The Best Store of Value?

[RockMiner]

It seems to me that come what may, everybody...

1) Gotta eat
2) Needs shelter

The only asset I know of that is capable of providing for these needs when all else fails is real-estate. Not to be a doom and gloomer but corporations may fail, markets can bust, and even Gold has poor nutritional value whereas one can hunt, fish, or grow crops on the right parcel of land. Inflation does not damage it either.
Is there a better, safer "core holding"?

 

[brewer12345]

I recently bought into PCRDX (commodities) as a way to have exposure to the basic stuff of life and hedge inflation and currency risk.

I'm also increasingly tempted by the thought of a cabin in the woods on a fair chunk of land, but its just not in the budget right now. I can dream, though...

 

[wabmester]

RockMiner, I bought real estate specifically for its "value store" properties.   Currently it comprises about 20% of my portfolio, and I may add more if prices correct in the near future.

There are lots of things I don't like about real estate, though.   High transaction costs, high carrying costs, illiquidity, and concentrated risk, for some.

I also own a chunk of gold (my doomsday stash), since gold has held its value well over the long run (like centuries).

And then I layer more risk on top of those hard assets: TIPS, insured CDs, traditional bonds, and finally stocks.

I'm not really much of a doom and gloomer, but I'm looking at perhaps 50 years of uncertainty, so I took a layered approach with my risk.   If all of the risky assets go to zero in some doomsday scenario, I should be left with enough to survive without suffering the ultimate horror -- returning to work!  

 

[AGuest]

Not to over simplifying it, but how about cold hard cash? Yes there is the depreciation scenario, twin deficits etc. but there is also a rising interest rate and sideline cash possibilities from investors and corporations to put into the mix.

 

[farmerEd]

Only problem I have with my real-estate as a place to store value is the property taxes...sure, you can live on it, eat off it, fish off it etc...as long as you can pay the taxman.

 

[wabmester]

It seems to me that come what may, everybody...

1) Gotta eat
2) Needs shelter

The only asset I know of that is capable of providing for these needs when all else fails is real-estate.

I forgot to mention the other essential asset classes during hard times: a gun and a good getaway car (something like a bulletproofed Hummer may turn out to be your best investment )

 

[John Galt]

Farmer Ed and rockminer..............This question is a slam dunk for me. Real estate is the answer hands down.
I am so certain of this that I am seriously considering
increasing my real estate holdings beyond 50% of my net worth. I have a bunch of cash which needs a home.
Equities are out. Interest rates stink. If everything else goes to hell. you can still live, hunt, fish, grow crops, etc.
For me, the real estate taxes have never been a
serious problem, compared to the upside potential.

John Galt

 

[dex]

Warning - second glass of wine.
First, this sound like a topic where you might want to check out the following site:
http://www.frugalsquirrels.com

I think the question is what scenario are you planning for? One lesson of the stock market is that it teaches you to lose. It isn't only the stock market. Like generals we are sometimes preparing to fight the last war.

So are we planning for inflation, stagflation, recession, deflation or depression? People should tell us what the basis for their opinion of where they think the best place for their money is.

I can only tell you that I live outside of Atlanta and the building of homes is amazing. I'm thinking that there is a housing bubble here and it has to burst - but I need a place to live. I don't think real estate is the answer here. I think cash is the answer. I think next Febuary will tell us if the stock market will be a good place for your money.

 

[JOhn Galt]

Hey dex. Good post. I've written some of my best stuff after my second glass of wine

I arrived in North Texas in 1994. Building was going nuts everywhere I
looked. Ten years later? Same thing. Will it ever stop?
Maybe. I figure chances are good that I won't be around to see the fall.

John Galt

 

[Cut-Throat]

So are we planning for inflation, stagflation, recession, deflation or depression? People should tell us what the basis for their opinion of where they think the best place for their money is.

The one word that comes to mind is Diversification

 

[RockMiner]

Interesting. So to synthesize the various responses...Get yourself some good land and surround it with razor wire. Bury a cache of gold, cash, and guns. Grab a beer and relax, secure in knowing that if your diversified Index funds and Tips crap out you can always get by on possum stew and 'taters.

