In today’s episode of The Freedom In Five Minutes Podcast, I talk about how you can hedge your bets against inflation by investing in physical assets that have inherent value.
Join me today as we explore and learn some of the best investments you can make.
Overview & Episode Content
- There is Great Value in Physical Assets
- How do Things Increase in Value Because of Inflation?
- Investing in Physical Assets with Inherent Value
- How to be Efficient in Your Investments
There is Great Value in Physical Assets
Lately, I have been investing in quite a number of things.
Now, when I say “investing”, what comes to mind for most people is the Stock Market, S&P 500, NASDAQ, the New York Stock Exchange, 401 (K), IRA, and all those other things. Well, not exactly. I have been investing in something that is quite different from things I mentioned above.
What I’m above to share is the fact that I have no problem investing in business and tools to become better — whether that’s in sales, marketing, or automation. But when it comes to investing in my family, my house, my land, etc… Oh my gosh! I count every penny and it’s hard not to.
So, for the last few months, I’ve decided to invest in physical assets that either feed my family, shelter my family, protect my family, or make it so we can get more animals.
Over the last few months, we’ve gotten two garden sheds that are 10 x 12 so they are pretty big. We have two 20-foot long connexes, we’ve built a treehouse or deck, we also just got two dogs, and are planning to get some goats.
Now, every time I pull the trigger for every one of these things, I’m like, “Oh man. What am I doing?”
For me, something like a car is a liability so I’m naturally hesitant to spend on stuff like that. But for stuff like this, despite also being pretty hesitant to spend money for some reason, I feel like there is something very important about it. There must be some value in these physical assets.
How Do Things Increase in Value Because of Inflation?
I do not know if you have gone to the supermarket lately. But notice the prices of some of the items for sale there. How much does a dozen organic eggs cost?
A hundred years ago, what were organic eggs even called? They were just called eggs. There weren’t such things as homogenized or processed eggs. Food was just considered organic. Everything was simply organic, for the most part at least.
So, can you tell how prices for things are increasing due to inflation? Obviously, things are not increasing by 3% or 6%. If you look at the price of organic eggs, for example. Their prices have gone up tremendously.
And how much does organic eggs cost today? In California, they cost $6.99 and they’re not even the best organic eggs. Prices can go up to about $10 a dozen for organic eggs! What about goat’s milk? Per gallon, that is about $20.00.
Now, I am going to blow your mind real quick with this thought experiment. Where does oil come from? It comes from fossils, right? It is literally fossil fuel. That means it is a finite resource.
Eventually, all of that is going away. Experts have been saying that for decades. Eventually, we are going to reach peak oil and there is nothing we can do about it.
Well, how much is a gallon of gasoline vs. a gallon of raw goat’s milk? Here in California, a gallon of gasoline is about $3.19. However, a gallon of goat’s milk is about $20 as I’ve mentioned.
How is it that something that is apparently finite costs only $3.19 and has not increased prices so much? But that gallon of goat’s milk is $20.
Investing in Physical Assets with Inherent Value
Those things like goats and chickens, even the connexes that we bought — these things cost more today by a pretty substantial margin compared to a few years ago.
When we got the connexes, I was like, “they are so expensive!”
But really, I am investing in something I can sell at a later time for a higher price! They have already gone up in value tremendously. So, why am I bringing all this up and why is this important?
Sometimes the best investment you can make is in physical assets — things that you can touch. Things that you can hold. Even dollars aren’t necessarily physical assets. If you look closely at what it is made of, how much is a dollar actually worth? As of December 2020, it costs around 5 cents for printing an actual dollar.
The value of that dollar fluctuates based on the value people are willing to give you for it. It’s very speculative in its nature. So investing in physical assets is one of the best things that you can do.
So why is this in Freedom In Five Minutes? Why am I talking about this? For one, it’s a story for me. I could not believe that I’m investing in stuff like this when I never would have done it before.
How to be Efficient in Your Investments
Another reason is this is actually a very quick investment because of COVID-19. A lot of small businesses are collapsing because they are following these guidelines. Let me remind you that these things are simply guidelines. And yet, small businesses are shutting down left and right out of fear of going against the guidelines.
So, out of the kindness of their hearts, some of these small businesses follow the guidelines and end up shutting down their business because they do care for their fellow man. But their businesses are collapsing which is bringing up inflation.
And over the last few months, these physical assets have held their value. And the reason why they do is because they have inherent value. And whether you’re trading a Kuwaiti Dinar to Filipino Peso, or a Mexican Peso to a Dollar — they hold their value across all of those different currencies.
What better way to be efficient with your investments than to do so with things that you are going to use anyway and resell quickly if you need to. Or something that is going to hold its value over time because that connex for example, is going to hold its value over time. Your chicken is going to hold its value for at least a few years and is going to produce an egg every day for 5 or 6 years — that’s about 365 eggs a year per chicken!
So, think about investing on physical assets so you can hedge your bets against inflation. I think it will be one of the biggest things that you can do for you and your business.