Prepper Investment Diversification

Today we present another article forthis round in our non-fiction writing contest  PrepperDoc

Survivalists run the risk of malinvestment because of their acute awareness of the risks that their national economy may face. Solomon long ago penned the advice, “Divide your portion to seven or eight, for you do not know what misfortune may come upon the land.” (Ecclesiastes 11:2) Investment professionals call this “diversification” and it can have great benefits for preppers. We know bad things are likely to be in our future, but we have to prepare for the possibility that they are both near AND far into the future.

I occasionally teach informal classes on investments, usually a total of 3-6 hours of education. While I don’t have formal investment or financial training, my chosen profession does not include any “pension” and thus I have the “on-the-job” training of having managed my own retirement “portfolio” and family for 30+ years, and I have a valuable advisor in my octogenarian father-in-law, who has seen even more than I, in his investing history. Disclaimer: The advice that I give here is not individual advice to YOU, it is general advice that may or may not apply: I am not your fiducial private investment advisor!

Generally, if you have DEBT, you have one of the only available guaranteed rates of return—pay off your debts! Especially consumer debts such as credit cards, auto loans, etc., which often have onerous terms and high interest rates, or grievous risks should you fail to make the payments promptly. There is reasoned disagreement on paying off your home mortgage prior to retirement investing, and every situation is different. If your mortgage has a higher interest rate and/or the stock market is high (like right now) you might want to put relatively more toward the mortgage; if your mortgage rate is really low, you might want to invest more heavily in retirement or other funds. Everyone should have an “emergency” fund that will keep you taken care of, for a period of 30 days (minimally) or up to 6 months (optimally). (Likewise, everyone should have an ample store of food / water.) Retirees may wish to keep up to 2 years of funding in a stable “emergency fund” – these are generally kept in low-risk vehicles such as savings accounts, short-term CD’s, or short-term bond funds or money market funds.

I personally have a preference for long term investments to be in mutual funds or ETF’s, rather than in individual stocks of individual companies. My father-in-law prefers the reverse, but he has far more time to study individual companies than I do. Even so, longer term studies seem to show that most of us do better with (passive) index mutual funds or index ETFs, than even experienced “stock pickers.”

Those investment funds/ETFs may be held in a tax-deferred traditional IRA or in a paid-with-your-checkbook ROTH IRA, or even a taxable brokerage fund, or in a mix of the three. The differences are in rates of taxation, as well as vulnerability to judgements. You may need advice from an expert to fine tune your exact mix, but it doesn’t hurt to have some of all, giving you “tax-diversity” and flexibility on withdrawals later. ROTH IRAs can easily be used for education after a few years, for example.

Longer-termed investment areas of interest to prepper types would probably include: domestic large and small cap stock funds; foreign stock funds; precious metals mining stock funds; nearby rental houses; REIT funds (real estate investing “the paper way”); physically-held precious metals (silver, gold, platinum, palladium); homestead land/home; firearms; ammunition & ammunition construction equipment; and “stable value” money market mutual funds. That is a list of TEN different investment areas – even more than Solomon’s admonition to split between “7 or 8”. I didn’t list “bond mutual funds” because these are probably heading for a loss in the next few years, but if interest rates were to rise to normal and remain there, bond funds would become more exciting.

Since none of us have a crystal ball (other than the longer-term view given by the Apostle John & others), a reasonable investment strategy is to pick some percentage breakdown amongst all these different investment avenues, and then split one’s investment money between them according to your percentage choices. (I might add one would want to be ongoingly investing in the The Kingdom of Heaven, through whatever church or other avenue God has led you to.) Most of the stock funds and REIT funds can be obtained (either inside an IRA or outside one, in a “taxable account”) easily through large public companies such as Vanguard or Fidelity, either using their web pages, or even picking up the telephone and dialing their 1-800 number for assistance.