 

[wabmester]

So are we planning for inflation, stagflation, recession, deflation or depression?

That depends on how long you're planning to stay retired. For my timeframe, I figure chances are that I'll see a bit of each. In the last 70 years or so, we've seen each of those scenarios play out.

We still haven't seen anything akin to the fall of the Roman Empire in the US, but it's virtually guaranteed to happen at some point in the future. Unfortunately, I can't predict if it'll happen in 1000 years or 10 years, but in the meantime I'll learn a few recipes for squirrel meat and hope I never have to use them

 

[Nords]

"The Best Store of Value"

Heck, I thought we were talking about CostCo...

 

[haha]

Unfortunately, I can't predict if it'll happen in 1000 years or 10 years, but in the meantime I'll learn a few recipes for squirrel meat and hope I never have to use them  

You guys should know that
a) it takes a lot of squirrels to make a meal. ( I know, I am my family's Burgoo specialist) and
b) Turns out the damn things carry a brain wasting disease similar to BSE.

Mikey

 

[yakers]

Well, my take on extreme times is to have a lot of cash, a bit of gold, transportation and most importantly a family or community that will take care of each other. When we had riots in the LOs Angeles area our neighbors got together and decided we would block off the ends of the street with RVs & trucks and check on each other. This is not a great solution but we figured trouble would pass us by in favor of easier targets. This would not work for a long term problem, where would we get food, water and energy?

Although in LA now my family has roots in Wisconsin farming. If I were to get there there would be a place to hang out if the winters didn't kill us off.
One of the most enlightened men I know believed in not owning real estate. It sucked up too much of his thinking time and it was not portable. He went on to live on a boat for several years, it suited him. I learned from friends that for many generations in many countries Jews kept a lot of gold and cash not so much that they were rich as it left them mobile as the had to relocate sometimes on little notice.

My take on it is that a supporting family and community would be the way to go, I know that may not sound as ruggedly independent as this board often sounds, but such independence may be a bit of a myth and based on an industrial society that if socially/financially challenged would not support such independence.

 

[unclemick]

On the west coast, the 'old' generation Chinese had Jade and precious stones for portability and hidability.

 

[John Galt]

I believe the best store of value is what's between your ears, but looking around I see it doesn't work for everyone

John Galt

 

[haha]

My take on it is that a supporting family and community would be the way to go, I know that may not sound as ruggedly independent as this board often sounds, but such independence may be a bit of a myth and based on an industrial society that if socially/financially challenged would not support such independence.

I agree completely with your analysis. There are reasons why people in times past lived in clans and tribes. Not very PC, and you give up a little autonomy- but when the going gets rough there really is no substutute.

Even our rugged mountain men might be challenged during a social breakdown, because they would be pressed on by groups.

If you have ever hunted with drivers, you have one idea why you need buddies. If you have ever been a teenager in a tough neighborhood you have another. And of course, any combat veteran needs no convincing.

M

 

[wabmester]

Comrades Mikey and Yakers -- I'm with you! So, I take it we have an actionable plan:

-- We'll all maintain at least 10% of our stash in portable fungibles: gold, precious gems, and whatever else we can stuff into our pockets.

-- When the sh*t hits the fan, we'll head straight for Hawaii.

-- We'll live off of pineapples and bananas. No squirrels for us!

-- And we'll move in with Nords, and help maintain his off-grid solar setup.

Now, who is going to tell Nords?

 

[consejo]

Rock, real estate is the answer for a lot of people who dream of ER...it is a sort of modified ER because if you use it to create income it is also a job.

You don't need as much expertise or luck as other investments, either.

Your own home can be the basis and a way to learn the ropes. I have personally made returns on my RE investment of almost 100% a year. Of course, the market is crazy right now and it would have a high cost of entry in some places (San Diego, LA, DC, Boston), but if you can move, you can still find very good deals.

Check out the link:

http://roqc.tripod.com/whatcolorareyourhandcuffs/

 

[Nords]

And we'll move in with Nords, and help maintain his off-grid solar setup.

My worst nightmare is that the planes stop flying (you should've seen Hawaii's 9/11-inspired hoarding) and nobody will be able to come or go! It's a darn long trip on the water...

Yep, no squirrels. Mongoose.