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Joni Vandenberghe

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What does Financial Independence and Prepping have in common?

We know prepping in Europe from popular tv shows coming from the states such as “Doomsday Preppers”. In this show we see ordinary Americans preparing for a disaster that may or may not strike them. Preppers in this show prepare for events that may include economic meltdown, terrorist attack, attack from the government, tsunami’s, solar flare  and of course pandemic and large fires. 

In US this show sometimes shows grown up men playing soldier and waving guns around. The version that is active in Europe is somewhat lighter and focuses more on self-sufficiency.

So lets find out what of preparing for these events can be useful for those striving to become Financially independent. Lets go over some of these events and see if it makes sense to incorporate these into your Financial Independence plans

Economic meltdown and food prices

Preppers who prepare for an economic meltdown believe the economy will crash and come to a standstill. Food will become scarce, just like other things we consider normal right now. So preppers actually stock up on huge amounts of food to counter this.

While I do not believe an economic meltdown that will make food prices skyrocket I do like to have a look at statistics. In the last 10 years we had a major economic crisis affecting us (the banking crisis). So the question is what did food prices do during these periods? Well eurostats actually learns us that in the Eurozone during this period food prices actually dropped. However it also learns us that the average food price over the last 20 years actually goes up a little less then 2% each year.

Source  https://ec.europa.eu/eurostat/

So that means that is is an “investment” that will yield about 2%. However if you manage to buy food in discount, say pasta is 50% off, and pasta can last easily 20 years, it does makes sense to buy it in large amounts. The only thing you need to make sure about it that you actually eat what you buy, otherwise it makes for a poor investment, so do not buy anything you do not actually eat.

Solar flare (EMP)

So the idea behind this is that a solar flare big enough can cause an EMP that brings down the power grid. The idea is not ridiculous. In 1859 a Solar flare hit the earth causing massive destruction to the telegraph network. In 2012 a solar flare of the same magnitude missed us by 9 days. However in what way does it make sense to invest in EMP-safe materials to protect us from this? 

As a person preparing for Financial Independence you should already be less attached to your electronic devices/cars then the average person. On top of that, what use is there to have a working Mobile phone or Laptop when the power grid goes down. A general piece of advice is to avoid investing in expensive gadgets that might break in the next years, as in this case you have invested in nothing at all. 

Tsunami or floods and buying of properties

Preparing for floods or tsunami can make sense. Its actually a fact that floods occur every year globally and in countries such as US and Japan the Government has warning systems in place for Tsunamis. In Europe however Tsunamis are rather unlikely. Floods however are not. 

In Belgium when selling a house you need to state if the house is in an area that can possibly be flooded. In the Netherlands some areas have yearly issues with flooding. When striving for Financial Independence one can only say that investing in such a property is not considered a very good investment. Where possibly buy properties in slightly higher areas. A piece of general advice, always research the area you buy an investment property in and avoid running into unpleasant surprises.

Pandemic and medicines

While it does make sense to have your prescription medicine at home at hand, it does not make sense to store large amounts of medicine and items that can expire within years.

 If you buy medicine that can expire make sure it’s items you frequently use such as for the common cold. Avoid buying more then you will need before it expires as in this case you have invested in air.

Large fires and insurances

Building a bunker in your backyard to protect from a fire does not make that much sense. It costs a ton of money and will generate you no interests. What does make sense is getting a good fire insurance. 

That goes for any type of insurance by the way. I myself have a family, theft, fire, hospital and health insurance. While it does cost money it also avoids me ending up in a situation where I suddenly have a big financial hit. So forget about the bunker but do not save on your fire insurance. 

Investing in Prepping materials or utilities

Another thing we see is that there is a large market for prepping utilities going from camping gear, utilities to foresee yourself from water and electricity (solar panels), first aid kits,… There is a whole range of items available. Just have a look at https://www.prepshop.nl/ if you are interested (I am not affiliated with this shop, its just an example of the kind of items prepshops sell).

Investing in energy saving methods such as roof isolation and energy generating methods can actually make sense. The question one must ask is are they economically viable for me. If the solar panel can generate enough electricity to get a return on your investment its absolutely the right choice to do so. Keep in mind a lot of countries both in Europe and US give tax incentives for various energy – saving measures you take. For example the US currently has a 30% tax credit in place for Solar Panels.  If you gain some self-sustainability and help the environment while doing so then its a nice bonus.

Growing your own food

This does have some common features with Economic crisis and growing your own food. As growing your own food does make you independent of food prices. From a Financial independence point of view if you have some fruit trees and even a vegetable garden then you have free food that comes almost free. On top of that you might save yourself a trip to the grocery store.

Sources

https://en.wikipedia.org/wiki/Solar_storm_of_1859
https://ec.europa.eu/eurostat/
https://www.nationalgeographic.com/tv/
https://news.energysage.com/congress-extends-the-solar-tax-credit/

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