How to Make Financial Decisions During a Crisis

In this article, we’ll focus on the financial side of things—how to avoid suddenly being left without means of support and how to protect what you’ve already saved. The main thing to understand is that any forecasts are pretty much useless right now. No one knows exactly what will happen or how things will work in this climate of uncertainty.

Asking “could it happen that…” is pointless. Assume that any scenario is possible. Every day brings new information that forces us to reassess just how pessimistic we should be about potential outcomes—even those we hadn’t considered just days ago.

General Principles for Decision-Making

1. Focus on preservation, not profit. In investment chats, you’ll find people planning to sell their apartments or take out loans to “buy cheap Sberbank shares with everything they have.” While this might work in some scenarios, it seems unwise in the current situation.
2. Minimize regret in worst-case scenarios. Normally, people try to make decisions that give the best expected result in the most likely scenario. Right now, the probabilities of different outcomes are changing almost hourly (and mostly for the worse). It’s better to make choices you won’t deeply regret if things turn out badly—even if you think that’s unlikely.
3. Don’t panic. The previous point doesn’t mean you should spiral into apocalyptic thinking and act on emotion. Ideally, you should be emotionally unafraid of anything, but rationally prepared for everything. It’s tough, but it’s the best approach.
4. Diversify. If you’re unsure what to do with your money—whether to do A or B—it makes sense to split your capital into portions and do A, B, and maybe even C (and keep some for D and E, just in case). This increases the chance that you’ll lose money in at least one area, but greatly reduces the risk of losing everything at once.
5. Choose optionality. In uncertain times, the best decisions are those that leave you with the most flexibility for future adjustments. Good decisions are those that keep your options open; bad ones lock you into a single, rigid path.

Finances for Those Living in Russia

There are two main sources of risk for people living in Russia:

• Political risks: Sanctions from the West and retaliatory actions by Russian authorities. This could mean a ban on any financial relationships with Western institutions for Russian residents/citizens, or scenarios like “in response to the confiscation of foreign reserves by hostile forces, restrictions are imposed on free currency exchange…”
• Economic risks: The effects of international isolation on the Russian economy and asset prices.

Key Considerations

• If you’ve been thinking about emigrating, now might be a good time to act. If you have an in-demand modern profession (like IT or programming), many are willing to help with jobs and relocation. Later, this option may become more difficult, especially if many people try to leave at once.
• If you plan to go abroad soon, consider how to move your capital out of Russia. This is usually only possible if you already have the necessary infrastructure—open bank or brokerage accounts with completed KYC/AML checks.
• If you plan to stay in Russia but have capital abroad (like investments), you might want to consider bringing it back, as the risk of freezes or blocks for Russians increases as sanctions take effect. It’s always good to have backup accounts with different foreign brokers or banks, but these should have been opened in advance—right now, it’s unlikely that new accounts will be opened for Russian residents.
• If you have foreign currency or securities in sanctioned banks or brokers, it makes sense to withdraw them. You can likely take out cash, and transfer securities to a non-sanctioned broker.
• A pessimistic scenario could look like this: an economic situation similar to 1998, plus international isolation like Iran. Inflation at levels not seen in a long time.
• Having a MIR card instead of VISA/Mastercard will soon be relevant—order one now.
• Keeping some cash in a widely accepted currency (USD/EUR) might be a good backup plan.
• As for physical gold, coins, and similar assets—you’ll likely only be able to use them at a steep discount to their real value. I wouldn’t focus on this option.
• Owning your own real estate is good—hold on to it.
• The stock market is a wild card. Gaining exposure to international markets from within Russia may become difficult. Investing only in crashed Russian stocks—no predictions here, anything is possible (from “unique historic buying opportunity” to “what is dead may never die”).
• Always remember liquidity. If you see a nice yield on your account but can’t actually withdraw the money or use it to buy food, the joy of a pretty chart on your screen won’t mean much.
• Be prepared not only for economic blockade, but also for being cut off from various international services, software, etc.—from both outside and inside. Make backups of everything you have in the cloud or elsewhere abroad.

Just to be clear: I’m not saying things will definitely get very bad. I’m saying it’s better to be prepared for the worst and end up in a “normal” scenario, than to watch things fall apart while being unprepared.

Finances for Those Living Outside Russia

• If you still have capital in Russia, it makes sense to move it out if possible.
• Be aware that sudden (unusual for you) large transfers from Russian to Western banks could be red flags and trigger temporary freezes and enhanced KYC/AML procedures. Discuss this with your receiving bank manager in advance.
• Bringing a suitcase of cash to a Western bank and depositing it without questions is also unlikely to work.
• If you’re registered as a Russian citizen at foreign financial institutions, there’s still a risk of sanctions or preventive measures.
• I don’t really believe in scenarios like “we’ll suddenly freeze and confiscate all assets from all Russians,” but I do think it’s more likely you’ll hear something like “we no longer want to do business with you, please transfer all your assets elsewhere within 30 days.”
• With this in mind, it’s best to have as many backup options and exit routes as possible (here’s a list of brokers who previously worked with Russians). Having a couple of brokers in the US is a good idea (if IB closes to Russians, it’ll be easier to transfer assets within the US to, say, Score Priority or Citi N.A.). The second line of defense is EU brokers like Saxo or Exante. If the US and EU act together with tough sanctions, a Swiss bank or broker like SwissQuote could be useful. You might also consider an Asian broker like Tiger Brokers.
• I don’t know how willing these brokers are to open accounts for people with Russian citizenship and non-Russian residency right now. In any case, it’s worth trying. Be ready to provide proof of residency (long-term rental agreement, utility bills in your name, etc.).

Full version of the post: https://rationalanswer.club/post/601/