Since I am essentially financially illiterate, my question doesn't have to do with what to do about investing, but rather a more general question of how to handle a possible financial upheaval in the coming year or two.
I came across some interviews and articles by David Stockman, that made me think about the "what if's" in the economy. With most of my worth involved in home ownership, IBonds, fixed interest annuity dollars, small amounts of stock and cash, I would not try to begin to speculate now.
Hmm... so what's left? And that's what I'm asking. Whether deflation or inflation, a major long term change in the national economy will mean (for DW and me) going in to a defensive mode. And that's the question.
What to do to minimize the effect of whatever may happen. With no prospects of increasing our assets by working or of investing, what steps to minimize negative effects of a changing economy,
First thoughts go to the "prepper mentality"... To buy today, what we may not be able to afford, tomorrow. To stash food.. hoard expendables, put in stores of those items that may be too costly in the future, such as medications. That's probably a naive thought, but are there other defensive measures that might work?
Another thing that might come into play is our ownership of two relatively low value properties. There, the thought is that these properties could maintain or increase in value, to become low cost residences for middle class people who could no longer afford their long term mortgage obligations.
We have already relocated and downsized to a lower cost income area, so the nominal costs for goods and services are much less than more metropolitan areas.
As to the interim period. We have decided not to upgrade or improve our living quarters, first because the home is in relatively good condition with newer appliances etc. Secondly, unless absolutely necessary, we will not buy newer cars (down to about 6K travel miles/yr).
My current belief is that a recession, if and when... would more likely result in inflation, rather than deflation... and that the term would be between five and ten years, so the duck and cover part would likely be for the rest of our lives, so not a ten or twenty year horizon.
This probably sounds like doom and gloom, but simply a what if scenario. If you are in your 40's, 50's or 60's, your own plans will naturally be different. If your financial health is supported by investments, your own "duck and cover" would be different... the ability to recover along with an improving economy.. or at worst, to go back to work.
So, in lieu of your own plans, how about imagining that you would be advising your own aging parents. What would you suggest?
I came across some interviews and articles by David Stockman, that made me think about the "what if's" in the economy. With most of my worth involved in home ownership, IBonds, fixed interest annuity dollars, small amounts of stock and cash, I would not try to begin to speculate now.
Hmm... so what's left? And that's what I'm asking. Whether deflation or inflation, a major long term change in the national economy will mean (for DW and me) going in to a defensive mode. And that's the question.
What to do to minimize the effect of whatever may happen. With no prospects of increasing our assets by working or of investing, what steps to minimize negative effects of a changing economy,
First thoughts go to the "prepper mentality"... To buy today, what we may not be able to afford, tomorrow. To stash food.. hoard expendables, put in stores of those items that may be too costly in the future, such as medications. That's probably a naive thought, but are there other defensive measures that might work?
Another thing that might come into play is our ownership of two relatively low value properties. There, the thought is that these properties could maintain or increase in value, to become low cost residences for middle class people who could no longer afford their long term mortgage obligations.
We have already relocated and downsized to a lower cost income area, so the nominal costs for goods and services are much less than more metropolitan areas.
As to the interim period. We have decided not to upgrade or improve our living quarters, first because the home is in relatively good condition with newer appliances etc. Secondly, unless absolutely necessary, we will not buy newer cars (down to about 6K travel miles/yr).
My current belief is that a recession, if and when... would more likely result in inflation, rather than deflation... and that the term would be between five and ten years, so the duck and cover part would likely be for the rest of our lives, so not a ten or twenty year horizon.
This probably sounds like doom and gloom, but simply a what if scenario. If you are in your 40's, 50's or 60's, your own plans will naturally be different. If your financial health is supported by investments, your own "duck and cover" would be different... the ability to recover along with an improving economy.. or at worst, to go back to work.
So, in lieu of your own plans, how about imagining that you would be advising your own aging parents. What would you suggest?
