Which Investments Will Survive the Next Economic Crash?


From Tony D:

I have been conservative over the years and instead of putting my money in equity investments, I have preferred debt instruments. Specifically Municipal Bonds. 

Is this considered the same as holding Treasury Bonds (i.e. dollar based asset) or am I safe in the crash with these. If not, then why is it safe in the insurance vehicles used in the “Cash Flow Banking System.” They buy similar investments don’t they?

Please help me understand and what would you do if you were me.

Tony D.

In short, are municipal bonds issued by cities and other local governments safe investments?

We’ve written about the dangers of municipal bonds before, but…

Let’s Go Straight to the Expert…

Investment Expert:  I completely agree that debt instruments (like bonds) are one of the safest and most conservative investments out there. However, the trade off has always been low yields and now … government backed debt? 

Think about it …. in years past it was an easy decision, but the big firms (at least the smart ones) are staying clear of those. 

The big carriers are staying away because municipal bonds, in general, are not safe.

Since the 2008 crisis, local governments are under extreme stress.

Many of them are funded through property taxes. And that meant they could spend like crazy when the housing bubble pushed property values through the roof.  But when the bubble popped, so did their revenue.

Now debt ridden cities are struggling just to pay their workers, and many have been laid off.  

The mayor of Scranton, PA put all city employees on minimum wage, including policemen and firefighters.

Earlier this year San Bernadino and Stockton,California joined several high profile municipalities that have filed for bankruptcy in 2012.

And just last month, Warren Buffet decided to cancel his long-held bet that at least a dozen states would continue to pay their bills on time.

So, then, what are the alternatives.

Investment Expert: So alternatively, they are doing the same thing we are doing in general. The bonds they invest in are private bonds, which are much more liquid, shorter term, and have higher yields. 

For example: The secured money lending that (Company name, censored) offers people are in fact a “bond,” yet the yields are 8-10%. Since the inception, they have been fully subscribed and have a waiting list to get in. 

Private bonds, rather than government bonds, because they tend to be “…more liquid, shorter term, and have higher yields.”

But not just any private bond, right? 

Investment Expert:  The Cash Flow Banking System only uses firms that use the same philosophy. The weapon of choice is a firm that has been around for 182 years, and one of the only ones who was actually profitable during the 2008-2009 crisis. They are smaller at 30 billion in assets, but that’s what allows them to be nimble and quick to respond to market conditions. 

That’s why the model we use works as well as it does. Safe, high yields, and critical leverage points allowing you to actually MAKE money when you access it rather than it costing you.

With most investment “newsletters” and organizations, it still really is “who you know” that makes you the most money.

But we’re taking this journey together.  We introduce you to the people and companies we personally invest with to grow wealth in the post-2008 economy.