East Coast Earthquake – Another Case for Geographic Diversification
August 23, 2011
Thankfully the earthquake felt on the East Coast was relatively minor by most standards. Yet it could have been much worse and some seismologists think that New York City is well past due for a big one:
NYC Past Due for an Earthquake
One of Harry Browne’s pieces of advice was to store your money geographically diversified, preferably overseas. While many may think this is for tax evasion (which is illegal and should never be done), the reality is it serves completely legitimate purposes. Not only are terrorist acts against US and international financial centers possible (and happened in the past), but other disasters can also make accessing your money difficult if you have it stored in one place. Earthquakes, massive power failures, hurricanes, cyber attacks, etc. are all a threat.
Today’s near miss with a major earthquake is just the latest example why you should not keep all your money at one institution and should spread it around outside of the country where you live. The NY financial district did not shut down, but a bigger earthquake could have been a major disaster. Yes I’m aware that banks, etc. have hot backup sites. But do you really want to be the crash test dummy in a major disaster when you have enough else to worry about? Me neither. If you have your money spread geographically you can still access some part of your funds while the other portions are being sorted out. This can be a big relief in an emergency knowing you aren’t locked out of 100% of your money.
This part of Harry Browne’s advice has become harder to do the past few years, but is not impossible if you research your options. Keeping all your assets at a single financial institution may be simpler, but you open yourself up to new kinds of risks by doing so. This isn’t to say that you should split your money up into tiny slices and spread it around like a squirrel. But having your investments split between two institutions is not a bad idea. It’s a even better idea to make sure those institutions are separated by many thousands of miles and a border.