Getting started is the hardest part. You have to pick percentage allocation to each chosen area out of the blue. It wouldn’t be unusual to simply keep them all even (10% in each area), though after a point, more firearms may not be useful (unless you have a license to deal in them), holding precious metals will likely require a substantial safe, and you may not need/want a huge home at this point in your life. After you have all the firearms & house you need, evenly dividing between the remaining categories would be reasonable. Then, simply pick an “index” fund that applies to each area, if at all possible: these will have the lowest costs and as the market has a finite amount of total “return”, you will end up giving the least amount of that total return to advisors & fees, if you use index funds! (I also happen to prefer Lee reloading presses, as they work, and they are inexpensive…)

The real profit come from the rebalancing efforts you’ll then do every year or so. You started with a set percentage allocation to each area. Some areas will prosper more than others. Their percentages will go higher than their set allocation, while others will drift below their set allocation… To rebalance, you simply compare the resulting percentages every year or so, and sell a bit out of whatever has grown, and buy some more in the areas of your losers, to bring their percentages back to your choices. Yes, I know that sounds counter-intuitive, but it mechanically forces you to “buy low, and sell high.” This is Prov 27:23 in action, “Know well the condition of your flocks, and pay attention to your herds….”

As of this writing (early July 2015), here is my own personal “estimate” of whether each area is currently near a peak, or a bottom (I could be a genius or an idiot, and variably so):

Domestic large cap stocks: Near a peak
Domestic small cap stocks: Peak
Foreign stocks: About to plummet
Precious Metals Mining Funds: Cheap
Rental Property: Depends on neighborhood
REIT funds: Probably peaking
Homes: Neighborhood dependent, but generally within reason.
Firearms: Cheaper than in years
Ammunition/Equipment: Cheaper than in years
Money Market Mutual Funds: As usual (usually don’t do much up or down)
Don’t put too much stock in my estimates, however!

Beyond rebalancing percentages invested in each different category, one can apply more advanced strategies (such as a momentum strategy [1]) to pick more specialized stock funds than the simple index funds, but you may have to stay the course to see your strategy succeed….changing course in a downturn can be a losing proposition. However, simply choosing index funds and well known precious metals, commonly utilized firearms in popular (thus re-sellable) calibers, maintaining a modest home with a productive garden, paying off your debts and rebalancing every year or so – these are strategies that will prosper in the long run.

REFERENCES
[1] E.g., the “Upgrading” momentum-based strategy taught by Sound Mind Investing. Web site: sminow.com

Prizes for this round (ends July 10 2015 ) in our non fiction writing contest include…

  1. First place winner will receive –  A case of Yoder’s Canned Bacon (12 cans, $169.95), a case of Future Essentials Canned Green Coffee Beans (12 cans, $143.30 value), and a case of our Future Essentials Canned Breakfast/Cold Cereal Variety with Milk (12 cans; a can each of Raisin Bran, Rice Krispies, Corn Flakes, Apple O’s, Whole Grain Frosted Wheat’s, Cocoa Rice Krispies, Honey & Nut O’s, Fruity O’s and Frosted Flakes, as well as three (3) Cans of Powdered Milk Substitute (18 oz. each) – (a value of $62.90) all courtesy MRE Depot and a  WonderMix Bread Mixer courtesy of FoodPrepper.com a $300 value. Total first place prize value over$674.
  2. Second Place Winner will receive – A Royal Berkey water filter, courtesy of Directive 21 (a $283 value) and an autographed copy of 31 Days to Survival
  3. Third place winner will receive –  A gift certificate for $150 off of Hornady Ammo courtesy of LuckyGunner Ammo.

Comments

  1. As a semi-retired part-time worker, my “Prepper Investment Diversification” is a bit different. I already own my home and car free and clear but I do have some medical bills to pay off. I supplement my household income with small clerical and writing jobs, so my monthly income fluctuates. I use a percentage system to diversify my holdings. With each check I take the total amount and then allocate portions by percentage: tithe 10%, convert to cash 45%, invest in silver and gold 30% and additional preps/barter items 15%. I pay down my medical debts in person in cash. While I’m sure my silver/gold buys using this method are higher than if I bought in larger numbers (I buy coins), I look at it as dollar cost averaging since the amounts so far haven’t varied by more than $2 or $3. As for the 15% preps and barter items, I stick to items my household needs and could be valuable in a barter: canned milk, canned meat, instant coffee, rice, beans, salt, pepper, spices, first aid, personal hygiene products, and ammo.

    • PrepperDoc says:

      I’m glad you’re diversifying! I have both made and lost large sums of money in gold and silver, perhaps you have also! I have enough stores of copper coated lead to run a small army for quite a while just like I bet you do. After you think you have pretty much what you need, I would encourage you to branch out into some other kinds of investing, perhaps into small businesses you could help / own, or housing.

