These days I get asked by a lot of people where they should invest their money. It’s a good question given uncertain times. Not only are we experiencing a traditional recession but there are concerns about the actual financial system itself.

This in turn has led to a somewhat deeper examination of money itself: its construction, process and ultimately its value.

Personally I’ve been in cash for the last 18 months having sold out of commercial property investments. Now, as interest rates are cut heavily and our banking system is on its knees, cash doesn’t seem as appealing as an investment class.

What if rates continue to fall? What if new rules are introduced such as limits on withdrawals, foreign transfers, currency trading etc? What if interest is frozen, bonds converted to equity and so on.

Gold is often mentioned as something useful to hold. I’m not a big fan of it myself but it’s likely to be worth something at some point so does have some holding appeal.

What I’m most interested in at the moment is investing locally. This could mean sticking in a decent veggie patch (if you have the space, which fortunately in NZ we do). How about investing in renewable energy for the home, solar heating, a wind turbine, battery pack etc? Normally its a bit upfront payment but at least you know you’ll be getting a decent return in KwH rather than cash.

But also investing in local food systems, local infrastructure or local transport. These all appeal because they can provide a return, real or cash,  and they keep cash circulating locally, which keeps people employed and boosts confidence in the community.

It’s an opportunity for local councils to get involved as they are struggling to riase cash at the moment given the rush into government guaranteed bank deposits. Many people talk about sending money overseas as they are worried about the falling NZ$ or whatever your local currency is. I say be careful. If you can’t access your cash in person then you have a much higher risk profile. Foreign cash deposits can be the first items to be frozen when new rules are applied. If you are worried about currency risk you can always do a forward currency trade with your bank or hedge through an online fx company.

There are some useful websites about this including, of course, Financial Permaculture as well as Catherine Austin Fitts at Solari. If readers have any useful links or ideas on this please let me know.

Tags: banking, financial crisis, financial permaculture, investing, markets, money, risk