Some Investment Options for the Prepper, by K.P.

My wife and I have been preparing for any probable event for the past five years.  I will start by stating the investments that we started with followed by an overview of various investment vehicles and their pros and cons.

Five years ago my wife and I were your average middle class couple with two kids, a decent paying job, and a lot to look forward to.  We owned a car with no loan and we had an SUV with a loan.  We bought into the 2006 housing bubble not knowing how deep the corruption was.

We discovered only months after buying into a new and expensive home.  That was when we hit the brick wall and came to the realization that we have been living in a fantasy world.  We were unable to rewind the mortgage because of early payment penalties and ended up getting stuck with it, for a while.

After we were able to balance our checkbooks and other accounts properly we started to concentrate on preparations.  We first started by purchasing extra food like rice and cans that we consumed often.  We bought a Berkey water filter and started filtering our water rather than paying for bottled water.  This resulted in massive savings every month with a rather small $200 up-front investment.

After squaring away the food and water problem we then looked into protection and self-defense.  At this time we were living in one of the People’s Republic states and had to take training courses and wait a week before we could ever bring home a firearm.  The firearm addiction soon turned into a burden until we put the brakes on it and only kept to the necessities (a couple of pistols, a riot shotgun, and a few different kinds of rifles).

Having squared away our food, water, and self-defensive items we then started to use our extra [Medical] Flexible Spending Account money to stock up on first-aid equipment.  After getting a few hundred dollars in first-aid supplies we worked on getting our emergency reserve fund back in order.  Most personal finance advisors recommend 3-6 months of reserve funds in a money market or savings type account.  This is useful in case you lose your job or you become temporarily impaired.

I would call all of the investments above “insurance”.  This is insurance against many of the foreseeable or probable dangers that anyone or any family may face.  Now let us look at investments…

Orthodox Investment Methods for Preppers
There are tons of investments out there, some orthodox, most not.  Let us first consider the orthodox ones before we tackle into the infinite realm of unorthodox investments.

Cash – “Cash is King” or so the saying goes, but I would ask someone from Zimbabwe if cash was still king.  While we use cash in everyday transactions, it does depreciate overtime due to deficit spending of the government.  Inflation is yet another form of taxation, albeit “hidden” taxation.  You could and should invest in cash and leave one month’s supply in your bolted-down safe or somewhere close at hand.  You never know when the banks may go on a little holiday and you will not have instant access to cash.

Savings Accounts – Low-yielding but they are FDIC insured which is the same as saying that they will never lose face value unless something with the government goes terribly wrong.  The yields are generally lower than inflation and I would only recommend this investment vehicle for your emergency reserve fund in case you lose your job or become ill.

Certificates of Deposit (CDs) – Low-yielding but also FDIC insured.  These are very similar to savings accounts except that you cannot withdraw money from them without paying penalties.  This would be good for the last three months or so of your emergency fund but I wouldn’t put them in anything longer than one year CDs.  If you really need the money you can always pay the penalty.  Inflation will eat this investment up as well.

Money Market – Similar to Savings Accounts but they are generally not FDIC insured and some places require a minimum balance of $10,000.  I would also recommend these for the emergency fund.

Stock Market – The stock market is a place where people buy and sell ownership certificates in various companies.  It is a place where people smarter than you convince you to spend your money with them.  Most people believe that they are in fact buying stocks but it is really the brokerage houses that buy the stocks and then put them in your name.  Be sure that your brokerage firm is well-insured and of good quality.  For the small time investors a site like is great because there really is no minimum quantity of stock that you must buy.  Most shares are traded in lots of 100, so if MSFT (Microsoft) is selling for $32.25 per share you would have to pay $3,225 plus transaction costs.  The best way to invest in the stock market is to buy good companies when they go on sale.  If you would like to purchase MSFT then think of it as a 2-liter bottle of soda or chicken breasts or whatever at the store.  If the chicken breasts doubled in price compared to last year would it be a good time to buy it now?  How about if the chicken breasts were selling for $0.50 per pound?  Buying stock is like buying chicken breasts at the store, do not overpay for them.  Be smart when it comes to buying stock and those smarter people will not necessarily be able to take advantage of you.  Note that the stock market has been a loser for the past 10 years when adjusted for inflation.  This will probably be the case for the next 5-10 years.  If you need the income then dividend paying stocks are great or you may want to utilize the bond market.

Bond Market – Bonds are nothing more than debt instruments.  They signify a set amount of money that must be paid when the bond comes due.  Attached to the bond is an interest rate and the bond holder will receive that rate until the bond expires at which time the bond holder will receive the full value of the bond.  The market is heavily dictated by the current interest rate.  When rates go up, bonds prices go down.  When rates go down, bond prices go up.  This happens so that the payment closely reflects the prevalent market interest rate.  With current interest rates at all time lows, the bond market is at an all-time high and it would be best to get out of this market unless you really need the monthly income (but don’t discount good paying dividend stocks, you could replace your bonds with stocks that pay decent dividends to their shareholders).

