Assets To Put Your Wealth Into In Times Of Crisis

12 mins read

A crisis is almost impossible to experience no matter how good a country’s economy is. We may experience long periods of financial and political stability, but a crisis will always occur at some point.

Natural disasters, war, political conflicts, and financial meltdowns are examples of crises that a country may face.

For example, in the year 2020, Covid-19, a respiratory disease, caused a worldwide crisis. On the other hand, there is the war between Russia and Ukraine, which has caused global fuel prices to skyrocket. 

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Aside from your life, you should strive to protect your wealth during crises such as war and natural disasters. Furthermore, without any wealth, you are likely to perish during these crises. Protecting wealth during a crisis, on the other hand, is easier said than done.

Here are some of the assets you can use to protect your wealth.

Gold

People have used various tools to help protect their wealth since ancient times. Precious metals such as gold were used in some of these tools. The primary reason is that precious metals are appealing, scarce, and long-lasting.

Some precious metals, such as gold, continue to be very valuable assets. Unlike gold, some fiat currencies may lose value if the local government becomes unstable.

Aside from political instability, fiat currency may lose value as a result of the financial crisis. For example, the Zimbabwe dollar experienced 600% annual inflation at one point. Even the most robust fiat currencies, such as the USD or the EUR, lose purchasing power over time.

Gold’s Weakness

Despite being a good asset for safeguarding your wealth, gold has its weaknesses. This is even after a long time of acting as a safeguard for wealth.

These weaknesses include:

  • Complex Logistics

Aside from gold, most precious metals take up a lot of space and are quite heavy. Furthermore, this precious metal can be quickly liquidated or exchanged. As a result, gold, like other precious metals, is highly susceptible to seizure or theft.

Furthermore, due to their large size, they are difficult to transport or conceal. This is especially true if you have a large number of them.

Furthermore, while it is a good store of wealth, it can be easily taken from you during times of crisis, such as war. Furthermore, claiming it may be difficult because the government may have claimed it before you invoke the state of emergency laws.

In short, if you want to use gold or any other precious metal as the place to store your wealth, then you’ll need proper logistical preparations. You’ll need to have security, transport, and any other important logistical particular before crisis hits.

  • Lack of Liquidity

In times of crisis, any financial system is vulnerable to collapse. As a result, the value of fiat currency is likely to fall. Banks may also start limiting their open time to prevent runs.

These occurrences raise the cost of living. This makes it likely that ordinary people will be unable to purchase their basic necessities.

So, if you keep all of your wealth in gold, you’ll have to divide it into smaller units that you can use. And, as a result of the crisis, there is a chance that the gold exchange market will be closed.

In other words, you are likely to face the problem of not being able to access the gold for use.

Blockchain Assets

The blockchain industry is still in its infancy. It all started with the creation of Bitcoin nearly a decade ago. Despite its youth, the blockchain spectrum provides a dizzying array of options for storing your wealth during a crisis.

Options to Keep Your Wealth in Crypto During a Crisis

Here are some of your options if you decide to keep your wealth in crypto during a crisis.

  • Cryptocurrency

Cryptocurrency refers to blockchain digital assets that serve as money. Bitcoin is the most popular of the cryptocurrencies that have been made available.

Monero, Ripple, and Litecoin are among the other cryptocurrencies on the list. This means that you can purchase these digital currencies on exchange platforms and keep them in your wallet.

  • Stablecoins

These are blockchain digital assets whose value is based on the value of other assets. The US dollar is the most commonly used asset to back stablecoins.

DAI, Tether, and USDC are examples of popular stablecoins.

Stablecoins, like cryptocurrencies, are traded on exchanges. They can also be stored in digital wallets like regular cryptocurrency.  

  • Non Fungible Tokens (NFTs)

NFTs are digital assets made up of video game characters, images, and artwork that are stored and traded on the blockchain. These tokens are bought and sold based on sentimental value and scarcity.

