Do You Need a Backup Plan

I come from midwestern Kansas stock. My grandparents were dairy farmers. They lived through the Great Depression. My grandfather fought in the first World War. My dad was an Army Ranger for the 101st Airborne. One valuable lesson I lea

rned from my parents and grandparents was to be prepared. This is not an apocalyptic fear mongering rant, but it is a commonsense approach to understanding the value of being prepared.

Regardless of your circumstances, political affiliations, personal beliefs, I think being organized is undervalued in society, especially by our youth. I speak from experience with my own children, and how I’ve tried to impart some wisdom along their journey growing up in this world. Keeping a planner is above their thinking, but they’ve been burned several times…just one example and lesson learned.

You can find all kinds of info on the internet to get you organized and prepared. I’m sharing a few things we do in my household that might be of help to others. Before I do that, I’ll share this short antidote about my dad. When I was a kid, my family was traveling on a highway in Texas heading on a very unusual vacation. We didn’t go every year; it wasn’t in the budget. Along the way, the car started “acting up.” My mom got nervous and asked my dad what he thought we should do. My dad got out of the car, lifted the hood, and “tinkered” while we waited. Pretty soon he came over and told my mom, “It’s what I thought; it’s the fan belt.” My mom said, “what are we going to do here on the middle of the highway?” (They didn’t have AAA.) My dad calmly announced, “I have a spare one in the trunk. I’m going to change it.” My mom laughed and said, “you’re incredible.” Dad was ALWAYS prepared! Happy ending and vacation!

Onto a plan. With the current economic climate, I think one of the things I get asked most often from clients is “is the dollar going to drop, and should we do some alternative investments?” The answer is that I don’t have a crystal ball, but I do have history to reflect on and make some commonsense opinions. There has never been a bull market this long – 12 years. The inflation rate is rising faster than any other time in history. The supply chains are almost halted with shipping cargo waiting to be unloaded. In some parts of the country, once again items like toilet paper and water are flying off the shelfs. More and more people are “stocking piling.” Should you?

For many people, stock piling is expensive, and space is limited. With that said, there are some great space-saving tutorials on the internet to assist with where to store items. For those living pretty much paycheck to paycheck, many items we have personally stocked we have done slowly. Each week we add an extra few items of nonperishables and paper products. Do I think we will need these? Just like the fan belt, hopefully not, but we will have options and will be able to help others in need should shortages continue down the road.

As far as alternative investments. Here’s a fact. Precious metals have an inverse relationship with real estate. When real estate is high – which it is currently off the charts, metal prices are low, so it’s an excellent time to acquire in your portfolio. Metals are insurance on your wealth. When properly allocated, a 10%-20% asset allocation to silver or gold can hedge against the dollar dropping and inflation. Therefore, if you have money in the market and the market goes down, the metals will act as a balance to ensure less loss, because they will be up. Most clients actually see growth when the market is down due to having a 20% allocation in silver or gold. When real estate is low is the time to sell a portion of metals and invest in other better performing vehicles. Side note, pre 1933 coins are a great option as they are classified as a “private asset.” They sell higher than post 1933 coins, are easily liquidated depending on where you purchased, and they are better options than paper market and bullion bars – since we can’t slice off a portion of a bar.

Also, if while you are planning and able to do so, try to save away up to six (6) months of liquidity for emergencies. This is recommended and even makes a huge difference when applying for a mortgage. The truth is that a little planning and being frugal will eventually pay off in being prepared for the future. If you want to explore ways to protect what you have further, seek a professional who can perform an analysis and project possible scenarios that would be beneficial to planning for your future.

Stay safe and prepared!

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