Letter Re: Surviving Financial SHTF and Becoming Debt Free, by K.D.

HJL,

KDs advice on getting out of debt and getting spending under control is spot on, but I am curious what KD and the SurvivalBlog editor recommend for retirement savings. Obviously silver and gold are vital components of any investment portfolio, as a hedge against the failure of currency, but these investments do not pay dividends and cannot be relied upon as a complete retirement plan.

When investing for the auction price of a stock, as the mainstream foolishly recommends, I agree with SurvivalBlog that the stock market can be a dangerous store of wealth. However, if you approach investing with the same mindset as you would if purchasing a corner 7/11 store, you cannot lose, short of a complete currency collapse.

KD mentioned pulling his/her money out of the stock market before the 2008 crash as being a good move. I have heard similar statements from many of my fellow preppers. Let’s consider what would have happened if KD had owned stock in Coca-Cola (KO) prior to 2008. Coca-Cola is a strong company with a wide moat brand, which has increased its dividend every year for over 50 years. When the 2008 crash happened, the auction price of Coca-Cola’s stock dropped considerably, but holders of the stock continued to earn the same increasing amount of money in dividends as before the stock crashed. This is because no one in America has ever turned on the news and said “Aaaah! The stock market’s crashing! I’ve got to immediately stop using my food stamps to buy soda, junk food, and other stuff I don’t need!” A wise person could then use the stock market dip to purchase more shares of KO at the sale price and earn even more of the awesome dividend. A patient person, holding their investment, would have then regained all of the investment’s value a few years later.

When you invest in dividend growth stocks, all anxiety relating to a stock market crash or closure ceases to exist. In fact, you pray for a stock market collapse so you can load up on cheap shares of awesome dividend growth stocks. Fairly valued (P/E < 20), quality companies with strong histories of growing dividends, good growth, and solid brands can be used to grow wealth to the point that a person can retire early.

The only way the dividend growth investor loses money is if Americans suddenly stop buying cigarettes, cheeseburgers, and gasoline, in which case life would probably be so horrible that the investor would be less concerned about their hoard of wealth and more concerned about procuring weapons and ammunition to fight off mauraders. I am not suggesting that people shouldn’t prepare for emergencies, or even full-scale civilization collapse. What I am saying is that people have been predicting the end of time since the beginning of time and that the world as we know it may very well not end within our lifetime. It would be foolish to put all of our wealth into disaster preps, only to reach retirement age and have no U.S. currency available to purchase necessary goods and services in this fiat-based economy. Preppers work so hard to prepare for hard times, why is it that we reject the idea of preparing for the contingency of good times?

Not so long ago in history, average people did not have access to the tools needed to retire and instead worked until they died. I encourage everyone to work as hard as they can to grow their wealth and intelligently use available methods to retire as early as possible, so they may maximize their enjoyment of this short and precious life. – D.R.

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