Mig has asked you against what risks do you wish to protect. Perhaps you need to consider the various categories of risk. I am no expert, but several that are relevant to you spring to mind. There is institution risk--the danger that the institutions with which you place your money will fail; there is currency risk--the risk that the currency in which your income is denominated will drop in value and the risk that the currency in which you pay your bills will rise in value; and there is asset risk which would affect you were you to put some of your money into property or buy a business or stocks. Companies can go bankrupt and small businesses can fail for reasons beyond the control of the owner. If you want to buy to rent out, there is the risk that renters will trash your property. If you purchase a home you can live in you will have that use value at least, and in the event of inflation or a real estate bubble in the economy in which you reside you are protected and/or can take advantage of the run up by selling and moving some place cheap, as I did when selling in LA in 2005 and moving to Arkansas.

A standard way of hedging risks is to diversify. If you buy government bonds and hold them to maturity you face the risk of inflation in the currency in which they are denominated and the risk of sovereign default. The returns on Bunds are not very appetizing just now but that might change. They would have the advantage of being denominated in a currency in which you have expenses. I liked Chris's suggestion about Norwegian investments. You might check out one of his fairly recent diaries to see why. Norway is an oil and gas producing country with a sovereign wealth fund. And it would diversify your currency risk.

The world economy seems very unstable now and I am mostly in cash. I agree with Mig that the general situation is deflationary, but I fear that attempts to stave off deflation could result in bungling into inflation. It is hard to protect against both at the same time.

"It is not necessary to have hope in order to persevere."