May 31, 2013 by Liberty
With the government printing presses running on overtime, you can’t count on the dollar providing you a strong future. There is no easy way how to protect your money from the government but with a little bit of creativity, you can shield yourself from the worst case scenarios.
The best way to protect the money you have is through diversification. All of the assets and strategies listed have their own sets of risks and rewards. That means you should take the time to thoroughly understand them all before getting started.
The more you understand about the strategies you use, the better off you’re going to be.
1. Diversify Into Gold
Gold has exploded in value for a reason. People trust that gold is always going to be worth something. It’s the perfect protection against the worst case scenario. Gold is still one of the safest places to put your money after thousands of years. Don’t count on that changing anytime soon.
Since writing this originally, gold has dropped a bit in value. Historically speaking, that doesn’t change a thing.
2. Try Out Bitcoin
On the speculative end, bitcoin is a cryptocurrency that’s designed to be safe from government printing. Bitcoins can only be created by using actual computer energy. That means that it doesn’t rely on trust to maintain it’s scarcity (only its value.) This is definitely more for the techies out there. It’s also very unproven which usually means risky.
3. Reduce Your Savings Account
Be careful with having to large a savings account. The interest on your savings account will not protect your money from government inflation. That means your money is sitting and shrinking. It’s kind of like filling a bucket with a hole in it. Savings are great for emergencies but try to get a lot of your savings into investments or use it to pay off high interest debt.
4. Stock Investments
This is an oldie but goodie. Stocks have been a consistent way to grow your investment faster than inflation. This is a risky way to go but also offers reasonable return percentages. Stocks will be less affected by inflation in a harmful way (especially larger companies.) Infrastructure is going to be valuable in all but the worst possible situations.
5. Consider Reducing 401k Investments
Some people will start throwing rocks at me for this one but it’s true for some people. You might get tax advantages from your 401k but those tax advantages aren’t always worth the risks they put you through. Government is treating these accounts more and more aggressively by the year. 401k’s are also rarely managed impressively either.
Consider the story of the person in Germany around WW2 that pulled out his retirement account. He saved in it for his whole life. He could only afford a loaf of bread with it all. Inflation is unpredictable in government hands. That makes weak investments bad investments.
6. Invest and Bank Out Of The US
Investing in the US poses some risks. With such a large government debt, no one would be surprised to see another Cyprus starting up here. When your money is out of the United States, you have a little bit safer a location. Naturally, I’m not saying to put all your money in Cyprus. Find countries with great records of security. This is not only possible for millionaires. Anyone can offshore bank with a little research.
7. Tangible Assets
When the government is going crazy with printing, your money may be safer in assets that can actually be touched. Land and properties are an interesting speculative move right now. Government has always benefited land owners and property taxes are typically limited more than other taxes based on geography. People will always need property and with less money directly in the dollar, your money is more safe (in the long term.)
8. Earn Passive Income
Government loves people that earn money without working. It provides massive advantages for you. I recommend making your living expenses with working and little more. Focus on gaining passive income with the rest of your available time. That means you can earn more and the government will take less of it.
9. Don’t Overpay the IRS
Some people get excited about their tax returns. I get mad. The IRS just took an interest free loan from you for the year. That’s money that you’re not making. Don’t overpay the IRS if you don’t have to. Adjust your forms to pay them what you “owe” them on the dot, if at all possible.
10. Sell Assets Slowly
You want to make sure you don’t gain huge amounts of money at any one time. The higher you push your tax bracket, the less money you make. Ideally, you want to make the absolute minimum you can live off of while holding the rest in safe assets. Change the sale of your assets for low income years if possible.
11. Think Hard Before Hiding It
Ooohh… Dangerous talk here. I say you should pay them to ease the worries of men with guns coming to your home but some people believe in hiding the money they make. Just ask yourself if it’s really worth it before you do it. My advice: Don’t wrestle with pigs. You’ll both get dirty and the pigs will like it.
12. Three Flag It
For people that really don’t want to have to pay a penny, you might want to consider setting up a three flag system of life. That is a method of locating your income source, home, and citizenship in the most beneficial locations. Look up perpetual traveler on Wikipedia to get a basic idea of the system. While I might not have the heart to go through with such an extreme plan, more power to those that can.
When you’re thinking about how to protect your money from the government, you need to be creative. There is no one size fits all solution and the laws change by the day. In many cases, it would be useful to hire a professional in the field for help. Remember, you’re the one that earned the money. As long as they’re fighting a war you don’t support or encouraging a system you wouldn’t pay for, you have the responsibility to support them as little as possible.
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