Where is a safe place to invest money in case of economic downturn?

[Auggie]

This seems to be the group to ask.

I think the U.S. economy has been living on borrowed time and is ready for a major correction. I don't want to see the vast majority of my retirement savings halved as it was in the last stock market crash (2001).

Most of what I have now is in growth and income mutual funds. Where would be a good place for me to transfer the bulk of it at the first sign of an economic downturn? Ideally, I'd want it within the same fund family, just to make the transfer quicker and easier. Bond Fund? Money Market? Foreign Fund? Precious metal funds?

I'm not looking to time the market. Just protect as much as I can.

Thanks

[BOSSHOG]

1. I would suggest

that you open a commercial bank or credit union Roth IRA Certificate of Deposit and max out every year. Depending on your age, and if you are happy with your mutual fund company you wouldn't have to move anything. But plan on diverting funds intended for those funds to ensure your IRA CD gets the maximum allowable. I would suggest a 12 month CD so you can feed it each year. And (once again depending on your age) if your funds in the stock market are reduced in half, that would be a great time to buy big.

I have some bucks in Janus Growth and Income and a couple of their slightly low risk Mutual funds and they have served me well for almost 20 years. But the closer I get to retirement, (I'm currently 53), I'm slowing down my additions to them and concentrating on my CD IRA's.

Good luck.

[lumberjack_jeff]

2. As with most things, it depends.

If you're betting on the dollar dropping against other currencies, anything that is not dollar-denominated is worth looking at. I have vanguard emerging markets index and vanguard total intl stock index.
If you're betting on worldwide recession, precious metals may be advisable. It's hard to find a precious metals mutual fund, so I've invested in vanguard precious metals and mining index (they invest primarily in mining companies)
If you're betting on a big drop in the general stock market, profunds offers USPIX, ultrashort fund, which is designed to go up twice as fast at the dow drops. Of course, the inverse is also true. I have a few shares of this as a slight hedge.

If you're betting that the world's going to go absolutely to hell in a bucket, ammo and kruggerands.

[A HERETIC I AM]

3. Better advice. Don't Bet. Invest.

Proper allocation, proper diversification across asset classes and styles.

[lumberjack_jeff]

4. Most asset allocation models include domestic long term bonds.

It's not unlikely that they'll continue to show lackluster returns due to fact that big interest rate drops are improbable. The purpose of long term domestic bonds in the published asset allocation models could better be served by another investment vehicle, imho.

The investments chosen for my asset allocation are biased toward a simple macroeconomic assumption; the dollar won't rebound strongly against other currencies. If that assumption is incorrect, my returns will be somewhat less than if I'd assumed the opposite.

Minimize risk while optimizing return. A savings account is risk free, but everything else is a calculated risk, i.e. "a bet".