It can be tough to know what to do in a financial crisis, but there are ways you can protect your assets. -

A financial crisis? Don't panic

Here are ten things that this financial panic means for you.

1. Check that your bank accounts are federally insured. The Federal Deposit Insurance Corporation (FDIC) guarantees deposits up to $100,000 per person. If you have to hold more than that, spread it across multiple banks. As a taxpayer you are paying for this insurance. Use it.

2. Make sure your brokerage accounts are federally insured, too. The Securities Investor Protection Corporation (SIPC) guarantees you at places like Lehman Brothers, Merrill Lynch, E-Trade and the like up to $500,000, including $100,000 worth of cash. The same rules apply: If you have more to invest, spread it across multiple firms. Note: The SIPC is only there to make sure you get your shares and bonds back if a brokerage fails. It does not, obviously, guarantee those investments' value.

3. Put money in thy purse. If this market and this economy get any tougher, cash isn't just going to be king any more. It's going to be king, queen, emperor, lord high chamberlain, and the whole court — including the royal cat and crazy prince Ruprecht locked in the attic. The easiest way to make or find a buck is to save it. So take an axe to those family budgets. The restaurant meals. The Super Duper Everything Cable package. The rip-off checking account with the high fees and low interest. It's all costing you.

4. Set up a home equity line of credit while you still can. I usually don't like advising people to take on more debt, but if access to ready cash might be a life saver it's best to line it up. That's especially true if you are worried about your job. Credit is already tight, and it may get a lot tighter still.

5. Refinance your mortgage. The panic on Wall Street just caused a collapse in the interest rate on long-term US Treasury bonds, as lots of investors rushed there for safety. And that usually leads to a fall in long-term mortgage rates.

6. Stop pulling a Monty Python when it comes to your worst investments. If you ever saw John Cleese and Michael Palin perform their famous skit about the dead parrot, you know exactly what I mean. No, your Fannie Mae shares aren't "resting." They're lying at the bottom of the cage with their feet in the air. What more do you need to know? So stop waiting for them to "recover" before sorting out your portfolio.

7. Don't panic. Journalists, like markets, tend to move in herds. And by the nature of their jobs they write about the plane that crashes instead of the thousands that land safely. Remember, too, that pundits want to seem really wise by putting on serious expressions and saying things like "we don't know how this thing is going to play out," and "the situation could get a lot worse". Bah. Guess what? We never know how things are going to play out. And the situation could get a lot better too. That's the future for you.

8. When it comes to your short-term money needs, nothing has changed. Any money you might need within the next year or two should be held in cash or equivalents. That was true two years ago and it is true now. The stock market is no home for money you may need urgently. It could fall 30 percent or jump 30 percent. Nobody knows. You can get a one year CD paying 5 percent right now, and it's federally guaranteed.

9. If you are investing for five years or more, buy some stock. The investment outlook is much, much better today than it has been for several years, because shares are much cheaper. World markets overall have fallen 27 percent from last year's peak. They're not a steal at current levels but they are not particularly expensive either. Invest globally. Vanguard Total World Stock gives you the whole world and low fees. If you are looking for a value focus, Morningstar analyst Bridget Hughes likes Oakmark Global. Another good one is Tweedy, Browne's new Worldwide High Dividend Yield Value. The list is not comprehensive. Remember: I am not trying to call the bottom of the market. Things could fall quite a bit further ahead. No one knows. So only invest little, often, and broadly.

10. If you want to worry about anything, worry about your taxes. The worse this crisis gets, the more they will end up putting the taxpayer on the hook to prevent a meltdown. Taxes are going up sooner or later anyway, no matter who wins the election, because of our gigantic federal deficits. (If you think Lehman Brothers was bad, you should look at Uncle Sam). And you can forget about any talk of tax breaks. Oh, and if you want a break from worrying about taxes, worry about Treasury bonds. Deficits won't do anything good for them.

Write to Brett Arends at

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