      • I would love to be able to afford to buy some acreage that would grow food. Should the Lord tarry, I might earn enough yet to do that. Until then, I just keep plodding along…

        • PrepperDoc says:

          There Is a great verse in the old testament that goes along the lines of “do not despair in the day of small things”

  2. JP in MT says:

    Good solid outlook and advise.

  3. Chuck Findlay says:

    I think any investment that uses the stock market to hold or grow it wealth is dangerous for the long term as it seems likely to fail at some point. You can only blow up a balloon so far before it burst.

    And I am really starting to question the wisdom of holding much of your wealth in US dollars. (The same balloon thing going on with it.)

    I have silver, all kinds of prepping supplies and food, tools and skills that allow me to keep making money if we have any kind of collapse or economic event. I’m learning new skills all the time and buying hard assets (screws, nails, electrical & plumbing supplies, welding wire, and all kinds of other consumables) that I use in my work.

    Basically with buying hard assets, I’m investing in myself and not things controlled by other people that don’t care about any of us and really don’t understand what true wealth is and or how to protect and manage it, if they did understand it they would not be doing what they have been doing for the last 100-years.

    I have no idea what we will be using for dollars in 10 or 15-years, but I will still be able to work and trade the work for the currency of the day.

    • PrepperDoc says:

      Yep, I hear you! I have similar concerns, however I choose to diversify into stocks as well as all the other items you list.

    • PrepperDoc says:

      By the way, in his bestseller book, ” the millionaire next door, “PhD researcher Stanley demonstrated that the number one way to become a millionaire in the US was to be developing a small business. So you can look forward to being part of a great group! There are 8 million millionaires in the United States, and I think just under half of them did it by starting their own business. Dry cleaning shops, scrap metal dealers, auto parts, salvage yards, you wouldn’t believe the things that people turn into cash cows.

      My particular profession doesn’t allow well for that, but I appreciate great entrepreneurs.

      • Hi PrepperDoc, I wish every high school kid in America was required to read either ‘The Millionaie Next Door’ or ‘The Millionaire Mind’ by the same guy. Great books which tell how self made millionaires made themselves rich: by being frugal and investing their savings instead of living high on the hog. They are preppers in their own way: financial preppers. If more people understood how most people get rich, more people would do well. Good books!

  4. messenger says:

    If for one minute I thought America could survive the coming crisis then I wouldn’t be prepping. Buying or investing in anything is not solely dedicated to your immediate survival is a waste of time, assets, and resources. Instead of diversification in the markets why not have seven or eight staches of well hidden prepper supplies. A person is either totally a prepper or no prepper at all. The bible also says, “A double minded man is unstable in all of his ways.” We are either in the prepper game with all our heart, mind, soul, and wallet or it is just a sideline with no real meaning, yet with deadly consquences. Blessings.

    • PrepperDoc says:

      But isn’t that quote really talking about our devotion to the Lord?

      Since Solomon told us to invest in “seven or eight” items, wouldn’t it be a contradiction to your interpretation if your scripture applied to investing criteria? Isn’t it wise for farmers to diversify their crops in case one species fails in a given year?

      • Anoanomo Also says:

        The quote was from James 1:8, It addresses all we are and all we do, including especially the attitude we “do” it with.
        Just before, James ( 1:2-7) speaks of temptation and the work it has…”worketh patience”, and continues with asking God for the things we need in faith. ie…in trust that He hears and blesses (those who request wisdom).
        The admonishment to ask in faith is followed by the explaination of the opposite of faith(wavering), and the wavering man is like a wave of the sea driven by the wind. The complete verse 8 was correctly quoted,” A double minded man is unstable in all his ways.” My Grandma sometimes phrased it as, you can’t stand on both sides of the fence.

        • JP in MT says:

          Anoanomo Also:

          And your grandfather’s saying should also say “and you end up with splinters somewhere uncomfortable.”

      • messenger says:

        No! No! No! If we had years left to let investments mature things would be different. And I really don’t know why we even brought farmers into the conversation. Anyway, happy portfolio, I got carrots ready to come out of the dehydrator. Blessings.

  5. the above first comment is sooooo right on it’s worth #’s 2,3,4, & 5 on the list….but that’s the short list….. diverse investments will provide, provided it’s not the biggest turd hitting the fan….. location is another consideration-primarily avoiding the zombies…. Skousen’s great recent article here gave a few insights worth consideration…. Question for the wolf pack: any thoughts on reverse mortgages? I value all comments….

