What should I invest in to hedge against a serious crash or calamity?
If you're referring to investment hedging, then you should diversify into things that would profit if expected event hit. For example alternative energy sources would benefit greatly from increased evidence of global warming, or the onset of peak oil. Preparing for calamities that would render the stock market inaccessible, the answer is quite different.  Simply own more of things that people would want than you need.  A list of possibilities would include: Precious metals are also a way to secure value outside the financial markets, but would not be readily sellable until the immediate calamity had passed. All this should be balanced on an honest evaluation of the risks, including the risk of nothing happening.  I've heard of people not saving for retirement because they don't expect the financial markets to be available then, but that's not a risk I'm willing to take. Different risks require different hedges.  You won't find a single hedge that will protect you against any risk.  The best way to think about this is who would benefit if those events occurred?  Those are the people you want to invest in.  So if a war broke out, who would benefit?  Defense contractors.  Security companies.  You get the idea. You also need to think about if you really need to hedge against those things now or not.  For example, I wouldn't bother to hedge against global warming or peak oil.  It's not like one morning you're going to wake up, turn on CNNfn and see that the stock market is down 500 points because global warming or peak oil just hit.  These are things that happen gradually and you can react to them gradually as they happen. Are you willing to risk the possibility of investing to prepare for these things and losing money or simply getting meager returns if those crises don't happen? Just invest in a well diversified portfolio both geographically and across multiple sectors and you should be fine. If peak oil is a concern, hedge against the effects of high oil prices.  Reduce your dependence on the gas pump by moving closer to the places you normally drive, or adjust your lifestyle so that you need less.  Buy things now that depend on fossil fuels (there's a long list). If instability is a concern, invest in a place where the chance of instability is less. If a freak event is a concern, think through what the consequences would be, and hedge accordingly. Etc. Etc.
Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments.  If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money.  Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities.  Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down.   And I agree with those who say that you aren't capitalized well enough to get started.  You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging).  Let's say that you make money on two out of three stocks on average.  What are the chances that you will lose money on three stocks in a row?  One in twenty-seven.  What if that happens on your first three stocks?   What if your odds at starting are really one in three to make money?  Then you'll lose money more than half the time on each of your first three stocks.  The odds don't favor you.   If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund.  Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information.  Focusing on the math problem over other things is then what you are supposed to be doing.  If you are good at that, you should be able to turn that into a permanent job.  If not, then go back to school somewhere.  You may not like your schooling options, but they may be better than your work options at this time.   Note that most internships will be easier to get if you imply that you are only taking a break from schooling.  Avoid outright lying, but saying things like needing to find the right fit should work.  You may even want to start applying to schools now.  Then you can truthfully say that you are involved in the application process.  Be open about your interest in the mathematics of finance.  Serious math minds can be difficult to find at those firms.   Given your finances, it is not practical to become a day trader.  If you want proof, pick a stock that is less than $100.  Found it?  Write down its current price and the date and time.  You just bought that stock.  Now sell it for a profit.  Ignore historical data.  Just monitor the current price.  Missed the uptick?  Too bad.  That's reality.  Once you've sold it, pick another stock that you can afford.  Don't forget to mark your price down for the trading commission.  A quick search suggests that $7 a trade is a cheap price.  Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock.  Keep doing that until you've run out of money.  Realize that that is what you are proposing to do.   If you can make enough money doing that to replace a minimum wage job, then we're all wrong.  Borrow a $100 from your mom and go to town.  But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares.  Starting with $100, you are more likely to run out of money within ten stocks. Firstly, playing the lottery is not investing it is gambling. The odds in gambling are always against you and with the house.  