Investments for the Little Guy


A few months ago I was interviewed on a radio station in Chicago with a listening audience of mostly lower-income people. The thrust of the host's questions was that I am a bad guy because I don't have any good suggestions to help the poor beat inflation. That is like killing the messenger who announces the bad news that the cards are marked, the dice are loaded and the odds rigged, and the house wins most of the time. It is just a fact, as Gary North pointed out recently, that the game of beating inflation, taxes, and government is so stacked against you that sometimes there aren't a lot of options to select from in the search for solutions.

The mythical "average" subscriber to the Ruff Times, for example, is in his late 40s, has two to three years of a college education, and makes around $35,000 a year. He has between $10,000 and $50,000 in savings and investments and an inflated equity in his home. Not many years ago, he would have been considered one of the more affluent members of society. Now he is almost lower-middle class, and government is taking a larger and larger portion of his income as he gets ratcheted into higher tax brackets and inflation devastates his traditional investments (blue chip stocks, bonds, certificates of deposit, cash value insurance, etc.). He has this hard, cold knot of fear in his stomach warning him that the affluence he pursued and thought he had found is turning to ashes in his hands and his retirement will be nothing better than genteel poverty.

It is a mistake, though, to believe that "the little guy" with this much or even less can do nothing to preserve his savings and assets. Actually, the less you have, the more important it is to do so. The rich can better afford to make expensive mistakes and recover from them. Most people would be just as happy on $5 million as on $10 million if they lost half of it. But if they only had $5,000 and lost half, they would be devastated. Consequently, one of the most important things the person with $5,000 can do is simply get out of those investments that are being ravaged by inflation.

And what could you do if you only had $5,000?

• You could start accumulating some food storage. You can buy one bucket of wheat (45 lbs.) at a time, at approximately $18 a bucket.

• You could buy silver coins—a roll or a partial bag. Or you could do what my foster son David did. He spent a few hours going into banks and buying and checking rolls of half-dollars, and he managed to reap from his day's activities nine 40 percent silver Kennedy half-dollars worth $27. Total capital required? About $20 to buy the rolls. Total investment in his coins? $4.50. If you have more time than money and want to build a survival silver coin position, you can do that too. Dimes and quarters have been pretty well picked over, but there are still enough silver halves around to make it worth a try. (Look for 1965 through 1969 halves.) If your time is more valuable than money, then your kids might do it for you. You could put up the capital and share the profits and help them get the feel of survival coin accumulation.

• You could buy some bullion gold coins. A 2 Rand can be bought for around $73; one Krugerrand for about $545.

• You could become a collector of inexpensive semiprecious stones, baseball cards, comic books, or numismatic coins.

• You could grow a garden and become self-sufficient and independent, drying your produce in your oven or in the sun. Such books as The ABC's of Home Food Dehydration (Target, $4.50 plus $1.00 for postage and handling) show you exactly how to do it.

• If you have unutilized inflated equity in a home, you could borrow against it and put it to work with a beat-inflation program.

• You could become politically involved and try to bring about change. You can ring doorbells or stuff envelopes for the campaign of some free-market, honest-money-oriented candidate who might help to bring about some change. Ultimately, that might do you more good than having all the gold and silver in the world.

What couldn't you do if you had only $5,000? You couldn't buy a good one-carat diamond, and you probably would find it difficult to buy a big apartment house. But, using creative financing, you could go out with only a few thousand dollars and make a downpayment on a small house or duplex, fix it up, raise the rent and the market value, and trade for a bigger property. Great real estate pyramids have been built on less than $5,000. We have a marvelous opportunity for creative financing in this disrupted marketplace that is now a buyer's paradise.

Not being able to do everything, or do it all at once, is no excuse for doing nothing. If you think you have limitations and can't take good advice, you may be bitten by the wild dogs of inflation and economic disruption and you may die financially.

Howard Ruff is the editor of Ruff Times, host of the TV interview show Ruff House, and the author of How to Prosper During the Coming Bad Years.