How Much Interest Has Your Food “Bank” Earned This Year?
This article was written by Tom Chatham and originally published at Project Chesapeake
In these days of declining paychecks and rising prices, people are hard pressed to get the most for their money. With every new dollar that is printed the value of your hard earned savings decreases and much buying power is lost. The conventional way to offset this decrease is to invest your money where it can earn interest and increase your holdings in real terms or at least keep up with inflation.
If you put your savings in the bank you might get .25% these days if you are lucky. This is at a time when real inflation is running close to 9% annually. In order to earn a better return on your funds you must put them in increasingly risky investments that have counter party risk that many may not fully appreciate until something happens. Just ask those fleeced by the MF Global bankruptcy.
There are few things one can place their money in these days that will maintain value or even grow. The normal safe haven in times like this are usually precious metals or investment grade collectables but those things must be sold in the marketplace in order to utilize the value of those items. What the average person needs is a safe haven they can hold and use at will and still reap the full value of those items.
When you earn interest on investments, your Uncle Sam will be standing there with his hand out when you liquidate that item so he can get his share. This just adds insult to injury when you loose buying power through inflation. There must be a better way to store wealth on a small scale that average people need and can use. That way is through commodities that you use every day.
When you buy a can of soup for .50 cents and put it on the shelf for several months and finally use it after the price has increased to .65 cents, you have effectively earned 30% interest on that can of soup. Where can you earn 30% interest these days with no counter party risk?
What makes this even better is that you pay no tax on that 30% interest. Can it get any better than that? This type of investment plan will work for anyone because everyone buys food on a regular basis. Not only that but the other things you use at home such as hygiene supplies, paper products, cleaning products, and hardware supplies will likely go up in price as time goes on and offer you the opportunity to save on your future needs. This also applies to things such as ammo, clothing, auto parts and energy supplies.
Some may say this is a waste of time because many of these things will have to be used within some time limit, but you will need to buy these things anyway at some point so why not increase your buying power by making purchases in a different manner than you normally do.
If you store a years supply of food at home and the real inflation rate is 8% annually, when you replace those goods that you use you may pay more but you will essentially be eating at last years prices. If inflation gets even worse in the future you will have more available purchasing power than others because you will not have to buy necessities every week like everyone else. You can wait for specials, deals on bulk purchases or seasonal fluctuations.
In a serious situation you would be able to stop purchases for up to a year and use that money for other things such as equipment to grow and can your own food. In the event of unemployment, it is also one less expense you will need to worry about. While food is a natural for this type of savings plan other household products may work even better due to longer shelf life.
Just imagine if you had everything you would need for the next ten years stored in your basement. How much would you save in inflated prices over that time period? With a real inflation rate of 8% prices would almost double every ten years. It is unlikely that your paycheck would increase at a similar rate. This type of savings plan is better than putting money in the bank because a bank can go out of business or outright steal your funds because of new laws that are now in place. The amount of money you spend on everyday necessities over several years can run into the thousands of dollars and that is sufficient to preserve a lot of money.
It is important for each person to analyze their financial position at regular intervals and you must be aware of the real inflation rate in order to devise a plan to get the most from every dollar you spend. This will become ever more important as the economy becomes more unstable as time goes on. In the end it is up to you to protect your hard earned money from loss due to economic conditions that are controlled by those that wish to destroy it.