With the economy still trying to recover from the recent recession, I've been watching closely for ways to protect what little wealth I have left. It seems like almost every investment option out there is either too unstable, doesn't provide enough of a return, or puts my money at risk of being lost in a bubble or through market manipulation.
Whether it's stocks, bonds, commodities, certificates of deposit, savings accounts, or just plain cash, it's hard to find something that is truly a stable investment that provides a steady and reasonable rate of return that isn't subject to being destroyed by forces outside my ability to control.
I've come up with investment that might actually protect wealth though…land.
Inflation Eats Cash
Cash -- especially the US dollar -- can often be a darn good wealth protector. It's pretty much universally accepted -- either in bill form, check, or credit card -- at home in the US, and in many cases, abroad. However, the downside to cash is -- at the moment at least -- not only low interest rates, which makes returns on cash investments like certificates of deposit, interest-earning checking accounts, and savings accounts rather pitiful, but inflation. While the government currently puts inflation at somewhere near 2 percent, for many of us it's significantly higher. Our family's personal rate of inflation is currently right around 5 percent for this past year, and this means that cash is not a very strong protector of wealth as without earned interest of any real meaningful amount, inflation eats away at it fairly quickly.
Metals are Only Worth What Someone is Willing to Pay
I hear a lot of people talk about having gold and silver on hand to combat higher inflation or even economic collapse. In fact, I've written a number of articles about putting money into silver and gold as a hedge about economic uncertainty. The downside to this type of investing is that a piece of metal is only worth what someone is willing to pay for it. If our nation's economy collapses, what is a silver coin going to be worth? Will it be worth $100 US dollars? A $1,000 US dollars? A piece of bread? Or absolutely nothing at all?
Well, it depends on what a person is willing to give me for it. I seriously doubt the local grocery store will be open and accepting gold and silver coins for food. And personally, I wouldn't be trading the food that I have on hand for my family to consume for lumps of metal that will do us absolutely no good. So while metals can be an option for wealth protection, it doesn't necessarily mean they will stand up during a truly devastated economy or economic collapse.
Stock Markets and Homes Hit Bubbles
So what's left when it comes to putting wealth to work? Well, there's the stock market. There's the housing market. But both areas are prone to manipulation and bubbles. A home can be a place to store and at times even create wealth, but as we saw during the market collapse beginning in 2007, it's also a place where plenty of wealth can be destroyed as well. And as we saw with the tech bubble and the financial crisis, the stock market can also be a place where wealth is both created and destroyed in quick spurts.
But if cash is out, metals are out, stocks are out, and homes are out; what else is left when it comes to protecting wealth?
The Benefits of a Home with Land
Personally, I think land is a great option for wealth protection. But it's not just land that comprises this option since there can still be carrying costs that eat into wealth while carrying land such as property taxes and maintenance. Owning land with a home upon it though could be the true wealth protector. In such a situation, not only do we have a place to live and possibly protect and even create wealth through a dwelling (which we must have one way or another), but there is the possibility for additional revenues through land usage.
Whether through growing food or hunting, raising fruit trees or grapes for harvest, utilizing the land for fuel through wood, coal, natural gas, mining minerals, utilizing water rights, harvesting lumber, and similar money making -- or at least money-protecting activities -- I'm looking at this sort of investment option as a possible future move in which I can not only obtain a place for my family to live, but to possible work and build a future that is relatively protected from the perils entailed in many other forms of investing and wealth management.
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The author is not a licensed financial or real estate professional. The information provided in this article is for informational purposes only and does not constitute legal, financial or real estate advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
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