Six Urgent Steps You Must Take IMMEDIATELY To Protect and Even GROW Your Wealth As This Crisis Intensifies …
Debt is what got us into this mess. Getting rid of debt, no matter how tough, is what’s going to get us out of it.
So my first piece of advice for you — even before I begin giving you the six steps I promised — is simple; nothing more than everyday common sense: Declare your own, personal war on debt beginning right now!
Even in good times, making payments on sky-high personal or business debts can be tough. In times like these — with unemployment skyrocketing and most companies struggling, excess debt is the killer that pushes so many into bankruptcy.
And even if you think you have plenty of money to see you through a depression, the money you spend each month on loan and credit card payments is money you could better spend to see your family through the crisis — not to mention taking advantage of major bargains in the months ahead.
First, raise as much cash as you can. Make a list of the things you own but never use or could do without. Have a garage sale. Post them on Craigslist and eBay. Then, set aside every penny you raise — you’ll need them for step four, below.
Second, put the family budget down on paper. Include every monthly expense you have. Here’s a good starter list:
Housing
Third, be ruthless in slashing expenses and eliminating the things you can live without.
Fourth, list every loan you have, beginning with those that nick you for the highest interest rates. And as you pay off these loans, use the money you save on monthly payments each month to pay down even more debt.
Fifth, for our complete debt-killing strategy — eight ways to reduce debt without bankruptcy — be sure to check out pages 10-13 of The Ultimate Depression Survival Guide!
Click here to order your copy online now.
Step #1:
Secure your income NOW!
At a time when unemployment is shooting for the moon, everybody worries that their job could be the next to vanish — and for good reason: So far in 2009, more than a half-million wage-earners are getting pink slips every week. That’s more than two million pink slips every month!
No wonder most people feel like targets — as if someone pinned a “Fire Me!” sign on their backs!
The good news is, you do not have to lose sleep wondering about how stable your employer is or whether your job is secure. Here’s what to do …
1. In the accompanying table, I provide a short list of the largest, publicly traded companies that, based on our analysis, are at risk of failure. If your employer is on it, the steps I’m going to recommend in a moment are all doubly urgent.
2. At the same time, I provide a list of companies that are among the strongest financially, with the most capital and the best prospects for weathering this storm. Of course, this alone is no guarantee that they won’t announce lay-offs with the goal of maintaining their strong financial health. But if your company is on this list, the chances of losing your income are greatly reduced.
Suppose your company is on neither list? Then, I recommend you rely more heavily on the next step …
3. Take a look at the long-term trend in their share price. More than any other financial indicator, their shares reflect the sum total of their performance and prospects. You can:
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Go to BigCharts.com.
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Enter the stock symbol of your company or a keyword in its name
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Click on “Advanced Chart.”
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On the left side of the screen, under Time, select “Two Years” (the time frame that best covers this crisis).
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Under Frequency, select “Monthly.”
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Then, just press the button “Draw Chart.” At a single glance, you should be able to see if your company’s performance and prospects are holding steady, going down or going up in this bear market.
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For an even better reading, just click on “compare to,” selecting “S&P 500.” This will show you whether it’s performing better than average, worse than average or on target.
4. If you work for a privately owned company — a firm that is not listed on any stock exchange — ask them two simple questions:
a.) “How much do you have in cash or equivalent?” And …
b.) “How much do you have in current liabilities — bills and debts coming due within the next year?”
If your employer has less than 25 cents in cash or equivalent per $1 of current liabilities, they may be in a pinch. If they have $1 or more, it means that there should be no immediate danger. Naturally, there are many other factors at work. But this gives you a quick and easy test.
If they refuse to give you the information, it’s not a good sign. But in any case, move on to the next step.
5. Go online and buy a report on your employer from Dun & Bradstreet. It’s cheap. And it’s good to have. If you like what you see, great!
6. And in any case, given how bad this crisis could be for almost every American corporation, it’s time to get busy looking for alternate sources of income. Get your resume in order, and no matter how secure your job may appear, start looking, seeking out strong employers in industries that typically hold up the best in the worst of times, selling things people can’t live without.
