Monday, September 16, 2019

Is a savings account the saftest investment for a recession?

Forget all the analysis (There' a Recession Coming! There's a Reason Coming!)* and all the “mix” of ideas depending on your “circumstances’) and / or rationalization or reasons behind savings counts or investments or burying your gold coins in the back yard.

There is a very basic principle (which has been around since at least the invention of writing) that most people don’t follow. And it's so simple. Forget recessions and all the super analysis by talking heads and financial reporters. And especially those who want a recession because they think it will make Trump lose an election (pathetic humans who wan to see millions suffer because they hate one guy).

Most economists, like weathermen, are wrong on predictions, especially when it comes to your money. The number 2 requirement of any financial plan is to have a saving accounts with emergency fund. (Number #1 having a budget). Forget the rest of the stuff for now -- if you don’t have this emergency account, in a savings or money market (where you can get your funds with 24 hours without affecting our retirement goals.) start one now. Like today. Not tomorrow, and not next week, or “when I get my next raise at work.”

If you don’t have an emergency fund, your first goal is $1,000 or equivalent.

If you do have one, you’re better off than 60 percent of Americans, and I’ll bet this is close world-wide. A recent poll says that most American would have to borrow money to replace their hot-water-heater. Pathetic. Says a lot about our educational system.

Not building that emergency fund (not investment fund) to at least 30 days of living expenses, is a disaster waiting to happen. I’ve been working on mine for 25 years and have 12-months. Overkill, probably, but I’ve been putting away 10 to 20 percent of my income for investments in the mean time. Something will happen. Going in debt will dig you a deeper whole. And you know what the Greeks say: “Shit happens." Unless you’re in Greece. Then it’s “You know what the Chinese say?”

Forget this this basic rule, and you’ll struggle to get ahead of the game.

So don’t worry about recessions. You have no control over these. Control and take charge of what you can.

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