As you probably know by now I’m very worried about the growing American Government bubble and I believe that investing in dividend paying companies in countries with a trade surplus is the safest way to put money in the stock market.
But the stock market isn’t the only place to invest. If you want to ensure your money retains it value or grows, there are a few other investments mentioned in The Real Crash that should do the trick.
Precious Metals
The experts say that a good diversified portfolio includes 10% precious metals. I tend to agree, although I’m willing to go up to 20% of my assets and I want to hold at least half of it physically.
I’ve already written about junk silver which is my favorite form of precious metals. It’s easy to identify real junk silver (any dime, quarter or half dollar made before 1964) and they could very well become the default barter currency in the event of a true collapse of the dollar.
While silver has the inherent value of being a “precious metal”, it also has applications nano technology and super computing because it conducts electricity better than any other metal. I highly recommend having some junk silver stored safely in your home.
If you prefer gold, that’s another good way to invest in precious metals. Some people think the price of gold is inflated, but I contend that the reason the price keeps going up is because the Federal Reserve keeps printing money. I think the Fed will keep printing money, so I think gold will keep going up against the dollar.
Precious metals are a great way to diversify your portfolio and protect against an American Government bubble.
Foreign Currencies
Another way to prevent your money from losing value is to get out of the dollar and into a more stable currency. Even when we aren’t in a great recession I don’t trust the Federal Reserve to maintain the value of the dollar. The Federal Reserve is a private bank that makes money by printing dollars and lending them to the federal government.
When a private, profit-seeking company increases their profits by devaluing the value of everyone else’s money, it makes the dollar incredibly risky.
Unfortunately a central bank isn’t unique to America. All currencies in the world are fiat currencies (meaning they are not backed by any physical assets). The key to picking a currency is to make sure that the country has a history of keeping inflation low and that the country exports more than they import.
Some currencies I like are the Australian Dollar and the Swiss Franc. I don’t like the American Dollar or the Euro.
I honestly haven’t invested in any foreign currency yet, but I do know that you can invest in currencies through the stock market with companies like Currency Shares. If you know a better way to invest in foreign currencies please leave a comment and let us know.
What’s The Worst That Could Happen?
Overall I recommend at least 50% of your portfolio be invested in a combination of dividend paying stocks in countries with trade surpluses, precious metals and foreign currencies. And my question is: “What’s the worst that could happen?”
If there is an American government bubble and it bursts, these investments might not skyrocket, but they should definitely do better than American dollars and American stocks.
However, if there is no American government bubble or if it doesn’t burst in our lifetime then you’re probably still alright. Your international investments could very well outperform American investments.
Readers: Is your investment portfolio diversified enough to overcome hyperinflation of a particular currency or government default of some country?
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
1965-1970 Kennedy Half Dollars are 40% silver. That is worth $3.95 in silver today for a measly $0.50. That’s a 790% ROI. Also, ’65-’70 half dollars are dramatically easier to find due to the little known fact that they contain silver.
Jefferson “War Nickels” are 35% silver and were minted between 1942-1945. If you find one in rough shape it’ll be worth $1.50 in silver today. If you found it in change and only had to spend $0.05 then you would be getting a 3000% ROI. If you are even more fortunate and find one that is in decent uncirculated condition or even high circulated condition you might want to consider selling it for its numismatic value which can range from $1.25 – $1265.00!
I’m already in silver (I might be buying some more soon while the prices are lower). I need to get into some gold, and I have always thought about buying foreign currencies but didn’t really know enough about it to pull the trigger. Good post!
Not finding much in my area. I used to order boxes on half dollars and search them, but I think myself and others have picked over the banks here. I have heard of people having more success in rural areas.
It’s pretty spent here too. I work at a Credit Union so I get lucky sometimes. An older gentleman made a loan payment in half dollars. I swiftly bought all of them and scored $4.50 in 90%ers and 40%ers. One of the guys that checks for half dollars puts a dot in the middle of each coin he checks with a sharpie. He even marked a 2008 proof I found. I was livid!
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I’m just curious what you would consider safely stored in your home. While you think you might have a good hiding place, a thief would probably find it. So outside of burying it in your crawl space (my grandfather did this) or having a large floor safe bolted to the ground, your home isn’t really that safe. I could argue that both of those places are really safe either.
Also, if you are looking for an easy way to add some “precious” metals, just start pulling pennies out of your pocket. Any Penny from 1909 – 1982 is 95% copper and based on the current price of copper is worth $.02. It is currently illegal to melt them down, but it is an easy way to start hoarding some useful metals. It will take up a TON of space though.
Instead of pennies I would do nickels. They are the only coin that hasn’t been debased (yet) with zinc. Metal prices are down right now but in 2011 when metal prices were peaking, nickels were worth $0.07 each. People HOARDED nickels. I read a story of a hedge fund manager buying $2 MILLION in nickels. I have no idea where this guy put it, but I guess if he can swing $2 million on $0.05 coins he must have some sort of underground lair. Think 1964-1965 when silver was taken out of coins. What would you have done? Probably cash in your investments and buy $2 million worth of dimes, quarters and half dollars! Needless to say, you would be very comfortable now if you would have had the foresight to do such a thing. Bulk pre-1982 pennies sell for about $0.02 – $0.03 at auctions. I’ve heard they are talking about changing the metal composition of nickels as well though. So hurry and start packing rolls of nickels in ammo cans and then bury them under the shed! Hahaha
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I couldn’t have said it better myself Kevin.. Portfolio diversification is one of the best strategies to mitigate risk associated with continuing and rapid increases in the amount of money that is not supported by a corresponding growth in the overall output of goods and services. It’s very important for investors to remember some key principles. First, diversification is critically important in terms of minimizing risk, thus, a diversified mutual fund is a great way to facilitate this need. Secondly, investors need to explore global opportunities and examine other markets for their potential geopolitical leverage with respect to investment growth. Thirdly, investors should be patient and carefully consider their expectations in terms of performance, by setting long term goals instead of expecting to obtain quick gains. And finally, you shouldn’t invest in something without first researching it very carefully, thus, gaining the ability to effectively distinguish between good and mediocre investments and reinforce your confidence in your ability to recognize long-term investment opportunities.
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It is indeed a well written page. As for my portfolio, it is indeed a well diversified one. Investing takes a lot precaution and risks. Thanks!
I know that I really need diversify. I have too much in the stock market and need to split it up to reduce risk.