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How to Prepare for Gray Swans – Part 1

You can prepare for gray swans.

Simply put, a gray swan is an obvious danger that we tend to ignore. The current inflation run-up is an example. Had we taken the risk seriously, we could have prepared before the big storm hit. Here are some practical steps to protect against gray swans or a major crisis. Increase your capacity to weather storms. Save, and keep 15 months of annual income or funds in emergency savings. This is money that’s not at risk of loss and is easily accessible without a penalty. This was God’s advice to Pharaoh through Joseph to prepare for the great famine of Egypt. Keep a month of cash on hand in a safe location in your home. These funds will carry you through a disruption in online banking or any emergency that requires that you flee. A small amount of gold coins can be insurance against a currency collapse. 

Get free of encumbrances. Be debt-free and in a position of financial freedom. You’ll avoid entrapments or obstacles that limit your choices. Be as liquid as possible in order to have access to resources if quickly needed. Liquidity means having sufficient cash on hand to meet financial responsibilities. Maintain liquidity above the bare minimum to guard against unexpected expenses. Liquid assets may be cash or property that can readily be converted to cash without substantial loss in value. Illiquid or fixed assets are possessions of value that are held long-term, such as real estate or equipment. Tune in tomorrow for more tips.

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