    • PrepperDoc says:

      I’ve got to tell you, that I think reverse mortgages are a last ditch effort for those who did not invest successfully to provide retirement funding in the earlier years. That might’ve happened due to miss fortune of course.

      I hope to leave quite a bit of property and other assets to my kids. I dislike giving things to banks!

  6. Just keep in mind everyone: Domestic large cap stocks, Domestic small cap stocks, Foreign stocks, Precious Metals Mining Funds, and Money Market Mutual Funds are not quite diversifications – they are paper promises. Think about the well diversified Chinese investor that right now cannot sell any of his paper. All paper financial instruments (except cash) that I can think of are really sub-categories of the same investment type.

    Thanks for the article!

    brentg

    • PrepperDoc says:

      Yes, you’re exactly right. That’s one reason I did a diversification check on myself recently, to study how my property holdings, stock holdings, bond holdings, ammo holdings, precious metal holdings, firearms, and on and on and on broke down.

      My conclusion was that I needed yet even more firearms, and also some more precious metals both of which I think are cheap right now. I got a great deal on a semi 308 rifle, and another 9 mm pistol, and I found a new dealer for silver and gold. I’m also testing heirloom corn against a hybrid variety to find out what I will need to feed 2 to 12 people.

  7. Agree in part with Chuck. No investment in assets, commodities, or stocks will be worth it in an SHTF/TEOTWAWKI scenario unless it provides “asset in hand.” In an SHTF/TEOTWAWKI scenario, any gains in investments will be worthless if you can’t cash them in or the currency that you cash them in for is so devalued that it’s practically worthless. You’d actually have to be pretty market-savvy (or have someone in your corner who is) to get your money out at the right time BEFORE an SHTF/TEOTWAWKI situation occurs in order to reap any tangible reward in preparation for a worst-case scenario. Look at the market crash of 1929. Since no one predicted the crash, no one extracted their money before it happened. As a consequence, there was a mad scramble by people to get their money out of everything right after the crash and no one could.

    What I mean when I say “asset in hand” is an investment in which you get a physical manifestation of the asset to keep as your own. An example of this is Roseland Capital, which gives you the value of your investment in bars or coins of precious metals, sent physically to you.

    Also agree with Chuck about the dollar. With the recent events of China, one of the biggest holders of reserve dollars, taking a massive economic downturn, and Russia, another big reserve dollar holder, intentionally doing a “dollar dump,” I would suggest that the dollar is set for a major devaluation and, arguably, being replaced as the world reserve currency. It would seem prudent to me to get your money out in a more tangible currency….I would argue for diamonds and precious stones.

    • PrepperDoc says:

      Well, while I understand your concerns, and I had very similar predictions, in fact, the dollar is getting stronger and stronger. That is actually causing me to sell dollars and buy things that are cheap: firearms and precious metals. Like you, I keep those in tangible physical assets.

      But I don’t shy away from holding paper assets as well, although I’m careful how I hold them ; currently 50% of my stuff is out of the stock market and in what one might consider as paper cash. Of course, cash can become worthless also, which is why I have all the other assets!

      • Oh I’m not saying don’t have paper assets now. I’m merely saying bail on them when it’s apparent things are going south in a big way.

        • PrepperDoc says:

          I see. One issue is our lack of a crystal ball! As Solomon said, “you do not know what misfortune may come upon the land”.

          During the 2007 crash, my paper investments dropped by close to 40%. What was impressive was that almost everything dropped. However within about three years I was back to previous levels and then zooming upwards as the government has tended to juice kinds of things I invested in.

          My rebalancing then forces me then to sell the items that are doing so well and diversified more into items that are currently in dis favor.

          One of the things that I always remember is the quote, that “even during catastrophes, someone is making money.”

          I really think that most of my best outcomes have resulted from the 2001 crash &. the 2007 crash… I wasn’t participating in the early 90s bull market, or I would’ve retired a long time ago and own a larger spread probably!

      • Chuck Findlay says:

        I agree the dollar will take a big hit when (not if) it’s replaced as the world reserve currency. And with all the debt-based printing going on with it, who could blame the world at large for dropping it as a world currency?

        At that point the dollars buying power is going to take a nose dive.

        • PrepperDoc says:

          Like you, I think the dollar will be somewhat supplanted by other currencies. However, reserve currencies are not an “all or none ” item. I read that central banks currently hold a potpourri of currencies, including the dollar and others, and more and more they are holding precious metals just like me.