Specifically, consider how you could apply your skills and experience with a firm that provides or sells health care, food, energy, or bargain-priced household goods, for instance. Local and governments, formerly steady employers, are now shaky. But the federal government, despite its big deficits, is expected to be relatively more reliable.
Then, when you find a prospective new employer, check that company out as well, just as you did in steps one through five.
And be sure to read Chapter One of The Ultimate Depression Survival Guide for five crucial steps to help improve the security of your current job …
Plus, I point you to some excellent free resources to help you add new income streams with your own depression-proof, home-based business.
Click here to order your copy online now.
Step #2:
Keep a roof over your family’s head!
One of the most common questions we get each day from the nearly 400,000 people who subscribe to our Money and Markets online newsletter is, “With property values plunging ever-faster, what should I do with my real estate?”
For investors — folks who own properties they don’t live in — the answer is the same one I’ve been offering to my readers for several years now:
You own wasting assets that have already lost 20% … 30% … up to 50% or more of their value.
There’s no way to know how much farther they’ll fall in value. It could be many years or even decades before they’re once again worth what you paid for them.
The money you have tied up in those properties could be used to pay off debts, to live on or even to invest in things that produce profits at times like these.
Here’s what to do now …
FIRST, if you have investment property, the best choice is simple: Take advantage of any temporary market recovery stimulated by the government to price, market and sell it aggressively.
No, you won’t get peak prices; that’s water under the bridge. But with few exceptions, you should get a FAR higher price than what’s likely in the coming depression.
SECOND, for your family home, the question of what to do is now more complex — and I can’t tell you what to decide. But …
A. If your mortgage payments are high and rents for equal or better homes are lower, you may want to sell before your home loses more of its value.
B. If so, make absolutely sure you choose a Realtor with strong marketing savvy and a recent track record of selling properties in the same general category as yours.
C. Consider offering your realtor a special incentive to sell your home before any others in his or her inventory. I strongly recommend a two percentage-point kicker — instead of earning 6%, your realtor will get 8% when your home sells.
And remind your agent to make sure the extra commission is clearly stated in the MLS listing so other realtors will show your home first as well!
Most important, check out pages 38-39 of The Ultimate Depression Survival Guide forall TEN of my recommended steps under the heading “Selling Your Home in a Sinking Market.”
Plus, if you’re committed to staying in your home but worried that you might lose it, Chapter Two gives you my eight steps for keeping your home come hell or high water — including where to turn and what to do to get your bank or even the federal government to help you save your home!
Click here to order your copy online now.
Step #3:
Protect the money you have in the bank like a junkyard dog!
Once upon a time, the phrase “good as money in the bank” meant something. Today? Not nearly as much!
There seems to be no method to Washington’s madness; letting some institutions fail but saving others. And with many of the biggest failures striking mere days after the CEOs go on TV to declare their bank is solid, it’s hard to know whom to believe.
In good times, bank failures don’t seem like much of a big deal. The Federal Depositor Insurance Corporation (FDIC) rushes in so quickly to guarantee your money, you might not even notice that your bank bit the dust.
Not so in depressions! There’s the very real possibility that an avalanche of failures could blindside the government, overwhelming its ability to provide prompt and seamless access to all accounts at all the failed institutions.
Here’s what to do …
First, make sure your bank is among the safest in America, starting with the list of the largest I’m providing here.
I must alert you, though, that many of today’s safest banks are smaller, regional banks. So for the safest bank in YOUR area, be sure to follow my instructions on the Web resource pages that come with your copy of The Ultimate Depression Survival Guide.
Second, whatever bank you choose, make sure your deposits remain comfortably under the old FDIC insurance coverage limits of $100,000. The new $250,000 per account limit is temporary; not something I believe you can rely on long term.
Third, even the safest bank in America won’t be able to guarantee immediate access to your money if the U.S. government declares a 1933-style banking holiday.
But if you’ve been worrying about how to make sure you have access to your cash even in a massive banking meltdown, I have good news for you: The simple truth is, you don’t need to have a savings or checking account at any bank, S&L or credit union!