Mutual Funds – Mutual funds and exchange traded funds are where unsophisticated investors flock to.  This is the investment for most retirement accounts and people who want to diversify for the sake of diversifying.  If you are unable to monitor your investments then this may be the place for you, but keep in mind that mutual funds, on average, perform worse than the markets themselves.  Mutual funds also tend to cost you more in fees and taxes.  Read the prospectus or you may regret ever buying one.

Precious Metals – Gold and silver used to be real money, today they are nothing more than a commodity.  Gold is predominantly used in jewelry and silver is mostly used in electronics, antibiotics, jewelry, and photography.  They do not generate cash flow and they cost money to store and protect.  They are, however, a good hedge against inflation.  With interest rates so low and the Federal Reserve printing money to fund the government with no end in site, gold and silver seem to be the investments of choice at this particular moment.  In a societal collapse they would be used in barter.  Keep in mind the price of chicken breasts, once they reach a level that you feel is too high then it would be time to bail out and to move your money into a different asset class.  I feel the next investment class after gold and silver will be the unorthodox methods.

Unorthodox Investment Methods for Preppers
Here are a few unorthodox or unconventional ones that most people do not think about:

Real Estate Rentals – Buying real estate now?  Are you crazy?  No, not at all.  You make your money when you buy not when you sell.  If you buy real estate now you will be looking at the potential for the property to generate cash flow and huge tax write-offs.  People always need a place to sleep and as long as society doesn’t completely collapse (which it generally does not) then real estate rentals are a good investment option.  If the currency devalues then you can raise rents or you can modify the contract and demand payment in specie (gold or silver).

Home-Based Business – Your home-based business could be anything from mowing lawns, making and delivering food, or preparing books for businesses (record keeping / accounting if you are an accountant).  Whatever your idea is, there is generally room for it in nearly any economy.  For the prepper you would be best off engaging in a business that you could continue in a soft societal collapse.  Everyone should have a side business, it gives you the potential for great rewards and tax write-offs.

Buy by the Acre, Sell by the Square Foot – While this generally applies to real estate it applies to anything that one can buy in bulk and resell in smaller quantities at generally much higher prices.  In real estate many developers will buy hundreds of acres and will then divide them into lots, run utilities up to each lot, and then piece out each lot while making about 10 times as much money as they paid.  You could also buy materials / items in bulk online and then sell them locally for a bit more, but you need to determine the need in your area and whether or not you have enough buyers.  I generally do not buy stuff in bulk unless I have buyers willing to pay me more than what I paid.

Sell Information – Whether coming over the Internet, through television, over the radio, or through print, information is bought and sold more than most other commodities.  Think of, James provides information for free while collecting money to pay for the bills from the advertisers and donations.  Magazines subsidize most of their costs from advertisers as well (trust me, I have seen the price sheets from agents to see their profits and they are huge, some pay nothing on a subscription but yet charge you $11.95 per year).  There is also the option of writing a book and publishing it yourself; places like help to support this model.  This extra revenue would also fall under the home-based business section.

Look Through Junk to Find Gems –

Another way of finding gems is to go to your local bank and request that they order you boxes of nickels, dimes, or halves. Spend some time with the kids going through the boxes looking for silver. You can expect about two 35% silver War Nickels per box. They [generally] appear darker than regular nickel and are dated from 1942-1945 with a big mint mark above the Monticello. You can expect about two silver dimes per box (they appear bright or highlighted from the edge of the coin and are dated 1964 or before). You can expect about 1-2 silver half dollars per box. They also appear brighter on the edge. Those that are dated 1964 or earlier are 90% silver, and those date 1965-1969 are 40% silver. Most people overlook the circulating 40% half dollars [, not recognizing their value]. Do not waste your time looking for silver quarters, since nearly all of them have already been removed from circulation. (I have looked through about $800 worth of quarters and have yet to find a single silver quarter). [JWR Adds: I recommend keeping all of the nickels you acquire. Eventually sorting out any silver War Nickels is simply a bonus. This is explained in my article: Mass Inflation Ahead — Save Your Nickels!]

There are many things that a prepper must do and these things I labeled as “insurance”: food, water, protection, first-aid, and an emergency fund.  There are many things that preppers can do and these are labeled as “investments”: cash, bank accounts, market accounts, metals, real-estate, businesses, information, and finding gems in junk. 

In case you are wondering, we have left the People’s Republic and now live in a state for free thinking people.  We have had personal experience with nearly every investment stated above.