          This latest astonishing catastrophe in China may delay the use of renminbi by central banks by quite a few years! The Chinese have kept the the Renminbi fairly Pegged to the dollar, however that will have to go if they continue in their efforts to prop up their margin-based stock market. So the Chinese currency suddenly isn’t working quite so hot after all! Euro has dropped like a rock for months now, I actually considered buying some of them as an investment.

          Eventually, some other currency is going to be added to the list of what central banks consider important to hold. However, the dollar is considered relatively solid and trillions are in hands all over the world greasing trade for billions of people, and its demise will be slow.

          It is precisely because the dollar is so incredibly strong right now that I diversify out of it into less solid items and currencies.

  8. Marivene says:

    I look at diversification a little differently, probably because I am older, & was raised by parents who were children during the Depression. To me diversification of assets means I have a “deep” pantry, filled with items I have put by. It means most of those items have been put up by U.S., from our garden or orchard, or traded with family (meat). It means that if I can raise apples & my daughter can’t, but she can raise chickens, We trade chicken everything for apple everything. To me diversification means I know how to bottle, jam AND dehydrate any/all of our fruits. I know how to put up vegetables multiple ways & I know how to preserve meats multiple ways. It means I own sufficient jars (& canners, & rings,&lids) to put by enough for my family & some to trade with extended family. It means when I have raspberry suckers that need moved, or a rhubarb crown that needs divided, the first place it goes is to the extended family network, & after them, to my immediate, likeminded neighbors. It means having a firepit, or a BBQ, or a camp stove to be able to cook or put by food.

    It means I have a bank, but I also have a credit union. It means I may have prepaid my taxes for a couple of years, because even tho we own our home, if the taxes aren’t paid, they can seize it. It means having an IRA & a Roth IRA, as well as plain old savings. It means keeping your garden tools & your cars in good repair, so they are not as likely to break on you when parts may be unavailable. It means holding some precious metals, if you have sufficient funds, because that is yet another type of financial basket.

    It means I have both summer & winter clothing & a good tent, with appropriate bedding.

    It means having culinary water stored. Humans do not live long without water. It means knowing how to purify water,& having any items needed to accomplish that already in yout storage, whether it is bleach or iodine to disinfect, a pan & fuel to boil water, or the right type of bottle for solar disinfection.

    • PrepperDoc says:

      wow, I agree with you in so many many ways!

      Like you, my parents were depression babies. You are slightly ahead of me in farming skills, but I’m catching up fast!

      My diversification includes a profession that will be an extremely high demand post loss of order, and I also have gunsmithing and ammo creation skills. Also engineering skills, radio skills, mechanical skills, lathe and milling machine.

      However, I also have to plan for the eventuality that life may go on fairly normally for a score of years, so I have enormous assets in income producing businesses all over the nation, via the stock market. My investments help create jobs for others.

      • Marivene says:

        When I was growing up, my mother often referred to “your father’s hard-earned money” & keeping “Uncle Sam’s grubby hands off of it”. My parents refused to put more than $100,ooo in any bank. As time went on, deposits were insured for more than that, but my parents had funds in over 40 banks & credit unions. Like those of their time, they did not talk money totals with their children – heaven forbid we should know how much our father earned ! We observed them paying tithing at church, but back- figured as an adult, knowing the starting balances of the 2 trusts they had to figure how many financial institutions they had. I would never have just one bank, or just one credit union. My financial institutions get irritated when I will not self-define them as my ” main” financial institution. I tell I do not know what that means, & because I am an old woman, they let it go.
        My parents did not have much use for “hard assets” like precious metals, but the silver in my maternal grandfather’s safe, at his insurance agency in town, is what saved his farm during the Depression.
        For me, a hard asset is more like a shovel or a garden fork, or my pressure canner, etc. I taught my children that if you had an apple tree, you needed to know how to put up apple sauce, sliced apples, apple jelly, apple juice, cider, & dried apples, preferably using a dehydrator, but also knowing how to dry without electricity. If you knew how to fully utilize your “assets” then you could trade with someone else, using either the fresh apples, or the items you had made with them.

        • PrepperDoc says:

          Such wisdom in both you and your parents! I am really really impressed!

