If I have learned anything from the current recession and associated turmoil in the markets it is this: no asset is safe from price depreciation, whether it is real estate, equities or fixed income securities.

It is certainly a humbling message being delivered to a generation which has hitherto thought that a house will always be worth what you paid for it (at worst) and that stocks will rise over any ten year period. I do not believe that anyone should wholly remove themselves from these risky assets, as smart investing in them-which includes being prepared for years like 07-08-will give you a better chance of retiring well.

Today’s is a column of safety. The first group of securities outlined here are the safest vehicles for your money. These are: demand deposits (your bank account is insured up to $100,000 by the FDIC), money market mutual funds (highly liquid short term debt mutual funds, newly insured), and Treasury securities.

Unless you believe that the American economy is about to collapse-not an unheard of opinion these days-these vehicles will most likely return your money with some small amount of interest. (If you do believe that the American economy is about to collapse, buy liquor and cigarettes, as these commodities often take the place of currency in times of collapse.)

Of course, as college students, an aptly labeled risky bunch, you laugh at my suggestion of three percent and want to know how to invest in equities safer. There are many answers to this, and the most prominent is of course “diversify.” Buy many different types of stocks, from different industries-some of which will be less cyclical, e.g. cigarettes and utilities, but with today’s financial “advancement” it is possible to invest in what are called “long/short funds.” Without boring with all details, someone who has a short position will profit if the equity decreases in value, and long is a normal purchase. These funds therefore have the ability-or rather their managers have the ability-to profit in a market which is being indiscriminately sold off… a market like… 08 perhaps?

Investing part of your portfolio in some safer assets, or hedging your portfolio with some short positions, will serve to protect your money in hard times

like these.