RE: Cash in a rental or in a bank?

[astonas]

Re: Cash in a rental or in a bank?

I am not really advocating growing your own food. It really wouldn't be worth it. That is why I like passive stuff, like solar, that can offset the costs and troubles of on-grid power. Stuff that works for you instead of you working for it.

My mistake. I assumed that was part of the reasoning for buying a plot of land and a very small building, rather than, for example, an equally small condo with good access to public transportation. Sorry for the misunderstanding.

[BadJuju]

Re: Cash in a rental or in a bank?

My mistake. I assumed that was part of the reasoning for buying a plot of land and a very small building, rather than, for example, an equally small condo with good access to public transportation. Sorry for the misunderstanding.

The problem I have with the condo is that it just costs more and there is less control that you can exert. With what I said, you could potentially build a home for very little. The land itself might cost more if it is in good proximity to a major population. Personally, I would prefer the condo, but the loss of independence and the cost just make it more untenable.

[raja]

Re: Cash in a rental or in a bank?

Originally Posted by RebbePete "I am more concerned with the return of my money than the return on my money" - Mark Twain.

I still would like to know what you, and others would do, if they were going to receive a million dollars, and how they would go about it.

Here's what I think:

In order to know what to do with your $mil, you have to know the future . . .
That's because different scenarios require different strategies.

For example, EJ's Fed "informants" tell him there will be no big tax on gold. If that's right, gold is a good investment. If it's wrong, gold is a disaster. (Given the Fed's past prediction record, and considering the history of government behavior throughout the ages, I'm betting it's wrong.)
Even if there is no big tax on gold, your profits will be eaten up by inflation tax.

Mark Twain said, "I am more concerned with the return of my money than the return on my money."
I, on the other hand, would consider myself lucky to even get the "return" of my money.
Here's the way I see it . . . .

There is no "safe" way to invest money at this time . . .
Part of the reason for this is that the world is going to become poorer, particularly the developed countries. It's already happening. We're competing with Asian workers who get paid $10 or less an hour, and they are more motivated and just as clever as we are. So things will equalize. They go up, we go down.
Another reason for the coming poverty is diminishing natural resources, e.g., water and oil. Compared to times past, oil enables us to live like kings did. As oil gets more expensive, we will be able to afford less "energy" servants.
There are 3 other reasons, but I won't go into those now.

I suggest doing two things (at the same time) with your $mil:

1. Buy rental properties.
A business that provides an income that's more or less indexed to inflation is the only way to beat the inflation monster. Therefore, never plan to sell your properties, the inflation tax will kill you. By the way, if we get BIG inflation, inflation tax is THE problem will all assets you buy now and plan to cash out later.
Do all your own repairs to the properties. It ain't rocket science, and google is your friend (just make sure you know how to avoid electrocuting yourself). That work will help keep you fit, and repairs don't come up that often if you stay on top of it. In fact, the main work of rental properties is taking the monthly checks to the bank. Just don't get too many properties, or you'll get overloaded.
When you're too old to turn a screwdriver, you can always hire someone to manage things (but it's to be expected they'll never do as good a job as you). Leave the properties to your relatives when you die.

2. Buy a small farm.
This will protect you against some of the more dire scenarios should they occur, like global economic collapse. It will also keep you fit. It's really a waste to jog to nowhere, but with farm chores you're actually accomplishing something. It's not difficult either . . . again, google is your friend. I have 8 cows, 28 sheep, 12 goats and 74 chickens. The animals eat grass, drink water, and I put out a mineral block once a year. Chickens are the only ones I feed, but they can do OK just foraging. Since I use natural farming, I don't give medicines.
It takes me only about 20 minutes or less a day to handle everything. At certain times there is more work, but it's not often. For example, we can slaughter, cut up and freeze 4 sheep in one day . . . and that will last us all year.
It's also great fun and intellectual stimulation to maximize things around the farm. For example, by tapping some springs on the property, I set up automatic watering for all the animals.
Getting initially set up requires most of the work. I planted 106 fruit trees, nut trees, berries, grapes, figs, etc. I've got it all on drip irrigation. After that initial work, it's just a matter of going out and picking what I need as I need it.
Two things I'll add about farming . . . there is a learning curve, and it would be a struggle without adequate set-up funds.

