What To Do If You’re Worried About North Korean Nukes

August 17, 2017

I recently had someone ask me about what the effect could be on their investment portfolio and what they should do about it should North Korea actually launch a nuclear missile. We’ll get to that, but the reality is that your investments will likely be the last of your worries.

However, there are some things to do to prepare for a nuclear attack that may not only help bring some peace of mind during uncertain geopolitical times, but could also help you should other disasters strike such as a job loss or weather-related event.

1) Know what to do if you’re in the vicinity of a nuclear blast.

The Department of Homeland Security has a quick summary of what to do. Study them and consider taking first aid classes from your local Red Cross. Those skills can come in handy in a variety of emergencies. We change lives at Financial Finesse but this can actually save them.

2) Build an emergency kit.

You don’t have to be a crazy survivalist living in a mountain cabin to see the value of an emergency kit with tools, first aid supplies, and enough food and water to last at least 3 days. In fact, that’s what’s officially recommended by FEMA and the NY Times. A basic kit can be purchased for less than $100 from the American Red Cross or you can put one together for even less, especially if you already own many of the components.

3) Stash some cash.

In an emergency, cash is truly king. No matter how adequate your emergency supplies are, you never know what you may need to purchase from someone else after a disaster. After a nuclear attack, banks may be closed, ATMs may not be working, and money market funds may not be available if the stock market is suspended as it was after 9/11. That’s why you’ll want to keep at least few hundred dollars in physical cash (yes, even if it’s under your actual mattress). Some people hoard gold coins for this reason but will the people you want to buy from know how to value them? I’d stick with cash.

4) Have an emergency food reserve.

If the emergency lasts past 3 days, you’ll still want to be able to eat. Consider having enough food to last at least a couple of weeks. The nice thing about food (as opposed to say, gold) is that it’s something you know you’ll need and can benefit from even if no emergency ever happens.

First of all, you can save a lot of money by buying non-perishable food in bulk. You would then simply replace items as you use them and perhaps add items while they’re on sale. Storing food you eat anyway also ensures that you won’t be making a big change in your diet during an already stressful time.

Second, a food reserve can also be part of your regular emergency fund and reduce the amount of savings you need. After all, you can eat it if you’re unemployed too. Sure, you would miss out on the less than ½ of a percent (minus taxes) you’d otherwise be earning with that money in your savings account. But according to the most recent CPI release, the inflation rate of food over the last 12 months ending at the end of June was about 1.6% so you’d actually be saving more than what you likely would have earned keeping that money in the bank.

5) Make sure your portfolio is diversified.

If we do get attacked, once the initial shock has worn off, you’ll eventually notice that your portfolio will most likely be decimated. This is why it’s important to be diversified in assets like international stocks, government bonds, and possibly alternative investments like gold that may not be as adversely affected or may even benefit from a crisis. You can use this asset allocation guide based on your risk tolerance, follow one of these model portfolios, or simply invest in a “one stop shop” asset allocation fund. Just be sure that this is part of your overall long term investment strategy — don’t change your investments every time North Korea makes a threat or the President tweets one or you’ll likely decimate it on your own.

Hopefully, you’ll never need any of this. In the best case scenario, having a plan will simply provide some peace of mind. In the worst case, better safe than sorry!

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