In the 1930s banking crisis — and even in the confusion of the Civil War — the U.S. Treasury has never defaulted on its debt. And even if you’re among the minority of folks who would not trust the government with their money for the next 30 years, you can certainly trust them for 13 weeks!
To buy a 13- week Treasury bill directly from the U.S. Treasury Department, just go to the TreasuryDirect website, and follow the simple instructions they provide. You will have no intermediary standing between you and your investment. Plus, if you check the appropriate box, your Treasury bills will be automatically rolled over as they mature.
Fourth, money market funds that invest almost exclusively in short-term U.S. Treasury securities are even more convenient and can give you most of the same deposit and checking services as a bank. Because your money is invested in Treasuries that are backed up by the Rolls Royce of government guarantees, you never have to worry that your bank could go belly up.
Plus, while the FDIC guarantees ONLY $250,000 of the funds you have deposited in banks, there is no limit to the Treasury Department’s guarantee on all its Treasury securities, whether you buy them directly or through a money market fund.
The interest you earn is exempt from local and state taxes. The management fees are less than the account fees banks charge. When you buy through a money fund, you can write checks on your balances, just as you do with any bank checking account — and checking is truly free. Nor do you need separate accounts for checking, saving and time deposits.
Problem: Some of these money market funds have closed their doors to new investors. But in my book and with the Web resources that come with my book, I give you the names of funds that continue to accept new money.
Plus, for my full list of 12 crucial steps for keeping ALL of your money safe even in a worst case scenario, just grab a copy of The Ultimate Depression Survival Guide and flip over to Chapter Six.
Click here to order your copy online now.
Step #4:
Save your investments before it’s too late!
If you own stocks, the best advice anybody could possibly give you right now is, simply, “SELL!”
Remember: From its peak in 1929, the Dow Jones Industrial Average fell nearly 90%. That would be tantamount to a plunge of more than 12,600 points from the Dow’s 2007 peak this time around — to a low of approximately 1500, or an additional 80% decline from today’s levels.
But even in proportion to the size of the U.S. economy, the debt bubble that preceded this depression is two times larger than the one that caused the great Wall Street bloodletting in the 1930s. So it’s not a stretch to say that this bear market could be equally severe. And even if it’s only half as bad, you’d still be looking at a further stock market decline of about 40%.
So unless you can bear additional losses of 50% … 70% … up to 80% or even more — and then wait many years or even decades to recoup your money …
Let me offer you the same advice I’ve been giving my readers since before this crisis began — advice that would have helped you avoid the massive losses stock investors have suffered so far and that can save you from further stock market declines ahead:
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If the stock market is enjoying a temporary, government- inspired rally, sell everything. Just call your broker and say: “Sell all my stocks at the market.” (Special situation stocks that are designed to go up despite — or because of — the bear market, are the sole exceptions.)
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If the stock market is falling and already down sharply, tell your broker to sell half as soon as possible. Then sell the balance on any rally.
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If the market is in a panicked frenzy, overrun by an uncontrollable crowd of sellers and virtually devoid of all buyers, wait. Don’t sell immediately. As soon as the panic subsides, then sell half. And as soon as there’s a solid, government-inspired rally, sell the balance.