Let me add one final suggestion, which won't cost you anything . . .
One of the most important things in life is health, especially as you get older. You can largely avoid wasting your $mil on medical expenses by staying fit. To do this, you need exert your body daily, get sunshine, and eat a fresh, healthy diet. Having a small farm will do that for you. Also, you must eat a diet that accords with human evolutionary heritage, which means no factory foods like sugar, white bread, chemicalized foods. Check out westonaprice.org for more info.

[LazyBoy]

Re: Cash in a rental or in a bank?

2. Buy a small farm.

. . . again, google is your friend. I have 8 cows, 28 sheep, 12 goats and 74 chickens. The animals eat grass, drink water, and I put out a mineral block once a year. Chickens are the only ones I feed, but they can do OK just foraging. Since I use natural farming, I don't give medicines.
It takes me only about 20 minutes or less a day to handle everything. At certain times there is more work, but it's not often.

This is a shocker. I thought farming was the definition of hard work.

What would I google to read more about this approach, "natural farming" ?

How many acres to support that menagerie?

I assume that's not dairy cattle, as that has to take more work...

[raja]

Re: Cash in a rental or in a bank?

This is a shocker. I thought farming was the definition of hard work.

It depends on your purpose . . . and your circumstances.
If you are earning a living from it, trying to put several kids through college, paying for orthodonics and healthcare, and putting away money for retirement . . . yes, it would be hard work.
But I was responding to Forrest, who sounds like he's approaching retirement or retired with savings, in which case farming goals can be modest.

Farming is Nature modified for human purposes.
Most animals need grass, water, minerals.
When humans become their caretakers, we need to have good fences, protection from predators, and and good pasturage. But day-to-day, the animals take care of themselves . . . and their numbers grow "automatically".

Growing crops also requires little work on a small scale.
I have a 1/8th acre wheat field. I give the wheat crop to the chickens now, but my real purpose is to learn how it's done in case I have to grow my own food.
In the Fall, I use the tractor to gather waste from the cow area, and the chicken, sheep and goat houses. I dump it into the manure spreader and put it on the field. 4 hours.
In the fall, I disc the field, then rototill it -- 2 hours.
I cast the wheat seeds with a hand cranked seeder, then drag the field to cover the seeds. 1 hour.
Next summer, I have a wheat crop.

If I had 40 acres under cultivation, or 100 cows, it would be a lot more work.
But one of my neighbors is 80 yo, and he still plants and harvests many acres of corn every year. He says it takes him about two weeks to plant.

What would I google to read more about this approach, "natural farming"?

Try "sustainable agriculture" or "organic farming"

Most people who write about natural farming make things too complicated.
The basic idea is to replicate the natural process, while interfering as little as possible.

Most animal diseases are cause by the farmer keeping the animals confined, and feeding unhealthy food. Corn, the main animal feed, is not the natural diet of cows, sheep and goats. They should be eating grass. Confining them in pens and small areas leads to parasites from ingestion of feces, so rotational grazing can be used to avoid parasites. Most farmers routinely worm and give antibiotics . . . I give my animals no medicines.

I also let Nature take it's course. My philosophy is that animals become sick for a reason, which is usually either genetic weakness or farmer error. In the former case, I let the sick animal die to improve the strength of the herd.

How many acres to support that menagerie?

12 acres of pasture, plus about 3 additional acres of woods for the goats.

[santafe2]

Re: Cash in a rental or in a bank?

12 acres of pasture, plus about 3 additional acres of woods for the goats.

This is a huge plot of land for a family. A family of 4 can make due with an acre and water rights and about 1/3 of all the world's land is arable. So I guess we should be good for another generation or two as long as you "elitist" farmers will cede your extra land to those in need. It's going to be a long century as we continue to increase human population to the point where arable land, stored energy and chemistry can no longer support all of us. Where is the tipping point?

[Forrest]

Re: Cash in a rental or in a bank?

Here's what I think:

In order to know what to do with your $mil, you have to know the future . . .
That's because different scenarios require different strategies.

For example, EJ's Fed "informants" tell him there will be no big tax on gold. If that's right, gold is a good investment. If it's wrong, gold is a disaster. (Given the Fed's past prediction record, and considering the history of government behavior throughout the ages, I'm betting it's wrong.)
Even if there is no big tax on gold, your profits will be eaten up by inflation tax.

