Imagine the economy collapses and the financial crisis that is currently on everyone's lips,
hits...
What do you do with your money during this crisis?
Are you prepared or do you think it will never happen?
Even if the timing is uncertain, it's better to be prepared than to be left behind not
knowing exactly what to do with your money during such a time.
And if you are someone who doesn't want to suffer a total loss during a financial crisis,
want to have full control over your money, wants to protect your finances for yourself
and your family and even improve your financial situation during such a time, you should definitely
be curious, because we will show you a detailed action plan to protect your money and even
improve your financial situation during a financial crisis!
But before we dive deeper, hello and welcome back to our channel!
We are the finance nerds and we help hardworking people like you to achieve your financial
goals with the income you have by sharing our knowledge in personal finance such as
saving money, budgeting and investing, and show you how to make it work for yourself.
And with that being said, let’s start!
You want to protect your money and finances when the financial crisis hits and still have
full control over your money?
The goal at the end of the video should be that you fully know what options you have
to achieve this and can choose the options that suit you and your situation.
But what do we even define as a financial crisis and what does it look like?
So before we present the possibilities of what you can do with your money, let's define
what a financial crisis is.
First of all, there is no 100% definition, but a financial crisis is characterized by
all asset classes taking a big step into the red, inflation rising, prices for living expenses
rising massively fast such as food, certain markets such as oil and gold experiencing
an upswing and energy prices also rise such as gasoline.
This condition then lasts for half a year, whereupon the next step happens, such as higher
government debt, insolvencies especially in the banking sector and sooner or later also
the case that you can no longer get your money because the banks have blocked the accounts
and government assistance such as your pension is canceled.
With all these scenarios, you naturally wonder what you should do now, which is why today
you will be given 5 options that you can pursue to survive a financial crisis.
Of course, it is possible that not all scenarios will happen, but that the economy will only
experience a recession, which you can also survive with the help of these 5 options.
In the following minutes, you'll learn exactly how to invest your money for times of crisis,
where to park some of your money for maximum protection, and why you should still make
it a point to improve your personal finances!
Now the big question is, what should you do with your money when such a crisis occurs?
Should you continue to pay off debts?
Should you continue to save?
Should you continue to invest?
The answer to all 3 questions is: YES!
But the "how" differs.
In times of crisis, one's goals should not be changed, but the plan towards those goals
should be adjusted to the circumstances.
The first thing you should do is: keep money as liquid assets as an emergency nest egg.
What do I mean by that?
Ideally, you should withdraw money that you have in the bank and really keep it as "cash"
in your house or apartment.
The question of why is quickly explained, the money you have withdrawn from your bank
account is safe from banks and the state, which could block your account and you would
not have access to your financial resources.
This money is really for the "worst case scenario".
Examples that this happens more often are quite frequent, for example, if we look at
the debt crisis of Greece since 2010, where the population forms eternally long queues
to get to their financial reserves.
With this emergency nest egg you at least have the possibility to pay for food or even
in the biggest emergency to leave the country with some money in your pocket.
And that brings us directly to point 2, where you should park your money for emergencies,
in order to still have liquid funds in the event of a national debt crisis, for example:
Keep a certain part of your assets in an off-shore bank account.
This means that you keep a certain part in a bank abroad, which brings further security
to your assets.
The reason is the same as just described, it is important to prepare for such cases
and then when the case arises to be at least with some cash than completely without.
Off-shore accounts offer the ideal and especially legal way to build up asset protection and
also to protect against the state and other banks.
If this is a possibility that is interesting for you, please contact your tax advisor.
We have already mentioned that it still makes sense to continue to pay off your debts and
you should definitely continue to do so in such crises.
Why?
Such crises pass and come back, it's a cycle that starts all over again and that's why
it doesn't make sense to stop paying off your debts, because imagine the peace of mind you
would have if you could get through such a financial crisis completely without debts
and annoying interest payments.
Debts rob you of opportunities and reduce your income and wealth more and more, which
is why it is important to eliminate them completely, unless they are debts used for wealth accumulation,
which we are not talking about.
Because even a financial crisis offers opportunities to buy companies cheaply and imagine how big
the profits could be if you could invest the money you are currently paying for interest?
And yes, you should continue to invest in such times, but with a different approach
and also in other markets.
What this looks like depends on your investment strategy and how your portfolio is structured.
At the end of the video I show you a way how you can build your portfolio, which generates
returns in all economic times and protects your capital in such times to the maximum!
As I just said, such times also offer the opportunity for very high returns, because
it offers the opportunity to buy companies cheaply and thus emerge stronger from the
crisis when the economy begins to recover again.
Because history shows that the economy always recovers and it was only a short setback and
you should use this setback to further expand your portfolio.
Now something you should avoid at all costs with your money: avoid government retirement
accounts.
When times get really tough and it's really an emergency the government will use that
money to pay their own debts and they'll take the money from you that you've dutifully paid
in over the years.
This is not a wild theory, but unfortunately it is also shown in history, for example in
Ireland or Poland, where this money has been used for other purposes under reserve.
The pension amounts are by far the highest financial reserve the state has access to
and when push comes to shove, they will use these financial reserves for other things.
But how can you now invest your money wisely to be well positioned in any economic climate?
A great way to do this is the approach of Ray Dalio and his "All-Weather" portfolio.
In the 1990s, successful hedge fund manager Ray Dalio tinkered with a portfolio that would
weather any stock market phase well.
Thus, in 1996, the all-weather portfolio was born.
Back calculations show that the average annual return would have been more than nine percent.
There were hardly any major setbacks.
For example, the largest annual loss from 1984 was 3.9 percent.
Loss years averaged only 1.9 percent.
This is made possible by the high proportion of U.S. government bonds.
These make up a total of 55 percent of the portfolio.
Dalio also has confidence in his home market when it comes to equities.
The proportion of equities is 30 percent in total and more than two-thirds of the portfolio
is made up of U.S. stocks.
Gold and other commodities are intended to provide further diversification.
The composition is as follows: 55 percent U.S. government bonds as the largest
portion of the portfolio 30 percent equities, with the main focus on
the U.S. S&P 500 index (18 percent) 15 percent commodities, with 7.5 percent gold
You have the possibility to build the portfolio yourself or to replicate this portfolio with
a mixture of certain ETFs.
And if you want to stop habits that keep you poor, watch the video in the middle now!
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We hope to see you in the next video.