The ice caps are melting. Antibiotic resistant bacteria is thriving. The threat of nuclear war looms in the background. It’s no wonder the survivalism industry (did you know that was even a thing?) has started to go mainstream. If you need evidence, just consider that Costco is now selling a year’s supply of survival food.
When it comes to your portfolio, what investments can endure the apocalypse and keep you alive? The answer lies in tangible assets, such as food and water.
Many investors tout the benefits of investing in precious metals (and guns, canned food, and all sorts of survival gear) during a crisis. In fact, history shows that when the stock market crashes, the price of gold goes up. That’s because investors seek out gold as a safer option when the economy seems to be tanking. But we at Financial Poise believe that investing in farmland and water is an overlooked option that keeps you alive both financially and physically.
Investing in tangible assets, generally, is something worth considering. Tangible assets tend to be less shakeable. The value of tangible assets are not influenced by the stock market. Their value may fluctuate depending on different factors, such as supply and demand, but they are more likely to help your portfolio withstand market volatility.
Still, there is not always a clear line between when a particular tangible asset constitutes an investment or something else. For example, is collecting rare antiques or collectibles an investment or a hobby? Or, ask yourself whether your ownership of your own home is an investment.
Essentially, which tangible investment is fun, and which can save your life down the line? Your baseball cards or antique dolls may not help during an apocalypse, but food and water is a very real alternative asset to consider in time of emergency.
It is true that precious metals have been a historically good way to go in times of trouble, and gold has spiked recently. But will past continue to be prologue?
Take a step back. If things get really bad, are metals really the way to go? You can’t eat them, nor can you defend yourself with them. (Well, you could hit someone with a gold bar or throw silver dollars at someone, but you get my point.)
Though precious metals can be relatively liquid – meaning some can be converted quickly into cash – they do not provide the same tangible benefits that come with owning real estate or farmland. In other words, gold or silver is not a productive asset. It does not produce a regular income (or, in the case of an emergency, food products).
If you really want to hedge against disasters of all kinds, which alternative assets make the most sense?
I have two immediate answers: food and water. That’s why I want to buy a farm and a lake. Why? Because you cannot eat or drink gold.
There are two ways to look at the investment. On one hand, investing in farmland through outright ownership can generate income from food or livestock, as well as capital gains from appreciation. Plus, owning farmland will save your life when supermarket shelves are looted and you need a food supply. On the other hand, investing in farmland and water infrastructure in general can improve food and water scarcity and bring new advancements to agricultural technology. These investments, whether through REITs or other means, lead to jobs and economic growth, especially as farmers face increasing struggles.
In the end, when the proverbial you-know-what hits the fan, will you clutch your gold or your water bottle?[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Alternative Assets Part 2: Investing in Real Estate and Other “Hard” Assets and Protecting Assets. This is an updated version of an article that first appeared on January 12, 2018.]
Jonathan Friedland is a senior partner in Sugar Felsenthal Grais & Helsinger LLP’s Chicago office. He is ranked AV® Preeminent™ by Martindale.com, has been repeatedly recognized as a “SuperLawyer”, by Leading Lawyers Magazine, is rated 10/10 by AVVO, and has received numerous other accolades. He has been profiled, interviewed, and/or quoted in publications such as Buyouts…
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