Argentina default warnings. Should I buy land?
Since my last question, things have worsened, and they will continue to do, so I diversified a little my savings, but now I'm thinking of buying some land.
I have the opportunity to get some cheap land just outside the city and I thought it would be a good way to preserve large amounts of savings. Also it is a good place to run for in case violence and looting starts to emerge here (which it will unfortunately).
You think this is a wise move? My worst fear is that I can't eat the soil in case of an emergency. By this I mean if I'm in need of cash to survive, that piece of land will be hard to sell. I do have some savings in gold for a rainy day, but they won't last forever.
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If the prices of properties are not declining consistently, it may be a good idea to get a property with a part of your money. But you have to understand that you might not be able to sell that property for years since in these conditions, people prefer foreign currencies and precious minerals. If this purchase can put your cash flow at risk, I wouldn't do it. You and your family need cash to survive and you need to save even more since your currency is consistently declining. And from your comment, investing 90% of your net worth on a single piece of property is not a good idea, even in the best economies.
If your cash flow can sustain the purchase of the property for a minimum period of 2-3 years, you can go ahead and buy the property. I would prefer a property which can produce some income, maybe through rent. The economy is bad but people will still need to do business and that income can become handy in the future.
However, the best option (even though the most difficult one) is to use that money to start a business with that money, preferably outside of Argentina (operated remotely) to hedge your finances from the inflation.
p.s. Moving to city skirts wouldn't ensure the safety of your family. In fact, that may make you an easy target, with little access to help. However, I have never been to Argentina and have no idea what may happen over there.
If you are afraid of what could happen in terms of violence, you'll probably have to go more far away than you might think, assuming you live in Buenos Aires. When the last crisis happened, I was living in Martinez, San Isidro(*).
Although it was way better than other places, gun armed robberies, larceny and express kidnappings where also happening, not that often, but still.
Maybe you should look to move away from any big city, and/or to another province, investigating and choosing some nice place beforehand.
If you choose to buy land, always remember it has it's risks. You'll have to pay taxes on it, it can be usurped if you don't live there, while buying and selling you'll have to pay a percentage on taxes, the tittle and real state agent, and it will be hard to sell if you suddenly need to.
If you think it might be unsafe to stay where you are currently living, it be a good moment to move if you can (considering job opportunities, family, will to move far and resources), it might be a good time to do so.
Also if you really want to buy property, believing it's value won't dip and will go up after things look better, you could try waiting for a good opportunity. Every now and then people need to sell fast even if cheaper, but you'll probably have to have the cash(**) available fast, and making several offers until you find someone desperate enough so you get a good deal.
Lastly, about gold, if you think you might have to sell it soon, the spread between buy/sell price will make you lose more money than saving in US dollars. Plus dollars are useful to buy property, leave the country if you want to, and it's more liquid than gold.
Other investments you might want to consider are sovereign bonds, the more trustworthy the issuing country is, the less dividends, so you'll get to choose how much you want to risk. There even are some decent bonds from Argentinian provinces in US dollars. But I wouldn't be surprised if you choose some other one.
Personally I don't think it will get as bad as you seem to think, but I guess you should invest according to what you believe.
(*) Note for people from other places: this is among the wealthiest/safest/more expensive places to live near Buenos Aires city without counting some Gated communities and Puerto Madero, the most (insanely) expensive neighborhood in Buenos Aires city).
(**) Again note for other readers: Most properties are bought in US dollars and in cash. Yes, seriously. Mostly because our currency tends to lose value compared to the US dollar, many people try to avoid depositing cash in the bank (some store them in a safe inside the bank, or even at home) for historical reasons; and there's a lot of tax evasion happening and bank transfers don't work well with this.
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