“The prudent see danger and take refuge, but the simple keep going and pay the penalty.”—Proverbs 22:3 Of course you recognize this title—it’s a (very) slightly modified version of the title of Carol J. Alexander’s outstanding post on this site, How to Invest in . . . Food? . That post tipped off something I’ve been contemplating for months, which is how to “invest” in usable and necessary commodities that have nothing to do with food. And no, I’m not referring to gold and silver—that’s an entirely separate topic. Right now, with interest rates hovering close to zero, there’s less incentive to having money saved in a bank account than ever. When you contrast this limitation with the fact that the price of nearly everything we need to survive is rising, the need to get a better return on our money is obvious. Stocking up on necessary items is one way to do this. No, consumer goods don’t pay interest, but by buying them now we lock-in prices at today’s levels, which protect us against future price increases that seem to be just about guaranteed to continue. This is a way of investing in commodities–the kind that are closest to home. A package of razor blades will always have value, but the money needed to buy it can and usually does drop in value—which is to say that we’ll need more money to buy a package of razor blades at some point in the future. What are the best non-foods to stock up on? The best will be those that fit into the high value/low volume category as they will be easier to store, transport or even to trade should that become a necessity. And there’s a super long list of these… Over the counter medications: pain relievers, decongestants, adhesive bandages, allergy medicines and digestive medications. People will need all of these no matter what the future holds. Personal products: hand soap, shampoo, toothpaste, deodorant, razors and razor blades, and laundry detergent, to name a few. Household goods: batteries, candles, light bulbs, duct or electrical tape, lighters, drain cleaners, bug spray, sealants and extension cords. This is just a sampling; just walk around your house and take note of all the “little things” that you use all the time but don’t think much about. Any one of them is a candidate for inclusion in your portfolio of non-food investments. Why non-foods? Why not stock up on food and declare “mission accomplished”? First off, I completely agree with the idea of stocking up on food for all the reasons Carol cited in her post. But non-foods have some advantages that can’t be overlooked—think of it as a form of investment diversification. Consider the following: Non-foods are generally non-perishable (though slow rotation is a good idea). As an emergency preparation, far more people are likely to stock up on food, giving someone with non-foods better bartering potential. Non-foods don’t take up as much storage space (think 24 bottles of Tylenol vs. 24 boxes of breakfast cereal). Food can be grown in a backyard garden, but home made batteries probably won’t happen. In a crisis, food production will be restored quickly—non-foods will come much later, enabling them to hold their value much longer. The “investment” value of non-foods How exactly are non-foods an investment, and where do they fit into a savings or investment portfolio-mix? Protection against future price increases. We discussed this at the beginning of the post, but this is the real value of things as an investment. By buying now, we lock in today’s lower prices, relieving ourselves of the need to generate additional income (and the taxes that brings) to pay higher prices later. Non-food items escape taxation. Any investment that either pays interest or dividends or can be sold at a higher price will result in a tax liability. But an item that’s purchased today for $10, and used in, say, two years, when it will cost $15 will not have any affect on your taxes– even though it’s doing basically the same thing as an appreciating stock! Non-foods fit well into an emergency fund. When we think of an emergency fund we normally think of money in a bank account or money market fund. But a stash of necessary items can serve a similar purpose. If the stash is filled with items you know you’ll need even and especially in an emergency, it qualifies as part of an emergency fund. You can even do an asset allocation similar to investing, with say 50% of the emergency fund in cash, 30% in food and 20% in non-foods. You’re emergency fund would then have built in inflation protection. As part of a disaster preparation plan. Do you know anyone who lived through the Great Depression? Many people who did are quite familiar with the practice of storing surplus goods. They remember when those goods were not available! Natural disasters are one kind of crisis but they tend to be localized, which is to say that production of goods is going on elsewhere and can be available at some time in the near future. But if the disaster is general, as in another economic depression, those goods may be either unavailable or beyond the reach of the average person to afford. Along with food, non-food necessities can be one of the very best investments you can make for a general economic collapse. With the debt towers of both Europe and America teetering more precariously each day, the possibility of this outcome cannot be dismissed lightly. Admittedly, a case of band-aids doesn’t have the sizzle of the latest dot com stock, but a critical element of investing is diversification, and that’s what we should be looking for. One “asset class” that we can fully expect to hold its value and even appreciate in an environment that’s toxic to financial assets will be a well stocked trove of the goods we and others use every day. Is there any better investment than that? What other non-food items can you think of that would be good to “invest” in? Meet us in the comments and let us know your thoughts! Want more? Read Carol J. Alexander’s post on How To Invest In . . . Food? Related Articles: How to Invest in . . . Food? Learn How To Invest In Stocks – For Free How To Invest In Gold & Should You How And When To Start Saving For Retirement The most important Organic fruits to buy What Is The Best Investment For My Money During These Economic Times? Is it Wise To Borrow Money To Invest? With backgrounds in both accounting and the mortgage industry, Kevin Mercadante is professional personal finance blogger, and the owner of OutOfYourRut.com , a website about careers, business ideas, money and more. A committed Christian, he lives in Atlanta with his wife and two teenage kids. As a thank you for subscribing to our newsletter you can download our quick eBook ” 25 Ways To Save Money in 2011 ” for FREE! The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .
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How To Invest In . . . NON-Foods?