What do we do with our money while we’re preparing for a potential fall of democracy?

Here's 6 things I am personally doing and what we are recommending to our clients who are worried about economic instability.

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A couple of weeks ago, we received this email from a client:

“Hi team,
I am watching as Trump dismantles our government bureaucracies. I am concerned about how that will affect me financially. I also want to be in a position to leave the country if I need to. Sounds crazy even saying this …but here we are.”

If this hits home with you as well, and you’re looking for guidance on what to do with your money, keep reading.

In uncertain times, financial security becomes a top priority. If democracy is at risk, economic instability often follows, making it crucial to safeguard our assets. But what can we do with our money while preparing for such a scenario? Here are some practical steps to consider.

1. Strengthen your cash position.

• When I say cash, I am referring to all of the different kinds: cash in your regular checking & savings accounts, high yield savings account funds, money markets, CDs and tangible cash.

• As in normal political and economical climates, Cash Is King. Cash is always the financial foundation to your overall wealth. If your cash amounts are not suitable, your financial plan is a house of cards.

• So, I know you may want to hear something juicier or more mysterious, but now is the time to take an honest look at your Emergency Funds and make sure you have at least 3-6 months’ worth of living expenses in cash. This is a universal rule of thumb for a reason…there is such thing as too little cash as well as too much cash.

  • If you’re wondering where you fall in the 3-6 month range, here’s a quick rule-of-thumb guide:

    • 3 months’ worth if you’re single with no dependents

    • 4-5 months’ worth if you’re married or have one dependent

    • 6 months’ worth if you’re married with dependents

  • Now, because we are in uncertain times, if you feel more at ease holding a larger than 6 months’ worth of cash, that is perfectly acceptable. Everyone’s risk tolerance when it comes to cash is different. If there’s ever a time to be more conservative and keep a little more cash than usual, it’s now.

    • For those who can afford it, one extra benefit of keeping a larger-than-normal cash position right now is to keep it as “dry powder” for when and if a huge drop or recession happens. For example, back in March of 2020, we had many clients who were ready to throw in some “dry powder” when the market plummeted.

    • This is a good time to share one of my favorite investing quotes: “Be fearful when others are greedy and greedy when others are fearful.” - Warren Buffett

• FDIC Concerns:

  • The FDIC, established during the Great Depression, plays a crucial role in maintaining public confidence in the banking system by insuring deposits up to $250,000 per depositor.

  • I know Trump has been proposing changes which have raised concerns among financial experts and former regulators. Critics argue that restructuring the FDIC could undermine this confidence, especially in light of recent banking failures that have already unsettled the financial sector.

  • It's important to note that any substantial changes to the structure or existence of the FDIC would require legislative action by Congress. As of now, these discussions are in the proposal stage, and no official policy changes have been implemented.

  • Even if this administration wants to weaken the FDIC, it would face legal and political hurdles, including resistance from Congress, the banking sector, and the public. I don't believe we should lose faith in this institution.

• How much should you have on hand in tangible, hard cash?

  • I know there is a lot of fear around the dismantling of the FDIC and a catastrophic cyber attack, etc. but it’s important to address the risks in holding tangible cash:

    • You could lose or misplace it.

    • It could be stolen.

    • It could be destroyed in a fire or other climate event.

    • And cash that is not earning interest will lose it’s value the most in inflationary periods, which may worsen if tariffs actually go through.

  • My family is personally keeping enough on hand (in a fireproof safe) that would last us a few weeks. Enough to buy gas, food and travel for about a month. This is a highly personal decision and should be based on your own risk tolerance and suitability, but I want to emphasize this isn’t the time to put it all “under your mattress.”

• One last note on where to put your cash. We are still in a relatively higher interest rate environment (due to inflation—the Fed increased interest rates to temper spending), and that means High Yield Savings Accounts are earning around 3.5-4% (as of March ‘25). You should definitely be taking advantage of HYSAs, and I have a free guide that tells you everything you need to know about them and even the one that I personally use. Get it HERE.

  • We keep enough in our checking to cover our monthly costs, and everything else is stored in the HYSA to make our cash hustle for us.

Photo by Dan Dennis on Unsplash

2. Reduce High-Interest Debt

A high high-interest debt burden can become a major liability if the economy crashes. Decreasing high-interest debt right now is a smart financial move for several reasons:

1. Rising Interest Rates – If interest rates continue to rise, variable-rate debt (like credit cards and some loans) will become even more expensive, making it harder to pay off.

