The key to your family’s financial survival is your assets, namely your money and your property. Therefore, protecting your assets must be one of your family’s top survival priorities. Unfortunately, many preppers put far more thought and effort into physical survival (storing food, etc.) than into protecting assets, even though protecting them is often just as important.
There are two major threats to your family’s assets in today’s world: confiscation and inflation. Confiscation means that government will try to seize all or part of your funds through taxes or simply by taking it. Confiscation isn’t as farfetched as you might think. In 1933, President Franklin D. Roosevelt (FDR) confiscated gold from citizens as part of his efforts to fight the Great Depression. During World War II, the money and property of some individuals, including German and Japanese Americans, was seized by the federal government.
More recently, the European Union pressured the government of Cyprus into seizing funds from certain bank accounts. There have also been suggestions that the U.S. government should seize or tax retirement accounts to raise more revenues. Local governments around the country are increasingly seizing private property through eminent domain, particularly in urban areas.
Protecting Financial Assets from Confiscation
The best way to protect your assets from confiscation is to put your funds in those vehicles least likely to be confiscated. The investments least likely to be confiscated are those owned by the rich, including politicians. No matter how greedy they are, bureaucrats and politicians are not likely to go after the rich. Like most predators, they go after those least able to defend themselves, namely the working or middle classes.
Consider putting some of your money where the rich put it—in stocks and in exchange-traded funds. If you have a lot of cash, open an investment account with a big investment bank such as Goldman Sachs. Goldman Sachs is politically connected; its executives often end up as Secretary of the Treasury. It is doubtful that any Treasury department bureaucrat is going to bother the bank his boss used to work for.
If you like to travel, you can also look into overseas bank accounts. Switzerland is still the safest, but in recent years, Uncle Sam has been pressuring its government to turn over information about Americans banking in that country. It is possible to transfer funds to overseas bank accounts from the U.S., but be careful. The federal government can track such transactions. Those who live close to the northern border can bank in Canada, which has stronger bank privacy laws than the U.S.
A good strategy for average people is to keep a large amount of cash in an insured bank account, such as a CD or a savings account. Under most circumstances, you will be able to pull the funds out as cash pretty quickly.
For long-term investments, insurance products such as annuities and whole life insurance policies provide a high level of security. These products aren’t likely to be touched either because the wealthy use them for their retirement.
The main rule about avoiding confiscation is to keep your money out of any asset, that is likely to be confiscated, such as a 401k account or gold bullion. Instead, look to see where the rich are putting their money and put it there.
Physical Assets, Inflation, and Confiscation
The other big threat to assets is inflation, the slow destruction of money’s value, which is a bigger problem than confiscation. Confiscation might or might not happen; inflation will happen, because all money loses value over time.
Any asset is potentially vulnerable to inflation, but some assets are more vulnerable than others. Generally, physical assets such as precious metals are safer than paper assets. (Although, as the recent bubble shows, gold is vulnerable to inflation and the boom and bust cycle as well.)
Average people should try putting a small part of their money in a physical asset that can be easily sold. Given American history, I’d recommend jewelry as this asset, because it is small, easy to sell or pawn, and easy to hide. Nor is it likely to be confiscated; FDR didn’t touch gold jewelry in 1933 (women had the vote). During World War II, jewelry sold very well, usually to women war workers afraid of confiscation.
Another advantage to jewelry is that it has gemstones, which add to the value. Something else about jewelry: It is one asset that you can actually wear and easily carry with you if you have to go on the run. Even if gold coins get confiscated, jewelry probably won’t.
Other assets you might look into are uncut or loose gemstones and silverware. Collectibles like comic books and stamps aren’t a good asset because they’re often overvalued and hard to sell. The same goes for antiques, including antique cars and guns. The market is limited and rigged against average people by professional dealers.
If you want to store up something to sell in an emergency, try storing up physical items people might need or want. That way you could sell or barter that stuff in an emergency. Ammunition might be a good thing to store because it is small and easy to hide. Wine or hard liquor lasts for years, and it can easily be stored in the average home. Another interesting asset is goods that could be easily bartered or sold in an emergency, such as cigarettes, batteries, tobacco, ammunition, candy, coffee, and tea. A large stash of such trade goods, particularly the ones you would use anyway, can beat inflation by limiting future purchases.
Real Estate, Inflation, and Confiscation
One physical asset I’d be leery of right now is real estate, because it is greatly overvalued in most of the United States. Real estate prices will collapse again and destroy a lot of wealth with them. Stay out of the real estate market until it collapses.
Instead, concentrate on paying off your home mortgage and only buy property that is a real bargain. In the long term, rentals will be a good business if you can purchase them cheaply. Large numbers of people are being squeezed out of home ownership right now, and they will need a place to live, but real estate prices exceed the potential profits from rent in many markets.
A better strategy is to save up your cash and wait for real estate prices to crash again. Then be on hand with cash to pick up likely rental properties. This can be difficult because realtors deliberately refuse to sell bargain properties like foreclosures in many markets. You may have to search tax auctions or approach homeowners directly to find low-cost real estate.
Real estate is vulnerable to eminent domain confiscation, so steer clear of those properties most likely to be stolen by real estate developers and politicians. This includes properties in downtown areas, land near venues such as stadiums or museums, buildings on busy commercial streets, and real estate along transportation arteries such as freeways and light rail lines. Instead, search for bargains in older neighborhoods off the beaten path.
Develop a Financial Survival Strategy Now
The way to protect your assets from confiscation and inflation is to develop a financial survival strategy now. Those that have one will be better off than those who trust in the government or the market.