You too? I've been noodling, beyond moving everything to my credit union (local ownership and not playing the money games that led to this has advantages — but enough so?), what to do with my money. Unfortunately I keep ending up with "leave the country ASAP, converting what I have to something else before it becomes completely worthless".

I kind of think megacorp bankers are unlikely cultists in a destroy-the-world plot. You'd have to assume a high enough level of brainwashing tech that we'd be looking at a third Bush term.

I'm fairly concerned that a global economic Depression is no longer unthinkable. I won't go so far as to say "likely", but a recession that made the 90s seem like twiddlywinks seems more than 50% likely to me.

That said, I'm not even an amateur economist.

The only thing that prevents me from panicking is that if a Depression truly comes to pass, there won't be a safe haven currency, so it's not worth worrying about.

I don't think Bush is thinking that line at all. I think he and his advisors are just that delusional.

I happen to have some money, and I have to make some decisions about that money based on what economics I *do* know.

Saying that only people who have economics degrees should be managing money is also pretty useless.

What he said.

My thinking is the US was due. Expecting a growing economy, living in excess that few in the world knows, out sourcing and importing cheap crap to support our quality of life, having an artifically lower gas prices and in general being very short sighted and econmoically arrogant.

Really, people have been seeing that China is the future for a long time now.

But then I'm always the cynic.

There's that vaunted conservative financial know-how in action.

No more philosophizing after midnight for you!

Seriously, though -- what's your percentage investment in international equities? Does that sound like a way you want to diversify your portfolio, either your 401k contributions or individual stuff in a Roth or the like?

- Megan

Keep in mind that "foreign" investments aren't necessarily foolproof either. Europe has its share of exposure to the CDO breakdown and it had that little matter of a "rogue" trader who lost a French bank several billion dollars.

And China may well be teetering itself. A bad winter, some exposure to the current financial markets and the like has made folks just as leery that China could be the next market to get hit with a "crisis". Central management can't _stop_ an economic breakdown, even if it might ameliorate it. What applies to the US with respect to an "always growing" economy applies equally to China, which has been experiencing incredible growth for many years now.

Economics is *not* my area of expertise, nor am I able to follow the news as regularly as I'd like since I get very busy with school from time to time.

Those both said... Yeah. I get worried sometimes too.

Perhaps I should stop watching post-apocalyptic movies for a while. ;)

There's a much easier way to invest in gold these days, streetTRACKS Gold Trust. GLD is an Exchange-Traded Fund, which gives you the liquidity and investment ease advantages of a stock. Each share is priced today as slightly under 0.1 oz of gold -- shares are devalued by the ETF manager by some small percentage (e.g. 0.25%) per year as the "management fee".

No, I'm not worried. (Personally I think this downturn is the result in the concurrence of abuse of leverage with poor lending practices, but that's just me. And are you worth less than you were work on March 1, 2007? I'm not, not by a long shot.)

My financial planning goes like the following.

First bucket of assumptions:
1) Over a period of decades the worldwide economy (including the US as part of it) will grow faster than inflation in the U.S.
2) Our representational finance system will continue to exist for my lifetime.

Almost all of my financial planning is based on those assumptions.
A small amount of my financial planning does take into account what to do if those assumptions are wrong. So a small amount of my resources goes into other forms of preparedness rather than building representational wealth.

Physical and mental skills seem like the best way for me to prepare for the downfall of our economy, so that covers assumption #2 (Yes, the habit of filling the gas tank whenever it is half empty is a skill in that arena, but it's also helpful for other things, like making emergency trips to help people. Other things in that arena )

I cover assumption #1 by trying to have few material needs so that if my buying power were dramatically reduced I could still get by.

I really don't have much fear that our representational economy will fail. Really really rich people have a lot more power than I do, and a lot more invested in the banking system, etc. continuing to work than I do. Therefore it is seems like a safe assumption to base most of my financial planning on.

Here's sketch of my financial rubric. ( The following don't have to be assumptions, but I'm too lazy to learn the economics to learn if they're true or not, and they seem like good assumptions to me. But sometimes I am wrong.)

Assumption 3 - Diversifying (and rebalanacing) across weakly correllated asset classes will reduce the risk for a given rate of return (or if you want to look at it a different way, increase the rate of return for a given amount of risk.

Assumption 4 - My internet acquaintance knew what he was doing and did what he said he did, so a bunch of competent Monte Carlo simulation backtesting different percentages of international and US equity holdings determined a ratio of 30%/70% maximizes the return. (Specifically comparing the Vanguard total US index fund with the Vanguard world index fund if I'm remembering right.)

Assumption 5 - Right now enough of our assets are in real estate (aka this house I'm sitting in) that even though real estate is weakly correlated with Us equities I don't care to diversify across that asset class.

Assumption 6 - There are enough interesting things I might choose to do with my cash that I'm not bothering to invest in bonds; the cash part of my portfolio doubles as our medium term goal bucket and our emergency fund.

Assumption 7 - When in doubt choose the lower fee choice.

_________

So the question is, what are you really worrying about. You have a pile of money. You're afraid that pile of money will become worthless. But what do you want to DO with that pile of money? The odds that it will disappear are low. If you want to use that money to pay for you to live in Europe, maybe it should be in Euros. But if you want to use that money to buy a house in the United States, maybe it should be invested in REITs, or bonds of some kind.

Money is just a tool.

I'm new here, just wanted to say hello and introduce myself.