How do I protect myself from the US Government?

49 Replies

I watch what the other countries are doing to address the government debt and I know that is coming our way. I want to be prepared.

Callapsed stock markets,devalued currency, and higher taxes are just a few thoughts of our future. I am nearing retirement. I have contributed heavily to my 401K and continue to also save on top of that. I don't want to see all that work squandered because our government has a spending problem.

What are you doing to protect yourself? Or what can I do to be protected from the government screwing up my retirement?

With all the news of goverment debt and the austerity measures being taken how does someone protect themselves from the US government from

Move to another country?

Seriously, you can't... all you can do is guess.

Some would say invest in US Bonds as their returns would rise as the Gov't struggles... of course the Gov't could just default on them all.

Some would stay use the stock market as inflation should push those returns higher. Of course we all know how volatile the stock market is and should realize by now that would "should" happen isn't always what "does" happen.

Some would say go with precious metals but I have no clue how you really value a pretty rock. It has no intrinsic value outside of some small manufacturing so who's to say it's really worth $1,700 an ounce or closer to $3 a pound like the dirt in my backyard?

Some like the real estate play, cash flow or appreciation. Same argument as the stock market, inflation should drive up rental returns and appreciate home values giving you a hedge against rising costs.

Others keep it simple... food stocks... and ammo :)

Get out of that 401k as quickly as possible - IRS Code 72t.

Buy real estate that cash flows, recruit good management.

Protect your family and cash in financial instruments that are difficult for govt confiscation - life insurance, annuities - avoid saving in traditional banks.

Minimize your tax footprint - avoid all tax deferred strategies. Pay tax on the seed not the harvest.

I see several replies that the answer may be in real estate. I wondered about that. I know the housing market has already taken a beating. Won't it just get worse if the whole debt thing goes South?

Originally posted by Steve Maye:
I see several replies that the answer may be in real estate. I wondered about that. I know the housing market has already taken a beating. Won't it just get worse if the whole debt thing goes South?

A lot of investors here are talking about cash flow investing, not appreciation. Once upon a time people thought of real estate like stock: buy low, sell high. Buy the property for $100,000 today and in 10 years when the city has grown that will be prime real estate worth $1M!! There are still some that go that way.

Others go for cash flow. We get a mortgage that has debt servicing of $400 a month on a place that rents for say $1,500 a month. After expenses we have $750 to pay the mortgage and pocket the change ($350). The argument is that should inflation devalue what $350 would buy, the $1,500 we are receiving in rents would go up. Lets say inflation pushes rents to $2,000, after expenses we now have $1,000, our mortgage is still the same so instead of $350 in cash flow, we're up to $600. Inflation of 33% in rental prices has led to a 70% inflation in our cash flow!

"If" rents were to inflate with all other prices, cash flow properties would provide a hedge against the devaluation of the dollar as shown above. Historically, they have.

Conversely, if the entire world goes to hell in a hand basket... well, people still need a place to live. They may not need a new iPod or car, but they do need a roof. Demand for a quality place to live is fairly static as it's considered a basic necessity of life.

How about this? Turn off Fox news and don't worry about it so much.
You have just experienced 3 years of relatively horrible economic times in this country and you are still on pace for a nice retirement. And NOW you are worried? If thee was a time to worry about gov't economic policies, it was 04,05,06,07. News channels and "public opinion" are the ultimate lagging indicators. That has been proven in studies time and time again but we ignore that fact because they rile us up for their own political and business purposes.
All they do is try to spook you with crazy **** so you keep glued to the tube and vote their way. News channels are in the news Business, with a small "n" and a big "B". It is never as bad or as good as they say it is.

People who predict crazy things like the rapture, the end of the world, the end of America as we know it, stocks going to zero, and who use extreme language make for good TV and good church but have ALWAYS been wrong. They ALWAYS say it is different this time and they are always wrong. So why do we keep listening?

We are not Greece, we are not Italy. We are not ancient Rome. We are not even close. There is no comparison. Even when we are down, we are still a giant in the world. They still buy the **** our of our currency and bonds whenever anything bad happens. Did they ever do that with Greece or Italy? No.

Things go up and down....always have...always will. Take reasonable measures (diversify) that have been appropriate for many decades and move on with your life.

The more you worry about the government and how it affects your life...the more it affects your life! Why don't people understand that?
If your desire to avoid government influence and/or taxes determines what you do for a living or where you live or how you live your life, then you are giving the government control your life. Don't give it that power over you. Live where you want and be what you want to be in your life, without regard to the government, pay the cost and forget about it. That is true freedom.

You are incredibly lucky to be living in the US, which is by far the most stable and resilient large economy in the world and overall the most free large country in the world. There is greater "opportunity" here than in every other country combined. The rest of the world knows that, but somehow we have a hard time seeing it. Could it be because we are spoiled?

