“U.S. stocks are now about 80% overvalued,” proclaimed the well-known economist Andrew Smithers. Billionaire Carl Icahn stated, “The public is walking into a trap as they did in 2007.” Robert Kiyosaki and Warren Buffett are even saying that the next stock market crash will soon be here.
By now it’s no secret. The stock market has been teetering for nearly a year and the next stock market crash will soon be upon us. It might be tomorrow, it might be next month, or maybe it’ll even stave itself off for a full year. There’s no mistake about it though. It’s coming.
So the next logical question is, “Okay…what do I do about it?”
How I’m Prepping For the Next Stock Market Crash
Now I’m no investment professional, so I’m not going to tell you to invest in this company or that company. I’ll leave that decision up to you. But, I CAN tell you what I’m doing to prep for the looming stock market crash.
1) Got Completely Out of Debt
People get foreclosed on all the time, but for some reason nobody thinks it will ever happen to them. …And then life happens:
- job loss
- a medical emergency
- the death of a spouse
Suddenly, people find themselves on hard times. I DID NOT want to be one of those people. That’s why I decided to take matters into my own hands (instead of the bank’s) and paid off my mortgage.
When that next stock market crash happens, I won’t be afraid and tip-toeing around at work, just hoping to keep my job. I’m going to be completely debt free and financially independent, hunting for those opportunities when everyone else is afraid.
The name of the game – be greedy when others are fearful. That’s how you get ahead in life. And to do that, you’ve got to be financially confident. That’s why I ditched all my debt.
2) Hoarding Cash for Real Estate
When you get rid of all your debt, this crazy thing happens. You can actually start to save up money! And I’m not just talking about a few hundred bucks here and there like you’re used to today. I’m talking about thousands of dollars every month!
Think about it. If you had absolutely no payments on:
- your car
- your student loans
- or YOUR HOUSE
How much extra money would you have each month?
….$300+$400+$1,300… Yeah, probably about $2,000! Isn’t that crazy?! Get out of debt and all that money goes into YOUR account instead of the bank’s.
So what do we do with all that money? We’re buying real estate.
On November 30th last year, we bought our first investment property – a single family home for $81,000. We bought it with cash. After property taxes, insurance, and maintenance, we clear $900 a month — that’s $10,000 a year!
Why are we doing this? Two reasons.
1) As a hedge against the stock market.
If the stock market tumbles, people will lose their jobs, lose their homes to foreclosure, and will need a place to live. Demand for rentals will go up, which means I’m going to make even more money in a down market than a prosperous one.
If the market never tanks, we’ll still keep enjoying our $900 a month because the house is in a great location and remains highly desirable as a rental.
2) A great investment deal will come in a down market
The real estate market is unbelievably hot right now. We bought our first property less than a year ago for $81,000 and could easily sell it for $120,000 today. This is great for our net worth, but it sure makes it tough to find another deal!
The best move for us right now is to pile up the cash and wait for the down economy. When more foreclosures flood the market during the next stock market crash, the more likely it is that we’ll find a unbelievable buy on the next investment property.
We have a plan to save up $80,000 by December 2017. At that point, we hope to find another diamond in the rough and earn another $1,000 a month in passive income!
3) I’m Still Investing in the Market
Even though I think the market is going to take a dive later this year, I’m still investing heavily into my 401k. Why? Because I don’t plan to take the money out any time soon (like, not for another 35 years… 😉 ).
My logic revolves around dollar-cost averaging. Basically, I have the mindset that the stock market is about to go on sale. This is my chance to buy up a bunch of shares at 10% off, 20% off, 30% off…heck, maybe even half off when the market reaches the trough. And, if I buy all these shares on the way down at a discount, when they come back and are worth the same amount or more, then I suddenly have a whack-load of money sitting in my retirement account.
4) Invested in Silver and Gold
I did some research about a month ago and came to the realization that now is the time to invest in silver and gold. But not in the physical commodity — Read why here: How to Buy and Sell Silver) — but rather in market shares that model the price of silver and gold. The best way to do this? Through a Motif.
What’s a Motif?
It’s a group of stocks that you can select and only pay one transaction fee for, which is absolutely amazing!
Typically, you’d buy a few shares of one stock, pay a transaction fee. Then, you’d buy some shares of another stock, pay another transaction fee… Before you know it, you blow $100 on fees alone! With a motif, you pay your $10 and purchase all your stocks at once.
Here’s a look at my motif (that actually someone else created, but it had exactly the mix that I wanted):
I diversified my silver and gold investments, but put them all in this one motif and paid a piddly $9.95 for the entire transaction. Honestly, I think this is such a great deal that I already became an affiliate and have an even better deal lined up for you!
Sign up through this link – Invest $2,000 through five motifs, and they’ll give you $150!
Want instructions on how to sign up? Comment below and if I get enough demand, I’ll whip some instructions up for you all so that you know exactly what to do.
…Anyway, enough of the sales pitch (I really can’t help it, it’s such a great deal!). You probably want to know how much I invested and why I chose silver and gold.
For now, I just put a couple toes in the water and invested $1,000 into the one motif. We typically don’t invest money into the market outside of our 401k, so a thousand bucks was the amount that we were both comfortable with at the time. We’ll likely up this amount in the future.
So why silver and gold?
Simple. It’s a hedge against the market.
Typically, when the stock market goes down, gold and silver go up. Since I think the market’s going to tank, why not invest in gold and silver, watch my holdings go up as the market dives, and then sell the shares when we’re ready to buy an investment property in the trough? Sounds like a sure-fire win to me.
Basically, I’m making this investment for a year or two and plan to remove it to help fund the next foreclosure deal.
What Do You Think?
So what do you think about my plan around the next stock market crash? It’s pretty simple:
- Pile up cash
- Continue to invest in the market with index funds
- Invest in silver and goal
- Buy a deal on a property when the market’s down
Would you do the same? Or do you plan on doing something different?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.