2. Inflation Impact – High inflation reduces purchasing power, meaning that maintaining high-interest debt could leave you with less disposable income for essentials.

3. Economic Uncertainty – With concerns about potential economic slowdowns or recessions, reducing debt provides more financial flexibility in case of emergencies or job loss.

4. Better Credit Score – Paying down high-interest debt improves your credit utilization ratio, leading to a better credit score, which can help secure lower interest rates on future loans.

5. More Savings for Investments – Instead of paying high interest to creditors, reducing debt allows you to allocate more money toward savings and investments that can grow over time.

6. Reduced Financial Stress – Eliminating or lowering high-interest debt gives you greater peace of mind and financial security.

3. Is Gold a Good Addition to Your Portfolio?

• In an era marked by inflation concerns, political upheaval, and market uncertainty, gold remains a compelling asset for many investors. Historically, this precious metal has served as both a hedge against inflation and a diversifier during market stress.

• Unlike stocks or bonds, gold functions as an asset class unto itself. Its performance is driven by factors such as jewelry demand, central bank policies, and global economic trends—making it largely independent of the cycles that affect traditional investments.

• Depending on the level of your worriedness in today’s volatile landscape, a carefully measured allocation of gold—around 10%—might provide the diversification and downside protection your portfolio needs. If you’re grappling with questions about how gold fits into your long-term strategy or if the current economic indicators have you reconsidering your allocations, let’s have a conversation.

• This doesn’t necessarily mean buying tangible gold. You can purchase a gold ETF which are are backed by gold holdings and traded like stocks on exchanges, making them easy to buy and sell.

Photo by Sudhith Xavier on Unsplash

4. Continue to diversify your assets.

• One of the first steps in financial preparedness is diversification. Avoid keeping all your wealth in one asset type. Consider spreading your investments across different asset classes such as stocks, bonds, real estate, commodities like gold or silver, and even the “c word” (I’m not allowed to talk about this asset type because of strict compliance rules). This strategy helps mitigate risk in the face of political and economic uncertainty.

• Your Bucket Strategy Should be on autopilot

  • Short-Term Bucket: Cash & cash equivalents

    • Cash on hand

    • Cash in checking account for monthly expenses

    • Emergency Funds in a high yield savings account

    • Cash in HYSA for goals/events that are happening within the next 2 years

  • Intermediate-Term Bucket

    • Invest for goals that are 2-10 years away

    • Use a “balanced” allocation where the stock to fixed income ratio is close 50/50 (more conservative than your long-term investments)

  • Long-Term Bucket

    • Investments for goals that are 10+ years away

      • Retirement income

      • Early retirement income

      • Education Planning

    • Investment should be relatively more aggressive because of long-term time horizon

• Check your liquidity ratio = liquid assets divided by illiquid assets

  • liquid assets = cash, investments that can be traded any given day

  • illiquid assets = real estate, businesses, etc.

  • The rule of thumb is to have a liquidity ratio above 1.

5. Don’t stop investing altogether

• However, if your Emergency Funds or Cash goal isn’t where you want it to be, consider decreasing or pausing contributions to build up your cash until you reach your cash goals or feel more comfortable.

• Pro Tip: You can change your 401(k) contributions at any time.

• I know this feels counterintuitive, but listen *grabbing your hand tenderly*…we have to play the rigged game to the best of our ability.

• As hard as it may be, we have to look for the opportunities while also staying vigilant. It’s important to stay disciplined:

  • Diversify

  • Automate investing so you are “dollar cost averaging” into the market, which is the most disciplined way to invest

  • Consider alternatives like gold

  • Train your mindset to view dips as sales

Photo by Cody Black on Unsplash

6. Don’t panic!

• Panic selling is one of the worst things you can do with your investments. As a financial advisor, one of my biggest roles during economic and political uncertainty is holding my clients’ hands, making sure they don’t panic and helping them make educated and confident decisions with their investments.

• If you feel like it may be time to hire an advisor that can meet you where you’re at and who can understand your fears, go here to book a Discovery Meeting with me and my partner

  Dustin Granger
  .

There is no perfect answer on what to do with your money because everyone’s situation is so unique, but I hope these insights have given you some ideas, assurance and action items to begin to think about in these unprecedented times.

Disclosure: ​The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.