I was recently asked what to do with funds contributed to a retirement plan. This is difficult to say since I do not have the balance sheet/income statement of the individual. However I can provide a plan that I believe will help a family weather the uncertain future economic reality. Nobody but the Lord God Almighty can be certain of what we will face over the next five years. We can only use the knowledge, wisdom, skill, and understanding (Daniel 1:17) to direct our loved ones and friends to what we believe is best in preparation. Some of us are called to the financial arena, others are not. They must rely on and trust the brethren who are called to look out for the best interest of the Body of Christ. Every joint is to supply the others: Ephesians 4:15 but, speaking the truth in love, may grow up in all things into Him who is the head–Christ– 16 from whom the whole body, joined and knit together by what every joint supplies, according to the effective working by which every part does its share, causes growth of the body for the edifying of itself in love.
For the body of Christ to grow, people must give. I am giving the following advice in order to help you defend yourself against expected economic downturns based on the global direction of the current system. I understand the many people do not have enough assets to take advantage of the following steps. Do what you can. Most of us can afford to buy an ounce of silver weekly. It’s a start. Go to the local coin shop and start an accumulation plan. Don’t worry about the daily price.
1. Buy gold and silver (the metals) as insurance. I would buy one ounce coins. I have no interest in rare coins because their value is perception based. Consider having 5-10% of your cash in these two metals. I expect gold to exceed $1,600 per ounce and silver to exceed $100 per ounce over the next 5 years (in U.S. Dollars).
2. Maintain 6-12 months’ supply of expenses in cash on hand or in the bank. If you personally lose a job, you want to be able to meet monthly obligations while looking for employment.
3. Check your bank’s exposure to derivatives and profitability at: http://www2.fdic.gov/ubpr/UbprReport/SearchEngine/Default.asp Look on Page 5 of the report for the derivatives’ exposure. Page 2 provides a 5 year comparison of net income. If they are losing money you might want to find a new bank.
4. Spread CD’S over multiple banks if you have more than the insured limit. CD rates are expected to decline over the next 12-24 months. The Federal Reserve has historically supported the banking system’s profitability at the expense of savers. This is done by lowering savings rates while the loan rates are lowered at a slower pace. You ultimately pay for their investment mistakes.
5. Weight your stock portfolio to energy (oil & gas), gold, silver, & coppper stocks, and consistent dividend paying stocks. Chevron, Petrohawk, Goldcorp, Yamana Gold, Silvercorp, GE, Southern Copper, Penn West Energy are all stocks for your review (see disclaimer). There are other stocks but these have had some prior review. I expect oil to trade over $150 per barrel. I expect natural gas to exceed $10 per mcf.
6. Bonds may be good but I am concerned about the insurers going bankrupt thus having a negative impact on the bond market.
7. Eliminate any leverage you have been using in investing. If necessary, sell stock to pay off the leveraged position.
8. Reduce/eliminate debt. Its time to contract your liabilities. If you use credit cards, pay off the balance each month. If you are making credit card payments, quit using the cards. If you can’t pay cash you probably don’t need it. Debt consolidation only works if you have the discipline to refrain from creating more credit card debt. Even though credit card usage is easy, start writing checks for purchases. This reinforces your awareness of the impact purchases has on your cash position. Credit card purchases seem to be "out of sight, out of mind" until that bill comes in.
9. Simplify. Look at what is controlling you and your time. Less is better. A friend of mine had a large pickup because he used to pull horse trailers. He doesn’t do that anymore. Get rid of your "pickup". It’s costing you money. It is easier to obtain than to "maintain". Calculate the 5 year cost of any asset that has an ongoing maintenance expense.
10. Eliminate on-going expenses if possible. Review your budget. If you don’t have a budget, create one. Look at your last six months’ expenses to see if there is something unnecessary. Don’t overlook the small expenses either.
These steps are intended to help direct your thinking, not eliminate your accountability in your financial affairs. Each of us are called to be stewards. If this website is helpful to you, share it with your friends.
Disclaimer:
The material on this website has no regard to the specific investment objectives, financial situation, or particular needs of any visitor. This site is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments.
References made to third parties are based on information obtained from sources believed to be reliable, but are not guaranteed as being accurate. Visitors should not regard it as a substitute for the exercise of their own judgment. Any opinions expressed in this site are subject to change without notice. Servias Ministries, Inc. is not under any obligation to update or keep current the information contained herein.
Servias Ministries, Inc.’s officers, directors and associates may have an interest in the securities or derivatives of any entities referred to in this material and accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. Our comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of our own credible sources. We recommend that you consult with a licensed, qualified professional before making any investment decisions.