How To Make It Through The Financial Crises

"In the long run, Americans have good reason to be confident in our economic strength. America has the most talented, productive, and entrepreneurial workers in the world. This country is the best country in the world to invest and do business in. Consumers around the world continue to seek out American products as evidenced by record-high exports. We have a flexible and resilient system that absorbs challenges and makes corrections and bounces back." President George W. Bush, September 19, 2008--White House Press release.

In the long run according to President Bush, we should be okay. So, what is happening now and where is the best place to invest right now to make it through the financial crises that we are in?
Do you remember back in January when there was a huge problem with sub prime mortgages and things seemed to be falling apart then? Well guess what? They have! To some extent, that is.

A sub prime mortgage loan is a loan made to a high risk individual. When this was going on investors were buying homes as speculative investments and getting these sub prime loans to finance the houses thinking that they would sell them later on. When housing prices fell in many locations around the country these high risk loan holders just walked away and these homes went into foreclosure. The majority of average home owners are paying their mortgages and paying back their debt however. The sub prime lending problem has shot through the veins of the financial system to the point where we are now in crises mode and it is difficult for individuals as well as business to obtain credit. What the government plans to do is to buy up all of the toxic mortgages and try to stabilize the financial markets.

Over the next few months and into the next year, the economy will continue to be weak and turbulent. There is talk about stagflation where you will see both high interest rates and high inflation--that's not a good thing.

The best place to invest your money is in non-cyclical. Think about things that people have to have in their lives like Grocery, Pharmaceutical, and Utility stocks. If you are not comfortable about investing in stocks or bonds right now, consider a short term Certificate of Deposit or a good Money Market account. Try to pay down your debt so that you have a credit cushion and try to build a cash emergency fund of three months worth of expenses in case you get laid off.