As I progress in my wealth building journey, I find myself drawn more and more to resilient and tangible forms of wealth. Not only do many of them seem more sustainable to me, they also bring me more joy and meaning, while simultaneously helping me further distance myself from the extractive, life-depleting, soul-sucking economy within which so much human activity takes place. This has led me to focus on cultivating stores of value.
I was first exposed to the concept of stores of value (at least it was the first time the idea stuck!) during my permaculture design course (PDC) about ten years ago. I remember the instructor making the point that in addition to plowing the field on a farm a tractor could act as a store of value for the farmer.
My boyfriend rides his bike more than he drives his truck. When he’s going somewhere he’s come to “think in bicycle” as he calls it meaning he assesses his departure time, route, and parking needs based on being on a bike, not in a car. I’ve started doing something similar in my wealth building efforts as now I have come to think in stores of value. I hope the ideas shared in this post will help you start thinking in sustainable stores of value as well.
What are Stores of Value?
A store of value is an asset that retains its value over time and can be exchanged for money now or in the future. Savvy wealth builders often view them as an additional way to diversify their holdings. Consider them a form of risk management. According to the SoFi website, “the ideal store of value would be one that has little risk and can be trusted to stay valuable well into the future.” Another way to think about it is that stores of value tend to retain their purchasing power.
Common examples include:
- collectibles like art, stamps, or wine
- precious metals
- (more recently) cryptocurrencies
Money as a Store of Value: Inflation and Other Thoughts
Conventional wisdom in the personal finance space regards money as a store of value. There are a few alternative thinkers who disagree. One is Brett Scott, author of The Heretic’s Guide to Global Finance, which I’ve referenced on this blog before. In this article from Resilience he argues that money functions instead as a claim on value. Jason Mills, the Data Driven Investor views it more as a measure of value.
We’ve already noted above that stores of value retain their purchasing power. In an article titled The Disadvantages of Using Money as a Store of Value Alan Rambaldini points out that the value of money can be inflated away over time as the price of goods and services increase. Next year your money won’t purchase as much as it does today. Opinions also vary as to whether the recent actions taken by the federal government to stimulate the U.S. economy during the pandemic will lead to greater than usual inflation.
Since our cash is always depreciating thinking in stores of value becomes especially important. By wisely selecting non-monetary stores of value you can store your wealth in ways that help mitigate the effects of inflation.
What We Can Learn from Other Cultures
It seems to me that people in other countries especially those with weak currencies are more prone to think in stores of value as a way to protect themselves against hyperinflation or any significant decrease in the value of their country’s currency. It also may be safer or more feasible for them to store their wealth in other types of assets rather than having cash stashed somewhere.
Popular personal finance YouTuber Jaspreet Singh of the Minority Mindset, immigrated with his family as a child from the Punjab state in India. I once heard him mention that in India women wore their families savings on their bodies in the form of gold jewelry.
I participated in an Africa regional breakout discussion during FinConX. Having traveled to South Africa for work in the past I was curious to hear from others working in personal finance there. Our small group conversation veered that day into one of my favorite topics – the multiple forms of capital. This lead us to acknowledging the less tangible forms of wealth still prominent outside more affluent countries such as strong community and family ties, as well as stores of value that are more common in Africa, but less conventional from a Western perspective. Many Africans “store” their wealth in livestock such as cattle or goats.
What are Sustainable Stores of Value?
Conventional stores of value such as precious metals like gold (and even cryptocurrencies for now) are extractive and depleting. Processes that are extremely harmful to the planet (and sometimes people) are used to “mine” them. The earth’s resources are depleted to make them accessible to us. The items themselves do nothing to improve the environment or society or make our lives more sustainable.
Our friends in Africa and other under-resourced places are onto something with storing value in livestock. That’s certainly an example of a sustainable store of value, where the cattle when managed properly help revitalize soils. As this article on soil fertility management stated, “Soil organic matter, perhaps the most key factor in controlling the productivity of West African soils (Moorman and Kang 1978) is increased with manure applications.”
And how about farmland, which has long been thought of as a store of value? Even Microsoft founder Bill Gates has started parking some of his wealth in this asset class. It turns out he’s now the largest private owner of farmland in the US.
Bill Gates’ approach to sustainable farming through a new green revolution, which brings his technology oriented tendencies to farmland, differs quite a bit from my preference for more regenerative and indigenous approaches. We do both agree that parking money in farmland (or any land on which you can grow edible, medicinal, and otherwise useful crops) is a wise move.
Owning our own house can be a store of value. Whether or not we own it free and mortgage clear or not, in most markets and circumstances there is equity and value in our homes. We can often even increase the value of our home by adding curb appeal or renovating it.
Another conventional option that can have a regenerative twist is owning your own business. Many successful entrepreneurs have continued to build value by constantly reinvesting in their own businesses. Operating a B Corporation, social enterprise, or other sustainably-minded business would be yet another way to capture, hold, and even increase value.
Much of the equipment and infrastructure that helps us better meet our needs without relying on outside sources also hold potential as stores of value. High quality cisterns and water catchment systems as well as my boyfriend’s beehives come to mind.
