An economy is essentially a byproduct of monetary transactions. Money comes in, money is spent on services. Money is lent, money is spent, money is paid back with interest. These are the fundamental parts of the system.
Investing relies on the economy and we hope the economy grows in a healthy way. However, every investor should be prepared to weather a storm. Unfortunately, due to extreme amounts of lending and not paying back these loans in the western world, things are getting pretty scary out there. Is a crash imminent? I can’t say. What I can tell you is, by keeping your personal economy strong you can be prepared for this.
Lately, I’ve cut spending on items that don’t produce value. I’m spending more on investments, saving more liquid cash, and seeking novel ways to grow my money. If everyone were to do this, the economy would slow. The few FIRE minded people out there can benefit if they jump on this opportunity while the economy is strong; your money will go further when it’s not.
It may sound like I’m not enjoying the fruits of my labour, but I am:
- Getting more enjoyment out of the things that I have
- Finding joy and new experiences in starting businesses
- Focusing on internal growth. (Go to your local library and get a book. Do it now!)
I really enjoy seeing my net worth increase and learning, so this is easy work for me. If it’s not your cup of tea, I hope you can see the light at the end of the tunnel and can grow your own way.
Look at your personal economy and see how you can make it stronger, more robust, and be prepared to weather any storm. When the downpour starts, you’ll be happy knowing you came prepared and can hit it full on.