Investing in Yourself: Fear of an Apocalyptic Economy

edvard munch - the scream 1893 by oddsock on Flickr!Four or five times a day, I get an email from a reader who is worried about some absolutely apocalyptic prediction about what will happen to the global economy over the next several years. As I’ve stated before, I don’t buy into fear, but when someone writes to me with obvious deep concern for their future, I am compelled to help.

My conclusion is that if you’re worried about the economic future, the best place to invest is in yourself. Developing yourself into a more intelligent person with more skills and more connections will pay huge dividends if such an apocalyptic scenario were to occur.

What does that mean, exactly?

Build strong relationships with a wide variety of people. Don’t just reach out to coworkers. Focus on building strong connections to your neighbors and others in the neighborhood as well. Don’t just stick with people who are in your socioeconomic status, either – look for people who are from different cultures, have different incomes, and have different values.

The more people you’re connected to, the more people you can contact for help and build connections between later on.

You can start this process by simply talking to your neighbors. Invite them over for dinner and build a strong relationship with them. Trade skills with them by freely volunteering yourself to help them out with their situations, and ask for their help when you need it.

The next step is to get involved with your community. Seek out community events and organizations that seem compelling to you and get to know the people involved. Serve those organizations as well, and build relationships with the people involved in those groups. In troubled times, such groups often develop into groups of mutual support, as with the Grange organizations during the economic crises of the late 1800s.

Learn a wide variety of skills – particularly ones that would be useful in the event of economic meltdown. During periods of deep economic uncertainty, many local areas resort to bartering, and skills are assets you can always barter.

Teach yourself basic carpentry, basic plumbing, basic electrical skills, and basic car repair. You should be able to handle almost every simple home repair yourself, be able to change a tire or change the oil in your car, know how to handle basic electrical problems in your home, and know how to deal with a leaky faucet or a plugged toilet yourself. And that’s just for starters – the deeper you dig, the more useful the knowledge becomes.

I suggest picking up a few handbooks for learning these things, such as the Reader’s Digest Fix It Yourself and Do It Yourself manuals and the Popular Mechanics Complete Car Care Manual are good places to start. The key, though, is to get these books and work through them. Try out these things and know how they’re done. When you’ve got these skills cold, expand into more advanced books, electrical books, carpentry books, and so on.

While I don’t envision any sort of situation where such a thing might happen, it is always useful to learn such basic skills. They can save you money in a boom economy or a bust economy because they enable you to do things for yourself and to build relationships with others by sharing these skills.

Invest at least some of your money in cost-saving and self-sufficient infrastructure improvements. People constantly want to hear about “recession proof” investments. The best “recession proof” investments you can make are improvements to your infrastructure.

For starters, fix the obvious problems with your home and property. If there are issues that could result in property devaluing or in potential danger, get it fixed.

Once that’s done, look for other investments you can make that will improve your infrastructure and reduce long-term costs. Ideas for this include solar panels, wind turbines, extremely durable roof tiles, energy efficient lighting throughout your home, a wood stove, a backup generator, a sturdy bicycle, and so on. These are all significant cost investments, but over the long haul they all pay for themselves and make you less reliant on the services of others.

Again, as with learning the basic skills, these options are all reasonable investments regardless of the state of the economy. They will save you money over the long run whether the economy is booming or it’s tanking, and they will always improve the value of your property.

Diversify your other investments. If you’re concerned about an economic disaster, your best bet to protect your investments is to diversify, diversify, diversify. Own index funds of domestic stocks, international stocks, large stocks, and small stocks. Own real estate index funds, bond index funds, and foreign currency index funds. Keep some money in cash, too – CDs and savings accounts. You can even look at rare metal index funds as a part of this.

Why? The only thing that is certain is uncertainty. Frankly, no one can predict the future and anyone that says that they can is selling you a story.

If you’re concerned about the future, prepare yourself by not relying too much on one particular asset to ride through the storm.

What do all of these suggestions have in common? All of these are things that a person who is conservative with their money might do in any economy, not just in the face of one that’s got them worried.

In the end, fortune always favors the prepared, no matter what the environment looks like.

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