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HOW SAFE IS YOUR BANK? How to make sure your money is in the safest institution available … why you could be locked out of even the safest bank in a national banking holiday … how to guarantee full access to your funds no mater what … more. Page 72 …
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The huge “silver lining” in every depression: How to play this economic crisis like a fine violin; shielding yourself from dangers while taking full advantage of the little-known rewards it will offer you. Page 74 …
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Will the FDIC’s $250,000 coverage really save you if your bank fails? The sobering reality. Page 75 …
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Hidden time-bombs even in America’s “safest” banks — 596 trillion reasons why the IMF and others are terrified the entire world banking system could completely collapse. Page 76 …
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Why Bank of America, Citibank, JPMorgan Chase and HSBC could suddenly implode without warning. The shocking truth the world’s richest banks DO NOT want you to know. Page 81 —
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5 disturbing reasons why Washington’s massive bank bailouts must soon end. And what will happen to you and your money if and when your bank fails. Page 85 …
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Will Washington shut down ALL banks again like it did in 1933? The answer will shock you! Here’s how the worst case scenario could impact you personally. Page 87 …
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Why nobody really needs a bank today: This little-known “national bank” is the single safest place in the world for your money — and you won’t need to sacrifice a single convenience, like free checking — they’re all FREE. Page 91 …
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The ONLY investments for your core holdings today: As easy to buy and sell as IBM or Microsoft — and they’re designed from the ground up to make you richer despite falling stocks — or even BECAUSE of them! Page 103 …
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Your home loses another 20% of its value — but THIS investment wipes out your loss or even hands you a profit. The five-step hedging strategy every homeowner should be using now. Page 107 …
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Your own, private bear market bonanza:Five simple steps for using ETFs to profit when stocks plunge. Page 119 …
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Why the euro, the pound and other foreign currencies are temporarily toast. Plus, how the rising dollar can keep a steady stream of profits and income flowing to you as Europe craters. Page 128 …
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How to invest in foreign currencies: Six simple steps for minimizing your risk and maximizing your profit potential. Page 130 …
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5 easy ways to spot the REAL bottom in stocks and bonds — and use it to pile up massive wealth in a recovery. Page 131 …
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Great $60 stocks on sale for 60 cents? Yes, and even less! Recommended bottom-fishing strategies. Page 131 …
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HEADS UP: Historic profit opportunity in bonds directly ahead! Why interest rates could skyrocket soon no matter WHAT the Fed does — and how to use rising rates to lock in yields of 10% or more per year PLUS huge capital gains! Page 144 …
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How to maximize your bond market and Treasury yields with safety: Six simple steps on Page 151 …
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YOU: A dividend millionaire? Could be — IF you play your cards right! Here’s how to pick up conservative dividend-paying stocks at the right time and then pull in unusually high income every year for the rest of your life! Plus: How to quickly and easily find America’s best dividend paying stocks. Page 153 …
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Settling the great “Inflation vs. Deflation Debate:” Will huge fed bailouts trigger the greatest hyper-inflationary spiral since the Weimar Republic? Or will their failure ensure deflation and falling resource prices for years to come? Dr. Weiss’ clear, unhedged answers begin on Page 163 …
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The best time to buy gold — 700% profits possible! Get your timing wrong, and you’re likely to lose a bundle. Get it right and Katie, bar the door! How to invest in gold, gold ETFs and mining shares during a depression. Page 171 …
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What YOU can do to save America from certain disaster: Crucial actions required now to get Washington and Wall Street to reverse course, save the dollar and pave the way for a true recovery. Page 173 …
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Two post-Depression scenarios: One condemns us to years of economic pain; the other lays the foundation for sustainable growth. Which will it be? Which investment will work best in each? Page 193 …
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And much, much more!
IMPORTANT: Do NOT stop with just your main investment portfolio. Take a hard look at your 401(k), your IRAs and any other retirement plans you may have as well:
For your 401(k), get the list of retirement plan choices available to you from your employer or 401(k) manager, moving your money out of stocks funds, and into the safest alternatives …
First choice: Treasury-only money market fund. (As a rule, not available in 401(k)s).
Second choice: A government-only money market fund.
Third choice: A standard money market fund.
Fourth choice: A medium-term income fund that invests exclusively in U.S. government notes and bonds and nothing in corporate bonds.
Fifth choice: A medium- term income fund that invests mostly in U.S. government notes and as little as possible in corporate paper.
Your goal: The highest possible quality with the shortest average maturity.
Beware: Treasury bills (short term) are not the same thing as Treasury notes (medium term) and Treasury bonds (long term)! With Treasury bills your price risk is as close to zero as you can get. With Treasury notes and bonds, you could suffer severe market price declines.
And with non-government paper, such as corporate and municipal bonds, you face the additional risk of a ratings downgrade or even default. So …
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Use any price rally as an opportunity to unload them, regardless of their current rating.