As a result, NFTs serve as a virtual representation of physical paintings. And, like physical paintings, these tokens can store wealth for an extended period of time.

  • Utility tokens

The majority of applications today are built on the blockchain using smart contracts. The majority of these applications include utility tokens. These utility tokens serve specific functions in these applications.

ETH is a good example of a utility token. You can buy gas on the blockchain with ETH.

What are the benefits of using Blockchain assets?

Some of the reasons why blockchain assets are the best to place your wealth during a crisis include:

  • It’s Liquid

Cryptocurrencies such as Bitcoin are widely available, which means they can be spent quickly. It also means that you can use these assets to buy real estate or groceries.

Furthermore, you do not need the assistance of institutions to access blockchain assets.

So, as long as there are parties willing to accept Bitcoin, ETH, or NFTs, you can easily spend them. In addition, unlike gold, you don’t need a lot of logistics to divide them into smaller units.

  • It is peer-to-peer

Spending or storing your blockchain assets does not necessitate the assistance of institutions. This also means you won’t have to worry about institutions censoring your assets.

The restrictions associated with these assets are minor, but they can have an impact on the movement of your wealth.

These features allow you to exchange these assets for goods and services. However, you must find someone who is willing to accept them.

  • It’s discrete

Without the assistance of institutions, you can store your blockchain assets. This means that your blockchain assets and their value remain private.

You only need a digital wallet with a memorized passcode to store your assets. As a result, whenever there is a crisis, it is nearly impossible for your assets to be confiscated.

What are the Limitations of Blockchain Assets?

Despite blockchain assets offering a wide variety of options to store your wealth during a crisis, they also have some limitations.  These limitations are:

  • Low Acceptability

Cryptocurrency, one of the blockchain assets, continues to face acceptance issues around the world. In short, most merchants are unaware of how these assets function. Others are unwilling to take the risk because of the volatility of cryptocurrency.

However, innovations such as Club Swan crypto debit cards can help to address this issue. These crypto debit cards make it easier to use your cryptocurrency all over the world.

  • Internet Reliance

Unlike fiat currency, cryptocurrency or any other blockchain asset must be moved or spent over the internet.

So, during a crisis, such as a political or natural disaster, access to the internet may be difficult.

However, some businesses are addressing these issues and attempting to resolve them. For example, Blockstream, a Canadian blockchain solutions start-up, has developed cutting-edge technology that can aid in the processing of bitcoin transactions using radio signals.

Real Estate

Real estate is another appealing and profitable way to preserve and grow your wealth. Homes and land continue to appreciate in value over time.

This, however, can change dramatically during times of financial or political crisis. For example, during a recession, demand for real estate may fall. As a result, the purchases may lower the value of the property.

As a result of market deflation, the value of your real estate may decline. Furthermore, natural disasters such as floods have the potential to significantly disrupt the real estate market.

Livestock and Foodstuff

During a crisis, basic needs take precedence over other considerations. Food, for example, has a difficult time losing value during a crisis because supply is reduced. In extreme cases of chaos, food becomes more valuable than gold.

Keeping your wealth in food and livestock ensures that their demand will only increase in the event of a crisis.

However, maintaining livestock and food supplies during political unrest may be difficult. They, like gold, require logistical preparation such as security, health care, and transportation.

Most foods, on the other hand, are perishable. This means you can only keep your wealth in livestock and food for a limited amount of time.

Conclusion

So are you looking to keep and grow your wealth during times of crisis? The above assets can prove to be very helpful when trying to combat the effects of a crisis. You can choose one that appeals to your kind of lifestyle.

 

Lethabo Ndlovu

Lethabo Ndlovu is a KwaZulu-Natal-born writer. He is the Editor-in-Chief at Nerdville. Ndlovu is happily married to Sarah Ndlovu with children and they both live in Johannesburg South Africa. His interests include football, writing, and trying to make himself better by reading.

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