Why Quality & Maintenance Matter
High quality items are more likely to hold their value. It’s worth putting the effort into researching which brands produce quality products and purchasing them when possible. Also just learning more about quality and products in general is helpful. For example, my boyfriend Albert has taught me that knives made in Japan and Germany tend to be of very good quality, likely because of the caliber of metallurgy in those places.
We also need to keep these items in good condition. If the farmer doesn’t properly maintain that tractor not only could it not function properly in the fields it will also be worth less money should the farmer ever need to sell it. I confess that maintenance is not my strong suit. My time, money, and attention too often get diverted in other directions, which leaves this as an area for great improvement.
That Brings Me (Briefly) to Generative Assets
I know that generative assets were covered in the main textbook we used for my PDC, but I credit Mike Hoag of Transformative Adventures for really helping me further my thinking about permaculture asset classes. In this blog post he describes generative assets as “durable assets” noting that they “help us become producers instead of consumers.” He cites examples such as cider mills, garden tools, sewing machines, and carpentry equipment. All of which “help us create something useful, saving us time and money, and generating value that can help us grow wealthier.”
I find a lot of overlap between generative assets and stores of value. Not all conventional stores of value are generative assets, but I find when we think about sustainable stores of value many of them are, which makes them even more likely to ensure our financial security long into the future. For example Albert’s beehives produce honey, beeswax, propolis and other products he can sell easily covering his beekeeping costs and earning him a nice profit from something that’s really important to planetary (and people) health.
And How about Those Procreative Assets?
Again we’ll turn to Mike Hoag to explain this permaculture asset class –
“Procreative assets are those that can self-replicate, truly growing “wealth.” These are usually natural systems. Fruit trees are a procreative asset that both generate value for us in the form of fruit and generate more fruit trees, creating a positive feedback loop in our life.”
I’m trying to include procreative assets in my retirement planning. One example is the native elderberry hedge I’m creating in my yard. I can use the berries to make my own immune boosting medicine and elderberry wine to barter or gift people. Elderberries (at least here in Florida) are very procreative producing lots of new elderberry shoots that I can dig up and offer to others in my local time bank in exchange for time credits.
I’m also wanting to plant a few native soap nut trees that won’t bear fruit for 10 years. When they do they will provide nuts I can use to wash my clothes and provide me with a form of currency to exchange with others. Unfortunately, you need several of these trees for fruit set and the only one I’ve managed to plant so far is not doing well. I’m not giving up yet though.
Lastly, I’ve planted some Florida friendly olive trees in my landscape in hopes of producing olives to sell, barter, share, and of course eat some myself. Given the warmer winters we’re experiencing here I may never get to reap that harvest, but even if these trees don’t fruit I can harvest the leaves, which have impressive medicinal qualities to make medicine and sell the leaves to our Florida Herbal Cooperative. Since these olive trees are very hard to propagate this may end up as a generative rather than a procreative asset.
Are You Overlooking Stores of Value in Your Midst?
People have long recognized the value of seeds. Before money and national currencies became the norm seeds were a common means of exchange. Their value was highlighted again this past year as interest in home vegetable gardening spiked during the pandemic and seed supply companies sold out of numerous common seeds. It’s very important that we always prioritize and save open-pollinated (not hybrid) seeds so we the people can maintain seed autonomy from the corporate monoliths that are trying to patent so many seeds. It also helps ensure that we don’t lose heirloom breeds that aren’t widely grown. Moral of the story – save those seeds!
And while mainstream economists might not include them in their list, I’d add skills. Learning how to do things such as bicycle repair, plumbing, solar panel installation, and coding, can earn you some amounts of money well beyond the initial cash or time investment necessary to attain those skills. In this guest post young Francis Sojun demonstrates very clearly how one can use skills to build and store wealth.
Another “alternative asset” I include on my list is community. I think we can create a beautiful ebb and flow of wealth with the various communities in which we participate, offering our gifts when available and receiving when we need it. Plus, there’s just so much joy, support, and connection in community.
Stores of Value = a More Holistic, Resilient, and Satisfying Way to Build Wealth
Money and currencies seem to become more digital and less tangible with each passing day and in many cases beholden to the availability of an ever weakening electrical grid and debt-ridden monetary systems. And then there’s that matter of inflation which means our money is always losing value.
A big benefit of these more sustainable stores of value is that they diversify our assets in a way that lends a true resilience to our wealth building efforts. I also find myself feeling more focused on and connected to abundance instead of scarcity when thinking in these sustainable stores of value.
Even without those concerns I find occupying myself with digits in a computer or on a spreadsheet far less compelling or rewarding than for example conducting an exchange with a fellow member of my local time bank to meet one of my needs. I find it much more engaging and encouraging to ponder useful plants, renovations that make my home more energy efficient, and how to build out my online business. (It’s not my intention here to discount the importance of managing and tracking our money numbers in our current economic model or the fact that some people are much more spreadsheet inclined than moi – just noting personal preference.)
Would you like to cultivate a more holistic approach to wealth that includes thinking in stores of value, socially conscious personal finance, and adding more resilience to your life? Then schedule a 1:1 coaching call with me today to start your resilient and regenerative wealth building journey.
What sustainable stores of value are you tending in your life?
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