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If the market is illiquid, give your broker the opportunity to “work the order,” taking advantage of any temporary flurries in trading activity spurred by government rescues and money injections.
Your broker may scream bloody murder. He’ll probably say you should “always hold for the long term.” If your investment is down, he’ll say “you can’t afford to lock in your losses.” If it’s up, he’ll say “you can’t afford to pay the taxes.” Either way, he’ll try to talk you out of selling or even try to persuade you to buy more.
But that advice has already cost most investors up to half of their money. At a time like this, sensible investors will just smile and say “sell.”
It would also pay you to grab a copy of The Ultimate Depression Survival Guide, for my complete action plan to safeguard every penny you now have invested.
Click here to order your copy online now.
Step #5:
Offset losses in investments you can’t sell
Let’s say you have not yet been able to get rid of real estate that’s falling in value. Or maybe you have stocks in a pension fund beyond your personal control that are plunging in value; losing you money every month.
You feel trapped. What do you do?
Simple: You create your own, personal hedging strategy — kind of an “insurance policy” that pays you when your stocks or real estate decline in value.
Now, make no mistake: I am not talking about using exotic strategies like shorting stocks that can expose you to unlimited risk or using highly leveraged investments like futures or options.
I’m talking about using plain-vanilla exchange-traded funds (ETFs) that rise in value when stocks fall.
These ETFs are as easy to buy and sell as any stock or mutual fund and you can do it in the brokerage account you have now, starting with just $100 or even less.
Unlike mutual funds, there are no sales charges, so you can trade them actively without getting nickel and dimed to death. You do pay commissions, but they’re cheap. And unlike mutual funds, ETFs never charge you for their own marketing costs.
Plus, there’s full transparency; you always know exactly what your ETF has invested your money in. ETFs are priced continuously during the day and never place restrictions on when you can buy or sell them, so you can take profits or cut losses any time of the trading day.
Just decide which investments you need to hedge against. For example …
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If you have a lot of technology stocks, you could protect yourself with the ETF tied inversely to the Dow Jones U.S. Technology Index (symbol REW).
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If you have a lot of small caps, you could protect yourself with the ETF tied inversely to the S&P SmallCap 600 Index (SBB). Or …
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If you’re exposed to emerging markets, you could use EUM or EEV, which are tied inversely to the MSCI Index and MSCI Emerging Markets Index, respectively.
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And if you’re worried about the value real of estate continuing to erode, you could help offset further losses with the inverse real estate ETF: UltraShort Real Estate ProShares (SRS).
But please: Do NOT just run out and buy these hedging investments without a solid strategy! On pages 108-115 of The Ultimate Depression Survival Guide, I show you, step-by-step, how to use inverse ETFs to protect yourself.
Plus, I include the complete list of the ETFs you can use to hedge against losses in virtually any kind of investment you might have.
Click here to order your copy online now.
Step #6:
USE this crisis to grow wealth.
Before we turn to wealth-building steps, let’s fast forward to the not-too-distant future — YOUR future. And let’s take a quick peek at what your financial situation could be like, once you’ve followed the steps I’ve outlined so far and taken full advantage of the extra help I give you in The Ultimate Depression Survival Guide.
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You have whittled your debt and monthly payments down to size, using the money you save each month to reduce them even further — or better yet, you’re debt-free, socking that money away for the rainy days ahead.
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You have secured or actually increased your income by ensuring that your employer is in good enough shape to fund your paycheck. Or better yet, you have used the resources I offer in The Ultimate Depression Survival Guide to add a second or even third income stream …
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You have made sure your family will continue to have a roof over its head by either 1) Deciding to stay in your home and using my action plan for saving it come hell or high water — or, 2) Deciding to sell and rent an equal or better home for less, using my tactics to do so quickly at a fair price …
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You have made sure your money is in the safest bank available to you — or better yet, you moved your money into a short-term treasuries-only money market fund …
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You have reduced or eliminated your exposure to plunging stocks and bonds, saving — your portfolio and your retirement from further disaster, and …
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You have hedged against further losses in the value of your home and in investments you can’t sell.
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