You are rare in the world to be able to have a retirement at all, now you are worried about how cushy it is. Just enjoy it and stop worrying.

Great post Eric, I whole-heartedly agree. This is the time to capitalize on everyone's fear.

Of course you need a different strategy when you are near retirement like the original poster. My advice is simple... diversify. You don't need to answer this Steve, but how is your 401k invested? All with one mutual fund company? Individual stocks? What mix of asset types do you have?

Happy New Year everyone.

Eric, I was looking for the Mega Vote button. I guess BP doesn't operate like some third world countries... vote early, vote often. Well, you get the first one at least.

Originally posted by Jon Klaus:
The worse the home ownership market gets, the better the rental market gets. Check occupancy and rental rate trends in your area.

Hi, Jon, where can I find that information (occupancy and rental rate trends)?

I am old enough to remember similar times when everyone was predicting the end of the world economically. We will always have the Fox News types. That's free speech. Yet we always recover. We operate basically in a free market economy with some regulation to protect us from ourselves.

In these bad times the rich have gotten richer and the poor are poorer. We don't seem to learn from previous mistakes.

We need to make financial decisions without emotion. This is hard to do. I agree there will always be real estate and people need to live somewhere. Find out what the people need most and provide it for them at a cost. That's how you get rich.

Well Eric's thoughts are in good intentions, you should believe some of the news. The US IS headed towards a horrible collapse. You are smart to want to want to protect your retirement. And although I may not be good in real estate (yet). I'm a knowledgeable in economics. I don't want to make a crazy long post so here is where you can get good, reliable, accurate information on the economy and where we are headed:

Peter Schiff: This is his YouTube channel, take a look at his videos, especially on gold. Gold is a great investment now and probably for a while.

http://www.youtube.com/user/schiffreport

This is all you need practically.

Also, Ron Paul, he's great at predicting the US economic problems. He's also running for president and will probably win the Iowa caucus Jan 3rd. I'm voting for him. He is very consistent and trust worthy. He also wants to end the Fed. As does Peter Schiff.

http://www.youtube.com/user/ronpaul

Believe the reliable propaganda. 2007 is nothing compared to what is coming. The only problem is we don't know if it's going to come 2012, 2013, etc.. but it's coming with the decade (10 years). Your welcome!

Originally posted by Manuel Acuna:
Your welcome!

Well it certainly has been a while since we had the hyperinflation is just around the corner lecture on the board. We're still waiting. Hopefully the next lecturer knows the difference between "your" and "you're" though.

I'm out...before this thing turns political.

Hopefully the next lecturer knows the difference between "your" and "you're" though.

Hopefully the next person who comments has the decency to not be a snob and use euphemism to take a silent hit at someones use of words.

Hopefully the next person who makes a stab at someone, can, without the use of a fallacy, but that's wishful thinking.

I'm out before I have to defend myself with more logic. And if you want to correct your grammar Mr. Snob, put a space after your horrible use of an ellipsis. Your, you're, you are, welcome. :D

If Bryan is out, I'm in! I won't take the time to point out all the needed corrections in the post by Eric. I guess we haven't had anything to worry about since 07. Boy is at a relief! I guess this is just been wonderful from 08 through 11.

Let me just point out a couple of things about Greece Italy and the United States for your consumption. The debt in Greece is 165% of its GDP. Italy currently stands at approximately 135%. You are correct, the United States is nowhere near that. We are only at 100% of GDP. The thing that you need to remember, is it is still possible to bailout a company like Greece where their debt is less than $1 trillion, I believe. Italy is slightly more difficult since their debt is approximately 3,000,000,000,000, I believe. Those are manageable numbers. If someone can explain to me how our $17 trillion is manageable then I will agree there is nothing to worry about in the future.

I do watch the news(mostly Fox) but I also read many magazines and pay attention to the written news also. I use this to make my investment choices and locations where to spend my money.

I consider myself extremely free but you better believe I do pay attention to what the government is doing. It does have an effect on how and where I invest. Anyone that is not paying attention to what the government is constantly changing is a fool in my opinion.

It is interesting to me that the poster saying how wonderful everything is has a lending company in Chicago. Maybe that is why it has been so wonderful in his opinion since 2008.

I would disagree with most of the other paragraphs in that post but I will leave it at this. I continue to invest in real estate and I continue to keep a very close watch on my estate planning, due to the changes the government continues to make. If someone doesn't think the difference in capital gains taxes for example will make a difference in your estate you need to go back to real estate school. If you are making a blank statement of how wonderful it is in the United States, please take a visit to some cities in Ohio or Michigan and try and explain that to them.