          Although I didn’t mention in the article, I do very much the same, although not quite 40, more like six or eight. What if one of these companies gets hacked? I want to be able to deal with the others and buy and sell or fund my family, while I wait for the dust to settle. So dividing between different institutions is something I thoroughly agree with.

          But, we simply can’t completely trust the banks, so I have many other kinds of assets as I’m sure you do too.

          You are more skilled in many areas than I, but I am catching up. We have plenty of food stored up, I know some methods of preservation (particularly dry canning grains, far cheaper than just buying stuff over the Internet) we make a good bit of our electricity, and I can hunt and fish and farm as well now. If society quit tomorrow, we would be fine. If there were a nuclear attack, we are fairly ready for that as well. An EMP, we are super ready for; economic collapse would not bother us, Nor would riots and chaos. Now, dictatorship is a bit tougher. But we would survive that also…

        • I really like the idea of multiple institutions! As a young man of a completely different generation of thought about money. Thanks for that great advice!

        • Chuck Findlay says:

          My parents were depression babies but the lessons did not take much as today they are in their 80’s (dad 86, mom 82) and part of the masses that have no clue. They have been this way for as long as I can remember…

  9. PrepperDoc says:

    I knew when I wrote this that it would cause some discussion. I tried to get everything covered, but there are always things you forget.

    1. In an end of the world scenario, money may be useful for a week or so, and then silver and gold potentially, but more so barter able items and skills. In keeping with Solomon’s command, I have all of the above! I agree with the advice given above to have skills and items, I have them in abundance.

    2. Where most people are going to get upset is with paper holdings in the stock market. That is predictable. However, I have a responsibility to prepare for the eventuality that the United States does not fall into catastrophe (within our lifetime), and that my wife and I have to feed ourselves for 20 or 30 years. Mathematically, savings will not work for that, only investing in businesses does.

    3. Currently, I take a dim view of the stock market, for multiple technical reasons, and as a result I am 50% essentially cash. Now as everyone knows, cash itself does not have a guaranteed value, but the Federal Reserve is likely to try to preserve the value of the cash that I have (money market funds) as long as they can. For example, they succeeded at that goal in 2007 and eight.

    4. Many people don’t understand that investments in the S&P 500 cover an extremely large number of nations. Therefore I am more diversified than just the United States. I’m also into mining companies, so if gold goes up, my holdings will go up multiples of how much gold goes up. (Essentially leverage without any debt)

    5. My gardening is getting better and better also, my house is paid for, and I’m really part-time nearly retired.

  10. Owl Creek Observer says:

    Excellent summary, PrepperDoc. I’ve spent decades handling our retirement-survival investments and I can’t disagree with anything you’ve said here. Each of us has his own personal preferences and we will all emphasize some investments over others, but you’ve done a good job of covering the fundamentals. I still wrestle with having a significant portion of our investments in the stock and bond markets but I’m not yet ready to move it all to something like the volatile metals markets or hide it under our mattress.

    • PrepperDoc says:

      Thank you for your appreciation!

      I have the same concerns, my brother became a multimillionaire in precious metal mining stocks, but failed to diversify and lost most of it. I have made quite a bit and lost in almost every investment I hold, including precious metals. Over the long term however I have tripled or quadrupled my initial investments.

      My heart breaks when I teach a finance course and discover so many elderly who are virtually penniless. Once I taught a course at my church, explaining that the minimum Social Security would make you about 12 or $13,000 a year, and an elderly lady in the back suddenly piped up and demanded to know how I had found out her income!

      If all you have is Social security, you had better have some land and be a darn good farmer. And never get sick and never get a chronic illness!! Every day at my profession I take care of people who are in serious problems. I hope to help people prepare so that they will be ready.

      • Marivene says:

        As far as Social Security goes, one set of my grandparents received checks, but the other did not, due to ages & time frames. I remember how my grandparents lived. They considered it living, not making do. They did not often go to the store; they ate what they produced, even when they were 80 & 90 years old. As we plan our retirement, our worst case scenario is not “just Social Security”. It is no Social Security. We have several plans, but the worst case for which we plan involves no help from SS at all, just utilizing what we have saved with our skill sets. That is how my older set of grandparents lived, & the first dividend we have noticed in planning this way is that we are less stressed than we used to be.

  11. I enjoyed the article, good points. There is a saying that says prepare for the worst and hope(pray) for the best.

    In 2009 and 2010 we were well below poverty level today we still have an income that is low but much higher than it was. Our home and car is paid for. I am preparing to start my own business working from home.

