CHISWICK, WEST LONDON – Welcome to another edition of our Friday mailbag.
Today, readers want to know how to “survive and flourish” as a traveling family on only $40,000 a year… whether safe havens, like consumer staples and uranium stocks, are as overvalued as tech stocks… and more.
Let’s dive right in…
Reader: You mention that you thought, “it’s self-indulgent to tell the story of one’s own life.” I am a 64-year-old woman who lives in Minnesota – my children live far away. I still work. I am divorced and live alone, except for my old and cranky cat.
I read your Postcards whenever they pop in my email. Your stories have been so interesting to me, I kind of feel like I know your family. You have shared your life, your family, and it has enriched my life. Your Postcards have been important to me.
Writing comes easily to some people but not to me. I think about quitting every day. Then get a message like yours… And it propels me forward again. So thank you!
Reader: I’m a keen follower and fan of yours! I’m also originally from the U.K., having grown up in London, but now live in Germany. How do you manage to travel the world with a family of four at only $40k USD per year?
I am asking because I might be forced to leave my job in Germany (due to being “unvaccinated”), so I’d really like to get an idea of how we will be able to not only survive but flourish at the same time (I have two children aged 10 and 12). Do you have a budget or a plan?
The short answer is you save a fortune by not keeping a home. Homes, whether rented or purchased, are expensive. And then, you spend more money on shopping, too.
I used to be an Amazon shopping fiend. But once we stopped having an address, I couldn’t shop any more. That, and the fact we could only keep what we could carry with us in our suitcase.
When we stopped keeping a home, all the bills went away, too – water, internet, electric…
$40,000 per year sounds like a lot to me. If we really wanted to, I think we could easily live on half that amount… Especially if we made our way over to Africa or Asia again.
Reader: Thank you for your very interesting reporting. I read that you have decided to sell your mother’s house. A son of mine is about to be transferred from the USA to Europe, so I wondered what would be the price on your house and if he could afford it.
We haven’t made up our minds about what we’re going to do with my mother’s beautiful house. I’m utterly torn over this decision and unable to decide. So I’m gonna stop thinking about it and do nothing for now.
Reader: When you talk about the S&P 500 being overvalued, do you make the distinction that this is mainly due to growth-type stocks (e.g. Big Tech)? I am asking because I am invested in energy, metals (miners and royalties), some dividend-paying staple stocks, commodity producers, and uranium…
Do you believe these kinds of shares to be overvalued, too? The reports that I read suggest they are undervalued – at least, compared to the rest of the market.
This is a great question. It keeps me up at night, too.
I’m certain that the types of stocks you mention are cheap relative to the rest of the market, but would they still be a safe haven in a deflationary crash? I doubt it.
And I wonder, if the whole market is overvalued, doesn’t that mean value stocks are also overvalued?
In my opinion, the safest strategy is to hedge my bets and bet on something that doesn’t care whether we get inflation or deflation.
This is why I love our Dow-to-Gold bet. As I explained in more detail here, it wins in either scenario…
Reader: I apologize for asking a question that probably arises from sublime ignorance. You wrote, “In a deflation, gold may fall in terms of cash.” If the cash value (price) of gold falls, with what, how do you purchase the value stocks you envision?
Our goal is to husband our savings in a way that maximizes our purchasing power in terms of great but cheap stocks in the future… And to do that without being able to see into the future.
To catch up newer readers, when I say “great but cheap stocks,” I’m talking about what I call “corporate aristocrats.”
These are companies with decades-long track records of relentlessly raising their dividends. Companies like Coca-Cola, Johnson & Johnson, and McDonald’s.
There are no better passive investments than stocks like these. You get rich twice this way. First, from the rising dividends, and then from the compounding effect of reinvesting dividends.
I could buy these companies today. I could also just sit in cash. Or I can hold gold.
I’ve chosen the latter. In my view, gold has the best risk-adjusted potential for maximizing my future purchasing power of great stocks.
This is why I care so much about the Dow-to-Gold ratio. It’ll help us know when these corporate aristocrats are cheap again, relative to gold.
Reader: So I stock up on physical gold. Everything tanks and the economy is horrible. Do I use my physical gold to barter/ buy things? Sell it for worthless dollars? Wouldn’t I be better off to have a garden and livestock already in place?
I don’t imagine dollars will ever be worthless… Only worth less.
My plan is to convert gold into dollars… use those dollars to buy the type of cheap but great stocks I mentioned above… and then hold those stocks for the rest of our lives.
And that’s all for this week!
Keep your questions and comments coming at [email protected], and I’ll respond to as many as I can in future Friday mailbag editions.
(I’ll never reveal your name or potentially identifying details if I decide to republish your note.)
– Tom Dyson
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