The U.S. economy is in the dumps. To avoid capital erosion, it’s important to review and restructure your personal and business portfolios. While that’s easier said than done, we’ve outlined some things to keep in mind to help you out:
- If you have a SBO – 401(k) plan (made specifically for small business owners in 2001) you can control the weight and distribution of different stocks in your portfolio. Take these precautionary steps:
a. Shift investments over to Large Cap or Blue Chip companies that have a global presence like IBM and Microsoft.
b. Play it safe and move as much cash over to money market accounts as you can.
c. Diversify by dipping into stocks from emerging markets like India and China.
- Even if you’ll only incur a small loss by selling real estate in markets like Florida and Las Vegas – do it (except for investments with a time horizon beyond 2010). Prices in these areas are expected to fall even more over the next couple of years, and losses can be written off against profits from the business.
- For companies in other regions, this is a great time to expand vertically and buy real estate under your business. More than likely, the Fed’s interest rate cutting spree will last another 6 to 8 months. Purchase real estate and lock in a low interest rate. Amid rising inflation and dropping top lines, invest prudently and build strong assets before lending norms tighten even more.
- Drive down costs by shifting to cheaper phone plans (substituting fixed lines with VOIP lines), renegotiating leases and using cash back cards for office supply purchases, phone bills and other miscellaneous expenses.