    My dad taught me to learn two different ways to earn money so that if one business goes down you can earn from another one.

    • PrepperDoc says:

      Congratulations! Glad to hear of your success. I know that you’ll be wary, as 50% of small businesses collapse. By starting your own small business at home, you will probably not need debt and can grow appropriately, at the proper amount for each time.

      “do you see a man skilled in his work? He will not stand before obscure men”.

      • I will not have any debt starting this business. In Jan this yr we figured out how much we will need to start and added it into our budget. I plan to be up and running by Jan 2016. 🙂

        • Chuck Findlay says:

          Speaking from personal experience starting several service-based businesses you need to budget about twice what you think it will cost to start up. Everyone greatly underestimates what it cost to run a business.

          And when you first start out you MUST advertise to grow and it’s at a time when you know almost nothing about advertising so a LOT OF MONEY get’s thrown away and doesn’t produce any income.

          You need to find an expert in direct response marketing and buy his marketing program. Yes it will be expensive to buy, but not even close to as expensive as not buying it.

          I floundered for over 2-years in a business before I bought an $900.00 marketing program by a guy named “Joe Polish” I tried his program and within 2-hours of delivering the flyers in his program I booked a $190.00 job. That program was paid for within a week and I still use it’s methods years later.

          PS” Almost all marketing is feel-good marketing that doesn’t produce good results for a small business. You need to look at direct response marketing to get good results.

  12. PrepperDoc says:

    As one person noted above, precious metals’ biggest use sometimes is to recapitalize a family after a catastrophe such as buying off the farm in hard times.
    As one person put it elsewhere, they are used to sustain your wealth through catastrophes. (so I have enough of it to do that!)

    “wealth is what you didn’t spend”

    In normal times, precious metals may not throw off income to sustain a family.

    Investing in companies provides employment and growth for others, enabling research and new product development. Without it, our nation would have long ago been overwhelmed by Russia and China. Investing in real estate provides homes for others.

    • Marivene says:

      Another use of precious metals can be to pay the taxes “on the farm”, so to speak. I did not know until a few months ago that it was even possible to prepay taxes for multiple years, but absent that possibility, at least in Utah after 2011, gold & silver coin of US mint are specified in law as “currency”, legal tender to pay debts. A gold or silver American eagle qualifies under Utah law as currency, but a Canadian gold or silver maple leaf coin does not – those are considered investments, not currency. It has been interesting reading the law, & learning about it. I suspect with the new gold repository going up in Texas that it may become the 2nd state to declare gold & silver as currency. Interesting possibilities for diversification.

      • Chuck Findlay says:

        American eagle silver coin is specified in law as currency but only at face value. Who would use a eagle silver (stamped face value as only one-dollar) to pay bills? Nobody I know would do this…

        You find a coin dealer and exchange it for the current silver value, not trade it in for only $1.00.

        • Marivene says:

          An American eagle silver coin is specified in federal law as currency at face value, but in Utah law, it is not specified at face value. Gold is also specified as currency, & not at face value either. The federal laws are different than the 2011 Utah state law, which do not specify face value, so in most places you would be correct.

          For example, in Utah they have an “app” that lets you pay your bills in gold. I believe it is called Liquid Gold, or something like that. If you google Sean Reyes (the Utah Attorney General), there is a video of him speaking to the Utah Precious Metals Association, where he demos the app. – I believe he pays a utility bill with it, if I remember correctly, then hits them up for a political donation to “test” their apps. If I understand it correctly, you buy gold with X number of dollars & store it in an repository associated with Liquid Gold, & you can then pay your bills, thru the app, & the company receiving the payment can choose whether they receive the payment in dollars or gold. I thought it was a pretty big step, not only because it created a way to actually USE gold & silver as “currency” without losing your shirt, but also because the app appears to be bypassing the banks, which to me was an interesting development.

  13. Si Turner says:

    Lots of interesting reponses to this article but I’m surprised that nobody has mentioned cryptocurrencies, or more specifically, bitcoin, as an alternative investment alonside things like precious metals and cash. True, an EMP would disrupt all computer-based activities, which is why my own crypto investments are backed up in EMP-proof locations. The great strength of bitcoin is it’s decenralised nature and I’m confident the network is resilient enough to quickly be restored after an EMP and the ability to instantly transmit value would resume.
    Sadly for me, here in the UK we do not have the option of stockpiling firearms and ammunition as you guys do, so I’m restricted to buying a few thousand airgun pellets to keep us supplied with rabbit if need be! Good luck to you all.