No one is a bigger believer in real estate than I am. There is also probably no one that is as diversified or prepared for what ever might come then I am. I will be more than happy to be considered weird for my beliefs in the economy, banking, or a continued devaluation in the value of our dollar. The facts are on my side if you look at history.

I always suggest to hope for the best and plan for the worst. I will continue without plan throughout my life. It has worked very well for me to this point and I seriously doubt that it will stop working for me in the future. Rich

Protection from the government:

MONEY, LAWYERS and GUNS.

In that order.

Having knowledge and skills is about the best you can do if you don't have money, lawyers and guns - until you do.

The question is not so much how to protect yourself from the government, because such a thing does not exist. Whatever you think, you are, as an individual, completely helpless against the will of the government. So the question really is, how do I live in my society, such as it is. I suppose Rich's approach, vigilance, awareness and diversification is about the best you can do.

For my peace of mind, I don't pay much attention to the news. I agree that by the time something makes it to prime time TV and it affects you negatively, your already screwed if you didn't already know. Besides, the one granule of useful info to be had from mass audience news is not worth listening to the story of the mother who brutally killed her baby 500 times a day every day only to be replaced by the guy who shot his family and then himself around the Christmas tree.

Hello,

Thank you all for your responses. I did not intend at all for this to become political. Purely, I worked hard all my life and saved along the way so I could retire. Just want to protect myself. I appreciate your thoughts.

Thanks again and I appreciate your forum.

Manuel,

I find your comments somewhat perplexing given your post asking advice on starting your investing career. In that post you state that you are a "broke as a joke" college student. As your predictions of doom are so strong and certain, I was wondering why you would even consider starting an investment career and where your theories of impending doom come from?

Originally posted by Manuel Acuna:

I'm out before I have to defend myself with more logic.

You posted a link and mentioned two people who agree with your claims...by definition of the word, that wouldn't be considered "logic." In fact, that would be considered a logical fallacy, often referred to as "Appeal to Authority."

Btw, I'm a big fan of both Schiff and Paul, and personally, I don't agree with your conclusion that a collapse is necessarily "coming within the decade." Regardless, just throwing their names out there and following with a conclusion that they may or may not agree with is not logic.

Btw, Paul is running for President; he wouldn't be running for President if he believed that an economic collapse was inevitable. Therefore, I would argue that he doesn't believe an economic collapse is inevitable.

That was logic I just used in the above two sentences...

Hey there J Scott. Let me give you some help.

I'm basing my thoughts, which is a prediction, on people who have successfully predicted the future more then once. It's like me basing my knowledge of math on an expert in math. Why wouldn't you base something off a credible person? An appeal to authority, if I must inform you, is when you base a judgement off a person who is not an expert in the subject at hand, but is just authoritative. Like if I based my economic prediction on a Christian Pope's prediction. He's obviously not an expert in economics. I'm basing a judgement on experts in the field of economics.

Second, you are using an argument from fallacy, fallacy. Why? I don't know. I'm not even using an appeal to authority. So, if you want to learn so more, I'm ready to lecture all day as I enjoy spreading knowledge.

-Manuel

Originally posted by Manuel Acuna:
So, if you want to learn so more, I'm ready to lecture all day as I enjoy spreading knowledge.

I for one can't wait!

Hey Cheryl,

"I find your comments somewhat perplexing given your post asking advice on starting your investing career."

Why is that perplexing? I'm not knowledgeable in investment so I'm asking for help? I don't get what you're saying.

"In that post you state that you are a "broke as a joke" college student. As your predictions of doom are so strong and certain, I was wondering why you would even consider starting an investment career and where your theories of impending doom come from?"

Excellent question! First let me address why I would want to start investing. Simply put, people are always going to need housing so I'm thinking this will be a good investment regardless of the future. That's like saying why make any money if the economy is going to go down the drain. The thing is, even though the economy is going down the hole, that doesn't mean everyone is going to all of a sudden become poor. There will be the smart one's who are investing in things like housing and precious metals that are going to make a lot of money from this situation. So why not try?

Second, if you read my post, you can yourself look up the hours upon hours of lectures and insights that Peter Schiff and Ron Paul have on their YouTube Channels. Well not so much Ron Paul, but Peter Schiff has a ton of videos. And if you state an opinion on these guys to me that will matter, please, watch, and understand their concepts. This will be very time consuming mind you. This is where I get my theories from. It's not impending doom neither. So please don't label it so. It may be for the working class, but not some investors.

I started with a book called: How an Economy Works and Why it Crashes. By Peter Schiff, it's the easiest read on economics. It is very basic as well so it's just a starting point.

Any other questions I'll be glad to answer. Expect them to be long as it's the only way to get my points across. Thanks,

Manuel