I have peeked into the dark side lately and read a few doom and gloom books, blogs and forums. There were many suggestions on how to protect your wealth (and life) from a wide range of supposedly imminent disasters. Suggestions spanned from keeping all your money in gold, to building a survival compound in a remote area, to getting a second citizenship (I'll spare you the more crazy suggestions)...
I couldn't help but think that a lot of the ways that are supposed to protect your wealth could actually be great barriers to building wealth in the first place.
In one of the books I read, the author tries to protect a trivial amount of wealth by literally spending hundreds of thousands of dollars (and getting in further debt in the process) to acquire a second citizenship, guns, Swiss bank accounts, survival gear and what not. He clearly thought that being prepared for whatever disaster was the "prudent" thing to do and that the money was well spent. But what if the world doesn't end? His extreme "prudence" might have costs him a shot at financial independence or worse...
Of course he was extreme in his views. But what about the people who fled the stock market last October and parked their money in treasuries, they too might have paid a price for being seemingly "prudent". What about people who bet the farm on gold and silver in the early 80's?
Could it be that, by trying to be as safe as we can be, we are in fact taking unintended risks with unimaginable consequences? Could it be that, by trying to insure against every conceivable risk, we end up making irreparable damages to our financial future?
I couldn't help but think that a lot of the ways that are supposed to protect your wealth could actually be great barriers to building wealth in the first place.
In one of the books I read, the author tries to protect a trivial amount of wealth by literally spending hundreds of thousands of dollars (and getting in further debt in the process) to acquire a second citizenship, guns, Swiss bank accounts, survival gear and what not. He clearly thought that being prepared for whatever disaster was the "prudent" thing to do and that the money was well spent. But what if the world doesn't end? His extreme "prudence" might have costs him a shot at financial independence or worse...
Of course he was extreme in his views. But what about the people who fled the stock market last October and parked their money in treasuries, they too might have paid a price for being seemingly "prudent". What about people who bet the farm on gold and silver in the early 80's?
Could it be that, by trying to be as safe as we can be, we are in fact taking unintended risks with unimaginable consequences? Could it be that, by trying to insure against every conceivable risk, we end up making irreparable damages to our financial future?