    • Si Turner says:

      “decentralised”, sorry 🙂

    • Here’s my question though: What if this EMP is powerful enough to wipe out THE WHOLE Internet and ALL modern telecommunications (which is likely to happen with a HEMP)/ modern electronics? Seriously, with ALL of modern technology down, who’s going to take the time to focus on the leisure sectors of the Internet (which is where I would argue cryptocurrencies are still at right now) and/or their corresponding access pieces (RFID chips and receivers)? Your cryptocurrency may be safe, but what good will it do you if you can’t connect it to its market?

      Not to try to sound like an exceptionalist, but there are rumors that the U.S. is bound for adopting a cryptocurrency to replace the dollar, and quite soon. I would argue that unless a major world nation adopts a cryptocurrency as its national currency, the cryptocurrency will gain little popularity on the global scale beyond a hobbyist investors market. Hence, it’s not likely to be high on the priority list to bring back in the aftermath of a widescale EMP attack.

      One final thought: If the problem is merely the latter issue (loss of modern electricity), do you have or are you working on a replacement power grid that can be converted to and support your electrical needs? If that is the only problem that you will have connecting to your cryptocurrency, then you’ll have a leg up if you already have it in place.

    • Chuck Findlay says:

      I just don’t trust Bitcoin to have any real value. It is made out of thin air with nothing more then a powerful computer. Who’s to say a government (and governments have the most powerful computers on the planet) that didn’t like or feel Bitcoin is a threat to them couldn’t go about flooding the Bitcoin market with their powerful computers. Granted I know little about it, but it doesn’t pass the smell test for longevity and as a safe medium to store my labor. And all money is, is a way to store the labor you do now for future use.

      They (governments) can’t make gold or silver, it’s rare and hard to dig up, and hard to destroy. This is what has made it a medium of exchange for 5,000-years and likely will still be a medium of exchange well beyond all of our lives. I don’t think you can say the same thing about Bitcoin.

  14. I read a lot of these comments and the one thing that I see missing in here yet is vitally important to remember. When one invests in the ira’s, mutual funds and stock market one puts their hard earned livelihood at the hands of unscrupulous people the likes of the federal government. Don’t forget that the illustrious federal government has measures in place much like we are seeing happen in Greece today. I do not know about the rest of you guys but I know the Feds will do everything to keep the government running including confiscation of your assets. I am tired of supporting them and their electorate who have been sucking on the government tit all their life. It is my money and I am not putting it anywhere thise stealing bastards have a chance to touch it

    • Good for you! You are right on track with your thoughts, as the refusal of the Federal Reserve to return the gold assets of Texas and the reports of the Federal Government misappropriating social security payments in order to support the government are demonstrating. In my honest opinion, putting your investments ANYWHERE NEAR government hands is tantamount to resigning yourself to a government dispensation.

    • Chuck Findlay says:

      (I do not know about the rest of you guys but I know the Feds will do everything to keep the government running including confiscation of your assets.)

      That is why for years I have been in the “If you don’t hold it, you don’t own it” camp.

      I buy hard assets like tools and supplies to do my work, food and prep supplies and silver that I personally have in a safe, not in one someone else controls. I also am actively learning new skills that expand my money making skills.

      I never welded anything before a year ago, but now I have a MIG welder, lots of wire and practice with it every 10-days or so. I have already paid for the welder. I got into PEX plumbing 2-years ago and paid for the tools with the first job. Investing in learning new skills is the best thing I can do to secure my future.

      Unlike a job that you work for another person, when you are self-employed, new skills pay off right away with the first time or job you use them. With a job there is no instant payoff. you have to wait and hope your boss pays you more at some future time.

      Everyone should develop a second (or third and fourth, and so on) income. Even if you work for someone else an outside-the-job extra income is good to have to make extra money and it also helps buffer the loss of a job. And it may grow to the point of being able to quit the job and enjoy real freedom.

      • Agree with you on the multiple streams of income. I’m planning on starting a business soon with a prepper buddy of mine and am also going to start a writing career soon.

  15. Chuck Findlay says:

    With all the mosquitoes we are having, last winter it may have been good to buy stock in a bug spray company. The sales of bug-juice has to be going through the roof this summer…

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