Mark Twain said, "I am more concerned with the return of my money than the return on my money."
I, on the other hand, would consider myself lucky to even get the "return" of my money.
Here's the way I see it . . . .

There is no "safe" way to invest money at this time . . .
Part of the reason for this is that the world is going to become poorer, particularly the developed countries. It's already happening. We're competing with Asian workers who get paid $10 or less an hour, and they are more motivated and just as clever as we are. So things will equalize. They go up, we go down.
Another reason for the coming poverty is diminishing natural resources, e.g., water and oil. Compared to times past, oil enables us to live like kings did. As oil gets more expensive, we will be able to afford less "energy" servants.
There are 3 other reasons, but I won't go into those now.

I suggest doing two things (at the same time) with your $mil:

1. Buy rental properties.
A business that provides an income that's more or less indexed to inflation is the only way to beat the inflation monster. Therefore, never plan to sell your properties, the inflation tax will kill you. By the way, if we get BIG inflation, inflation tax is THE problem will all assets you buy now and plan to cash out later.
Do all your own repairs to the properties. It ain't rocket science, and google is your friend (just make sure you know how to avoid electrocuting yourself). That work will help keep you fit, and repairs don't come up that often if you stay on top of it. In fact, the main work of rental properties is taking the monthly checks to the bank. Just don't get too many properties, or you'll get overloaded.
When you're too old to turn a screwdriver, you can always hire someone to manage things (but it's to be expected they'll never do as good a job as you). Leave the properties to your relatives when you die.

2. Buy a small farm.
This will protect you against some of the more dire scenarios should they occur, like global economic collapse. It will also keep you fit. It's really a waste to jog to nowhere, but with farm chores you're actually accomplishing something. It's not difficult either . . . again, google is your friend. I have 8 cows, 28 sheep, 12 goats and 74 chickens. The animals eat grass, drink water, and I put out a mineral block once a year. Chickens are the only ones I feed, but they can do OK just foraging. Since I use natural farming, I don't give medicines.
It takes me only about 20 minutes or less a day to handle everything. At certain times there is more work, but it's not often. For example, we can slaughter, cut up and freeze 4 sheep in one day . . . and that will last us all year.
It's also great fun and intellectual stimulation to maximize things around the farm. For example, by tapping some springs on the property, I set up automatic watering for all the animals.
Getting initially set up requires most of the work. I planted 106 fruit trees, nut trees, berries, grapes, figs, etc. I've got it all on drip irrigation. After that initial work, it's just a matter of going out and picking what I need as I need it.
Two things I'll add about farming . . . there is a learning curve, and it would be a struggle without adequate set-up funds.

Let me add one final suggestion, which won't cost you anything . . .
One of the most important things in life is health, especially as you get older. You can largely avoid wasting your $mil on medical expenses by staying fit. To do this, you need exert your body daily, get sunshine, and eat a fresh, healthy diet. Having a small farm will do that for you. Also, you must eat a diet that accords with human evolutionary heritage, which means no factory foods like sugar, white bread, chemicalized foods. Check out westonaprice.org for more info.

I want to thank all of you for volunteering your ideas...it verifies what I was thinking myself, and stops me from thinking I'm insane to get back to basics.

I already live on 5 acres of good soil in So. Cal, in the southern rural mountainous area, at about 4K feet. I'm on a grade, so I'll need to terrace, but that is merely a matter of design.

The weather is weird...you never know what it's going to be for more than 5 days at a time, so I had thought to do my 'farming' a bit more indoors, with greenhouses, shading and temperature controls. One can, under these circumstances farm 365 days a year. I also was thinking a farm sized windmill...I have steady winds almost all the time above my roof level, and I own my own water for as long as the gub'mint doesn't take it from me. With a steady cost for Electricity, and the ability to heat and chill any number of greenhouses and pump my own water regardless of damage to the electrical grid is a good thought for a Mediteranean climate.

I had planned on mostly free ranging the chickens, with some added grains and seeds raised on the property to add to their diet, but I'm not really up to larger animals. Many of my neighbors have them, and will perhaps be selling/trading. The problem will be making sure they are safe at night...we have Coyotes and Bob Cats in plenty. On the other hand, I love Dobermanns.

