Today I bring you a special guest post by a gentleman named Wade Slome – a multi-millionaire by the age of 32.

SPECIAL NOTE

Everyone who comments on this post will be entered in a random drawing for a free copy of How I Managed $20,000,000,000 by Age 32. Stop by one or more scheduled blog tour stops and share your thoughts and comments with author and investing expert Wade Slome. He will check in throughout the day to answer questions, and you’ll have a chance to win a copy of his book. Wade is also offering a free ebook which shares excerpts from his book, for a limited time. Be sure to stop by his website to get a copy www.Sidoxia.com. This is your chance to take a look inside the book and to learn additional information about Wade Slome and his business.

For more information about Wade Slome and his virtual tour, check the schedule at  http://virtualblogtour.blogspot.com/2008/12/how-i-managed-20000000000-by-age-32-by.html

Autographed copies available at http://www.amazon.com/gp/offer-listing/0615251587 – from Sidoxia for $23.95

Or

His book is also on Amazon for retail cost – http://www.amazon.com/How-Managed-000-000-00-Age/dp/0615251587

Alright, enough of my yakking, let’s get on to Wade’s thoughts:

How to Recession Proof Your Investments

Not too long ago, the National Bureau of Economic Research confirmed that the United States has been in a recession since December 2007. What a surprise? The recession confirmation just took a year to officially declare this known fact. The moral of the story: beware of the reliability of government statistics – the numbers constantly get revised.

Now that we know we’re in recession, what can you do to grow and protect your investments?

Diversification: The first place to start is “Investing 101″ and that’s diversification. Diversification is even important in asset classes traditionally considered safe, such as AAA-rated short term securities (i.e., Auction-Rate Securities) that froze up last year and prevented investor access. On the fixed-income (bond) side, spreading your bets is a worthy strategy as well. Right now there are certain opportunities in non-treasury bonds, such as TIPS (Treasury Inflation Protected Securities), Convertible Bonds, Corporates, High Yield, International bonds, among others. On the equity side of the coin, in addition to diversifying across individual stocks, broadening exposure across small capitalization stocks, large capitalization stocks, international, and emerging markets is also a worthy line of attack.

Asset Allocation: One size doesn’t fit all. If you’re an 80 year-old retiree, you don’t necessarily have to take on excessive risk. On the other hand, someone in their mid-30s generally can assume more risk.

But much more consideration must go into asset allocation, beyond age. Some older retirees may have such a large financial cushion that priorities may shift to grandchildren, in which case a more aggressive allocation may be appropriate. If the previously mentioned 30 year-old plans on purchasing a business within the next six months, then a conservative allocation should rule the day.

Avoid Fees: When returns are going up, investors generally ignore fees. A silver lining created from the downturn is that investors are sifting through the rubble and raising questions about the high fees they are paying. Whether it is high commissions, load fees, high management fees, surrender charges, administrative fees, 12b1 fees, or other charges, your typical “Joe” stock broker now has to answer tough questions. Don’t be bashful, ask the difficult questions. Once you factor in load fees, management fees, and transactions costs, the average investor is probably paying close to 2.50%, which is brutal to consider when you realize that ten-year treasury notes are currently yielding about 2.8% and investors have been losing their shirt in real estate and financial investments….ouch!

Dollar Cost Averaging: As asset prices decline, you can purchase more of that same asset with a similar amount of money. Or stated differently, you can purchase the same amount of shares for less money. For example, if I have $100 and I need to buy a suit, if the suit goes on sale for half price, there’s now a good chance I can buy a pair of shoes and a belt to go along with my suit. Plainly and simply, I can buy more goods at a lower price. As equities have lost close to 50% of their peak values, investors can purchase double the number of shares for the same price – a pretty good deal.

Market Forces Recession Proofing Assets: The almighty economic laws of supply and demand have injected self-correcting protection items into investors’ portfolios. With more than a dozen bear markets in our back pocket since World War II, we can appreciate that pricing risk levels are much lower than a year ago. Although counterintuitive, these periods historically have been the absolute best times to increase equity allocations (modified for investors’ risk tolerance and time horizons).

The Commodity Bubble has Burst: Every penny of gasoline price decline roughly translates into $1 billion in stimulus to the economy. A decline in gasoline prices from $4.50 a gallon to less than $2.25 a gallon translates into roughly a $225 billion stimulus. The prices of wheat and corn have come down to earth too and this will eventually lead to lower prices at the grocery store. In a recession, these self-correcting forces naturally relieve some of the economic pressures, and eventually these cycles provide a tailwind to the economy rather than a headwind.

Plan. Invest. Prosper.

www.Sidoxia.com