Secondly, no one would ever give you a payout of 3 to 1 when the odds are 50:50, unless they were looking to give away money. Even when you place your chips on either red or black on a roulette table your payout if you are correct is 100% (double your money), however the odds of winning are less than 50%, there are 18 reds, 18 blacks and 2 greens (0 and 00). Even if you place your chips on one single number, your payout will be 35:1 but your odds of winning are 1:38. The odds are always with the house. If you want to play the lotto, use some money you don't need and expect to lose, have some fun and enjoy yourself if you get any small winnings. Gambling should be looked at as a source of entertainment not a source of investing. If you take gambling more serious than this then you might have a problem. "Nobody has a ""crash proof"" portfolio -- you can make it ""crash resistant"". You protect against a crash by diversifying and not reacting out of fear when the markets are down. Be careful about focusing on the worst possible scenario (US default) vs. the more likely scenarios. Right now, many people think that inflation and interest rates are heading up -- so you should be making sure that your bond portfolio is mostly in short-duration bonds that are less sensitive to rate risk. Another risk is opportunity cost. Many people sold all of their equities in 2008/2009, and are sitting on lots of money in cash accounts. That money is ""safe"", but those investors lost the opportunity to recoup investments or grow -- to the tune of 25-40%." From watching the hearings and reading the papers, it appears that JPMs London Office entered into a hedge-like position that was meant to hedge against a worldwide economic downturn. As far as I know, JPM corporate found this position on their own (probably alerted by the huge mark-to-market losses) and it was not found by some outside manager.  That position itself was a hedge that turned out not to be a very good hedge, and upon this finding it was determined that JPM needed to exit this hedge. Unfortunately, the position had lost a substantial amount even by this point. This, according to Dimon, was because this particular group had been very successful in previous years and was not subject to the same regulations as most other groups.  JPM has been very quiet about the details, because they don't need the position getting any more out of control than it already is. I assume some market participants have a good idea on what it is exactly, given its size, but I do not.   It is not really like LTCM, which was not hedging and were supposed to be taking arbitrage positions in the market. It is also unlike LTCM is myriad ways (being 1 major position, $8B is not the same to JPM as to LTCM, JPM will almost 100% take the full loss, etc).  I would recommend watching [this](http://www.c-spanvideo.org/program/306502-102). Dimon clearly thinks the position was very unwise, and they are unwinding it, but details will be in short supply until JPM gets out of the position. "Do you want to do it pre or post correction? If you're bearish on the market the obvious thing to do is short an index. I would say this is kind of dumb. The main problem is that it may take months or years for the market to crash, and by then it will have gone up so much that even the crash doesn't bring you profit, and you're paying borrowing fees meanwhile as well. You need to watch the portfolio also, when you short sell you'll get a bunch of cash, which you most likely will want to invest, but once you invest it, the market can spike and pummel your short position, resulting in negative remaining cash (since you already spent it). At that point you get a margin call from your broker. If you check your account regularly, not a big deal, but bad things can happen if you treat it as a fire and forget strategy. These days they have inverse funds so you don't have to borrow anything. The fund manager borrows for you. I'd say those are much better. The less cumbersome choice is to simply sell call options on the index or buy puts. These are even cash options, so when you exercise you get/lose money, not shares. You can even arrange them so that your potential loss is capped. (but honestly, same goes for shorts - it's called a stop loss) You could also wait for the correction and buy the dip. Less worrying about shorts and such, but of course the issue is timing the crash. Usually the crashes are very quick, and there are several ""pre-crashes"" that look like it bottomed out but then it crashes more. So actually very difficult thing to tell. You have to know either exactly when the correction will be, or exactly what the price floor is (and set a limit buy). Hope your crystal ball works! Yet another choice is finding asset classes uncorrelated or even anticorrelated with the broader market. For instance some emerging markets (developing countries), some sectors, individual stocks that are not inflated, bonds, gold and so on can have these characteristics where if S&P goes down they go up. Buying those may be a safer approach since at least you are still holding a fundamentally valuable thing even if your thesis flops, meanwhile shorts and puts and the like are purely speculative." "Say you have $15,000 of capital to invest. You want to put the majority of your capital into low risk investments that will yield positive gains over the course of your working career.  $5,000: Government bonds and mutual funds, split how you want.  $9,500: Low risk, trusted companies with positive historical growth. If the stock market is very unfamiliar for you, I recommend Google Finance, Yahoo Finance, and Zack's to learn about smart investments you can make. You can also research the investments that hedge fund managers and top investors are making. Google ""Warren Buffett or Carl Icahn portfolio"", and this will give you an idea of stocks you can put your money into. Do not leave your money into a certain company for more than 25 years. Rebalance your portfolio and take the gains when you feel you need them. You have no idea when to take your profits now, but 5 years from now, you will be a smart and experienced investor. A safe investment strategy to start is to put your money into an ETF that mimics the S&P 500. Over the past 20 years, the S&P 500 has yielded gains of about 270%. During the financial crisis a few years back, the S&P 500 had lost over 50% of its value when it reached its low point. However, from when it hit rock bottom in 2009, it has had as high percentage gains in six years as it did in 12 years from 1995 to 2007, which about 200%. The market is very strong and will treat your money well if you invest wisely. $500: Medium - High risk Speculative Stocks There is a reason this category accounts for only approximately 3% of your portfolio. This may take some research on the weekend, but the returns that may result can be extraordinary. Speculative companies are often innovative, low priced stocks that see high volatility, gains or losses of more than 10% over a single month. The likelihood of your $500 investment being completely evaporated is very slim, but if you lose $300 here, the thousands invested in the S&P 500, low risk stocks, government bonds, and mutual funds will more than recuperate the losses.  If your pick is a winner, however, expect that the $500 investment could easily double, triple, or gain even more in a single year or over the course of just a few, perhaps, 2-4 years will see a very large return. I hope this advice helps and happy investing! Sending your money to smart investments is the key to financial security, freedom, and later, a comfortable retirement. Good luck, Matt McLaughlin" "As JoeTaxpayer notes in his comment, ""answers"" to this are really just opinions, so here's mine, for what it's worth. If your risk tolerance is 5 out of 5, you shouldn't have anything in Treasuries.  Those are basically the most conservative of all investments.  This would probably mean no TIPS as well.  If you're more like 4.5 out of 5, you could have some, but just a little; a 30% allocation to government securities is quite conservative.  If you want to diversify across different asset classes, you could consider a bond fund like (for instance VBMFX, the Vanguard total bond market index fund).  Your portfolio doesn't currently contain any (non-government) bonds, which is something to consider. 20% seems like quite a large allocation to REITs.  Most sample portfolios I've seen allocate no more than 10% to REITs, often no more than 5%.  There are some that have more like the 20% you're envisioning, but you might want to ponder that a bit more especially in light of your concerns about REITs being at an all-time high. As for your question about all-time highs, it's reasonable to think about, but I think waiting for 30-50% off all-time highs is unrealistic.  Looking at a chart of VFINX (essentially the S&P 500), I see that at the nadir of the recent downturn, in early 2009, the market was at about 50% of its pre-crash all-time high.  At the nadir of the dot-com bust, the market was about 45% off its pre-crash high.  If you're waiting for it to be 50% off it's all-time high, you're not just waiting for ""a good time to invest"", you're waiting for a major crash. It could certainly make sense not to immediately put everything into US stocks, but that doesn't mean you should put nothing in.  As Trevor Wilson commented, you could put some of the money in and then gradually add the rest over time, reducing the risk of unluckily buying at the peak.  (This can also reduce the psychological angst of worrying about whether you're doing the right thing, which is worth taking into account.)  Also note that if you get rid of the treasuries, you eliminate a good chunk of the stuff that you thought was too close to the peak anyway. Your two basic points (asset allocation and low-cost funds) have a strong Boglehead flavor.  You may already have looked at the Bogleheads wiki; if not you should take a look.  If you are comfortable with that philosophy (and I think it's a sound one), you should remember that part of that philosophy is not worrying about ""timing the market"".  You pursue a buy-and-hold strategy if you believe the market will go up in the long term and don't care much about what it does in the short term.  That said, as mentioned above, you might want to ease in your investment over time, rather than buying all at once, if only to avoid tearing your hair out if the market goes down in the short term. Incidentally, your proposed portfolio is similar to this one that they mention, although as I said above I think this is too conservative if you are 30 years old and consider yourself a ""5 out of 5"" in terms of risk tolerance.  I'm not sure if you already saw that in your research, but since that portfolio apparently has a name and is known, you might be able to find information about its risks and benefits by searching for discussion of it by name." If the market has not crashed but you know it will, sell short or buy puts.  If the market has crashed, buy equities while they are cheap. If you don't know if or when it will crash hold a diversified portfolio including stocks, bonds, real estate, and alternatives (gold, etc).