The house is small, all of 1200 sq feet, but it's only me, so it doesn't matter. I am 58, and disabled from a car wreck, but healthy none the less, and working all things around my odds and ends of abilities...that's another point for raised beds in a series of greenhouses...I don't stand or walk well for long durations, but I do just fine seated! I already am into the first 30x 40 sq.ft. Greenhouse, and plan a minimum of 4 more if the probate goes through as planned, as well as re-insulating my house. And being disabled actually doesn't get in the way...the stuff I couldn't do by myself anyway is easily done by younger and stronger arms than mine for a fair price. I also don't have to fear the loss of ability as I age...I've actually been improving in health since I went to a gallon of organic juice a day in November of 2010 (a 15 vegetable mix only, add eggs on the side, and the odd potato, and I'm covered. And yes, my cholesterol is just fine.)

That can easily take care of about half the inheritance. I don't have a choice about hanging onto the family apartment building...bills and back taxes are coming out first of course, and then the family split.

Again, it's the pesky amount of cash left over...it's a lot of money, and gold and real estate are safer than many investments, but in California there are a lot of empty houses that are not good investments...thousands of them being held by the banks to maintain false real estate values, while the big investors are selling to small investors what was worth buying in the first place, but without telling them just how much the rents will be depressed as the rest of the empty houses are let loose on the unsuspecting market. What will rents be when people actually understand there are still too many houses in California? And investing out of state is so far out of my knowledge base that I am left clutching my future moneybags, afraid to let them go into something I don't understand. All of us will do well from gold, but it's not practical to throw everything into one type of nest egg.

It is a strange thing to find out that having money is a burden to take care of, and something to worry about getting a return from. I never felt my relative poverty before now but despite having a large chunk of cash thrown at you, the idea of 'wealth' still seems like something out of reach. When one is still working, it is easy to take risks, small or large...one doesn't think of the loss mattering so much, because although time has been lost, one has time and ability to recoup.

Not working, it is not a fun idea when there are so few stable economie's anywhere to invest in. Even so, there are always some doing better than others, so various nations' bonds might be a way to a stream of income, just as rentals could be in the right circumstance. Putting some more money into gold is always attractive to me, but I am well aware that if the prices worldwide were to go to 50k per ounce, I'll be getting 5K an ounce from our generous gub'mint...so one wonders how much gold to set aside...what will it sell at, and what will the gub'mint let me keep. What cash I have, I have already in metals, and a little paper...adding to it seems reasonable up to Eric's 30%...except that's a very big insurance policy...20% might seem a bit safer to someone as unused to money as I am, and if I can figure how to bury it safely, and still have quick access to it!

Simply putting the capital into a bank account, or under a mattress, and simply eating up the principle seems reckless...all the education I've been getting on line for the past 7 years in economics on line seems to point to investing into something with a return, yet I've never seen such a raucous casino as Wall Street, and don't know whether to even stick one bent and twisted old toe into such sticky waters.

So I thank you all for considering the question. It doesn't entirely take away my sense of uncertainty, but keeping one half to live an old fashion country life will make it easier to risk the rest. And with a little careful searching, perhaps I can find other old fashioned ways of investing the 2nd half.


　

[raja]

Re: Cash in a rental or in a bank?

This is a huge plot of land for a family. A family of 4 can make due with an acre and water rights and about 1/3 of all the world's land is arable. So I guess we should be good for another generation or two as long as you "elitist" farmers will cede your extra land to those in need. It's going to be a long century as we continue to increase human population to the point where arable land, stored energy and chemistry can no longer support all of us. Where is the tipping point?

The one scenario for which I do not have a plan is a Communist take-over, where the land is taken from the "evil landholders" and turned into collective farms. But I may escape that, since my small acreage is a speck compared to others . . . for example, the guy next to me and the guy across the creek both own over 600 acres.

I have to disagree with your statement about "making due" on an acre, unless you mean by "make due" that they ate potatoes, vegetables and maybe a few eggs. Even with that, they couldn't make enough to afford clothes (well, maybe some rags in a tropical climate) and they wouldn't have enough land to feed a horse or enough trees to heat their house. Forget about a car, internet, electricity, etc. The only possible exception might be someone growing a specialty, high-value crop like shiitake mushrooms.

