have money to buy stocks that are now on sale, that is the very time he/she is forced to sell even more of these same beaten down stocks to pay people who are screaming for their money. And after a long time when things are good again, and all the stock have rebound people will once again start investing again and, he will have cash, but he is forced to buy–at the top.

On the most important questions of all is; do you have all (100%) your money invested in the stock and bond markets.

If yes, then you should truly panic!

The money you need now and for next five years should never be invested where it’s at risk, it should be in something that is in a fixed or guaranteed investments or just simple plain old cash.

Also take a lesson from intelligent investor never, never, have all your money invested at any time.

Keep at least 30% of your portfolio out of the market at all times so you have money for emergencies and can also to take advantage of buying opportunities when a crisis like this comes around, because this is guaranteed to always happen.

Believe it or not, Safer Investing is really simple.

If you did your homework and invested right in the first place by doing your research and reading by a book such as, “Simpler, Safer Investing: How NOT to Lose Money, Over 110 Years of Investing History Cannot Be Wrong” by Sherwin Presley Brown, you learn how to invest in profitable monthly and quarterly dividend-paying companies and have them enrolled in a  DRIP (Dividend Reinvestment Plan). 

Learn to see a down market in a good light. You will dance with the Bears and run with the Bulls. 

In addition, one of the key fundamentals of Safer Investing is a down market (a stock market that is correcting and even one that is crashed is a very good thing). Just a reminder: All investment markets have ups and downs—and you need a down market to make really good money. If you plan well by keeping the money that you’ll need within the near future (one month to thirty months—see buckets of money notes in my book mentioned above)  out of the stock market at all times, then you should welcome a down market. You can buy shares a lot cheaper, and your dividends will be reinvested at much lower prices.


Bonus Question:
When another country or other parts of the world are having financial trouble, such as Greece, which is the one county that investors run to with their money for safety?


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Sherwin Brown

About Sherwin Brown

Sherwin has been an entrepreneur since he was twelve years old. He currently teaches, writes, and speaks to people about how to improve and safeguard all aspects of their financial portfolios.