Time to Disaster-Proof Your Portfolio

The market seems like it's in a constant state of flux lately, thanks to hurricanes, high oil prices and the threat of inflation. Granted, it's pretty unsettling but (please) calm down: This is not Armageddon.

Like everything else in life, the market has its ups and downs. It has proved to be resilient in the past and will prevail again through this current uncertainty. So don't even think about stuffing cash under your mattress.

But that doesn't mean you should avoid the obvious. While the world is not ending, things are clearly a bit rocky here in the U.S. Hurricane season will come to an end, but the possibility of a recession will still linger. The economy is immensely vulnerable right now, thanks to huge deficits and very low national savings.

So while you don't need to jump ship, you do need to make sure your portfolio is properly diversified so that you are prepared for any other upcoming "disasters." That means beefing up your savings and properly diversifying outside of the comfy blue-chips zone many of us take safety in. (Consider this the second part of the disaster preparation for your financial life.)

Save for the Long-Haul

As trite as it sounds, the best way to prepare for disaster is to save as much as you can on an ongoing basis, says Rande Spiegelman, vice president of financial planning at the Schwab Center for Investment Research. "Not only will the savings contribute to your long-term investment portfolio, the discipline of regular savings will provide a short-term cushion if earnings are interrupted."

So stop living paycheck to paycheck and spending 110% of your salary -- it's going to catch up to you. Get yourself on a disciplined savings schedule, whether it's with payroll contributions to your 401(k) or monthly transfers from your checking to savings account. If it happens automatically, you won't even notice it. But you will notice your peace of mind with each transfer as your nest egg continues to grow.