[raja]

Re: Cash in a rental or in a bank?

I had planned on mostly free ranging the chickens, with some added grains and seeds raised on the property to add to their diet, but I'm not really up to larger animals. Many of my neighbors have them, and will perhaps be selling/trading. The problem will be making sure they are safe at night...we have Coyotes and Bob Cats in plenty. On the other hand, I love Dobermanns.

Most predator problems occur at night. Chickens will automatically "go to roost" at dusk, so you just need to build a coop for them and close the door every night after they go inside in the evening. Good fences will keep out predators. The only problem I've had with chicken kills during the day is neighborhood dogs who find a gap under the fence.

[Guinnesstime]

Re: Cash in a rental or in a bank?

I want to thank all of you for volunteering your ideas...it verifies what I was thinking myself, and stops me from thinking I'm insane to get back to basics.

I already live on 5 acres of good soil in So. Cal, in the southern rural mountainous area, at about 4K feet. I'm on a grade, so I'll need to terrace, but that is merely a matter of design.

The weather is weird...you never know what it's going to be for more than 5 days at a time, so I had thought to do my 'farming' a bit more indoors, with greenhouses, shading and temperature controls. One can, under these circumstances farm 365 days a year. I also was thinking a farm sized windmill...I have steady winds almost all the time above my roof level, and I own my own water for as long as the gub'mint doesn't take it from me. With a steady cost for Electricity, and the ability to heat and chill any number of greenhouses and pump my own water regardless of damage to the electrical grid is a good thought for a Mediteranean climate.
　

If you are on a grade that is not too steep you could always plant an orchard or vineyard. "Bacchus loves hills." Take a look at your GDD, and winter temperatures to determine if what you want to grow will have enough heat accumulation and is hardy enough. Lastly, be sure to do a soil survey and determine what crops would best maximize their efficiency in your soil type.

[Forrest]

Re: Cash in a rental or in a bank?

Most predator problems occur at night. Chickens will automatically "go to roost" at dusk, so you just need to build a coop for them and close the door every night after they go inside in the evening. Good fences will keep out predators. The only problem I've had with chicken kills during the day is neighborhood dogs who find a gap under the fence.

Thanks for letting me know the outside dog dangers during the day...I train mine up from pups to not eat my cats...when I get chicks, that will be a new experience...the cats will also need training no to eat the chicks! I plann to plant up about half an acre garden run, seperately fenced for the Chickens...flowers, fruit bushes and fruit trees, not veggies, with their hen house attached. The five acres is ranch fenced, but I planned in using up part of the first half of my inheritance to chain link the property. Thus the chickens can eat the bugs available, which will make my flowers happy, and enable me to use the orchard area as a garden, everything is kept out of the greenhouses, and who knows, I might get a goat or two somewhere down the line.

The whole plan seems like an insane dream, setting up food production, designing the five acres not for beauty alone, but to a real purpose, and then, not needing to worry so much about what money is coming in (7 gallons of fresh juice a week is very expensive), and thus becoming more willing to risk the remainder on other investments. At the least, I will have my annuity, a small one, to cover bills and repairs, (until money is re-structured in America) and the odd pair of overalls, and hopefully, some income off the rest so that I can still afford to run the small utility tractor, or actually go into town to get specialty items, like dark chocolate, or yeast. After that, hopefully my handfuls of metal will replace the annuity...who can tell? But if I use one half of my inheritance to set me up to survive comfortably at home, it does take away a lot of the fear of what might happen to the rest. If I feel as safe as I can feel safe in this uncertain world, putting the rest to work becomes a reality I can face.

If you are on a grade that is not too steep you could always plant an orchard or vineyard. "Bacchus loves hills." Take a look at your GDD, and winter temperatures to determine if what you want to grow will have enough heat accumulation and is hardy enough. Lastly, be sure to do a soil survey and determine what crops would best maximize their efficiency in your soil type.

