I get the feeling people are not appropriately paranoid about the events unfolding in Ukraine.
As I’m sure you know, Russia invaded Ukraine last week. Russian president Vladimir Putin has also made explicit threats about using nuclear weapons against Ukraine (and others). This is not idle chatter. Whatever else you might say about Putin, he is a deadly serious character. And the Russian military/intelligence community is packed with other deadly serious characters.
Now, this is a personal finance letter. So, we won’t dwell on the war’s geopolitical implications. My primary objective at Jared Dillian Money is to help you eliminate financial stress. So, we’re going to cover practical steps you can take to prepare yourself for the possibility that this war spills out of Ukraine, becoming a bigger problem for Europe and possibly the US.
Before we go on, I want to point out that I am not a doomsday prepper. If you followed my work during the pandemic, you’ll recall that I remained pretty optimistic throughout the whole thing. Most of the time, I am optimistic about people figuring things out.
That said, there’s a lot of complacency in the financial markets right now. Investors don’t seem to realize all the ways this could go wrong. So, let’s talk about what you can do to limit your personal and financial risk.
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First, go to the bank and pull out some cash. If the war affects our banking system, you don’t want to find yourself waiting in a long line at the ATM, wondering if you’ll be able to get the cash you need. Just take care of it now—today. Worst-case scenario, you have a little extra cash at home. That’s not a bad thing.
Two, head to the grocery store and load up. It’s possible the war could create more supply chain issues. If that happens, you’ll want to have a pantry full of staples. Worst-case scenario, you find yourself sitting on some extra canned chili. Again—not a bad thing.
Three, take a look at your investment portfolio and make sure you own some gold. I am super excited about gold. In fact, I think it’s one of the best investment opportunities there is right now. And I’ve been adding to my personal position.
If you have already set up your personal Awesome Portfolio, you are all set here. Because the Awesome Portfolio includes a 20% allocation to gold, which is the right amount. If you don’t own any gold, or if your allocation is smaller than 20%, you want to fix that now, before gold rips higher.
Gold is trading just above $1,900. The next leg up is $2,500 (or possibly even $3,000). Even more important—gold will smooth out the volatility in your portfolio, which will lessen the likelihood you will panic and make poor choices.
There are a few ways to flesh out your gold allocation. You could buy physical gold and store it in a home safe. But that can be a hassle, and the possibility of theft or government seizure is not zero. For most people, the best option is a gold ETF, like the one I recommend in The Awesome Portfolio.
One more note on the Awesome Portfolio: I designed it to deliver the best long-term risk-adjusted returns in any environment. In good times or bad. In peacetime or war. It’s a profitable, set-it-and-forget-it investment strategy for people who don’t want to fret about money when their heads hit the pillow at night. Click here for more.
Jared Dillian