What to do to protect myself in the event of a US default.
July 23, 2011 7:48 AM Subscribe
I'm not saying that I think the US will default in 10 days, but I am nervous enough to start thinking about covering my butt. I have some money socked away. Its not much, but its something, and I would really love for it all not to somehow evaporate.
posted by tempythethird to work & money (10 answers total) 8 users marked this as a favorite
So half of my savings are sitting in a bank account in USD, collecting dust. I'm not too worried about that, because even if the dollar tanks, I am not going to be using this money outside of the US.
The other half, however, is split up among bond ETFs, specifically these: HYG, LQD, and BND. This is what worries me. I have only a fuzzy understanding of these ETFs and the underlying bonds. In theory, if the US defaults, non-Government bonds should see a boost. On the other hand, some of the companies that have issued these bonds may go bust for whatever reason. Either way, I have no idea how these ETFs would react to a potential default, and whether or not holding onto them would be a good idea.
My understanding of finance and economics comes almost entirely from listening to Planet Money, so financefilter, please set me straight. Also, to be clear, I am not looking for investment advice and I'm not trying to make money. Rather, I'm looking for any perspective on how the aforementioned ETFs should react to a default.