The grade is gentle enough for me to terrace in 10 - 20 foot wide swaths, with an acre sized flattish are at the top that can be used with only a little leveling, where the greenhouses will be expaned into. The house is on it's own terrace, below the flattish area, with another already 20 foot deep in grass just four feet below it. The soil is only slightly alkaline, decomposed granite with decades of Chaparrell leaf drop. Anywhere I plant, does well with plenty of cow manure mixed in.

As for grapes, I've got a few that just came into flower buds this year, raspberry, blackberry, two different apple trees, two different sweet cherries, and one excessively well growing apricot! I also have tangerine trees, and am planning more when the other greenhouses are up for frost and snow protection. I'm growing regular and sweet potatoes in 7 gallon bags to keep my beds uncrowded. The greenhouse beds that are in have electric heating coils 10" down into the soil, and will have shade and A/C for the summer...maybe not this summer, but by next, and only a tiny bit of general heating is needed under greenhouse cover to keep things growing in winter.

I do plan to develop all the land in time, but I am making sure that what I have got now will be under control under my hand alone, before I expand farther.

Intensive greenhouse gardening is only difficult in planning the succession plantings of veggies I use all the time. By the time the other greenhouses are built, I hope to have 5 different climates working year round to produce. And that is merely because I love outwitting the weather to the extent that I can...I don't advise this unless you have fun intensively gardening for high production in a small area. Even so, it only takes a couple of hours a week to maintain even my large beds, and another few hours a week to cultivate new seedlings, or pot them on. The rest is just juicing, prepping and drying what you don't eat for future need...or barter.

Putting in more trees is possible on the sloped area, but I wonder whether to raise for my own supplies, or for sale...it requires licensing if I plan to sell produce. Fortunately, I'm already looking into California's organic seal of approval, which since the 25' x 8' raised beds inside my greenhouse area is all new, mixed with virgin soil, and virgin amendments, but it's a 3 year process of them monitoring my soil.

Are either of you planning to sale/barter? Or already begun? Details would be nice on what you have accomplished so far. I have a Farmer's Market to sell to...really good organic anything is scarce and expensive here, but that will be three years down the road, and truly, I am mostly worried about taking care of my self and trading with my friends.

Again, thank you for your encouragement. I need to keep reminding myself that if food and housing are covered, I don't need all that much, and whatever the remaining $half mil brings in will be sufficient.

[Guinnesstime]

Re: Cash in a rental or in a bank?

Forrest, have you looked into developing an aquaponic system in your greenhouse? Kill two birds with one stone, fish and veggies.

[Forrest]

Re: Cash in a rental or in a bank?

Nope...never thought of it...thanks for the idea...raising trout might be nice...anything bigger I think would be a problem. I'm off to Amazon for another book!

[raja]

Re: Cash in a rental or in a bank?

Thanks for letting me know the outside dog dangers during the day...I train mine up from pups to not eat my cats...when I get chicks, that will be a new experience...the cats will also need training no to eat the chicks!

In these parts, the common wisdom is that once a dog has killed a chicken, they can never be trained to stop.
My dog used to chase chickens, but never took more than some feathers. I had to hit him really hard one day in order to change that behavior. He still needs the occasional verbal reminder.

About gold, I would be careful not to count on it too much.
If you're interested in why I think that (from a previous post):

Investments that go way up from fiat inflation will be subject to inflation tax.
For example, if you bought an ounce of gold when the price was $250, and later you sell when the price is $2250, you are paying 28% collectibles tax on $2000 profit = $560. In addition, the remaining profit you keep of a nominal $1440 will have a real value of $144 due to inflation. So, this investment only loses you $131 of your original $250
It's far worse if Rickards prediction comes true, and there's a windfall profits tax of 90% after the creation of a New Dollar.

If you buy a business with assets -- and never sell the business -- you will receive ongoing inflation-indexed rising income, plus you will avoid any inflation tax.

The trick is knowing which businesses will prosper or at least survive the coming crash . . . .


Also, see: http://www.itulip.com/forums/showthr...old-Bug-Thesis

[Guinnesstime]

Re: Cash in a rental or in a bank?

Nope...never thought of it...thanks for the idea...raising trout might be nice...anything bigger I think would be a problem. I'm off to Amazon for another book!

http://www.fastonline.org/content/view/15/29/

Here is a good place to start with a free how to manual for barrel sized aquaponics.


Sorry for the thread hijack.