This is the second article of a three-part series. In Part 1 we discussed the idea of alternative investments and how to invest for privacy. Today we will cover investing for security.
The little FDIC sticker on your bank’s door means that you are protected if the bank collapses and loses your money. Should that happen, the federal government has promised to step in and reimburse what you lost. The catch is that this is limited to one hundred thousand dollars. Want to know another fact about the FDIC? They do not insure your investments – at all. So, if the guy running your 401(k) pulls a Bernie Madoff (or a Bernie Sanders) and takes all your money, you are out of luck.
Money in the bank or the stock market is deceptively insecure. Even if the bank does not shut its doors, its employees will happily turn your assets over to the government when instructed. Your retirement accounts could even one day be tapped to fund the federal government. Think that could never happen? Tell it to the people in Cyprus and Greece. So, how are you supposed to protect your wealth?
Gold and silver are the two most popular assets for securing your funds. Unlike bitcoins, their prices are relatively stable, and they also have the benefit of existing offline. While salesmen on TV try to sell gold and silver as investments which can make you millions, it is best to view them as wealth preservers. A gold coin today will always be able to buy you the same basket of goods today as fifty years from now because the price rises with inflation. According to the Census Bureau and Apmex, roughly 230 ounces of gold would have bought you an average priced home in 1987, while also doing the same in 2017.
Investments focused on securing your wealth can also include other precious metals, collectibles, or even art or fine wine. The idea here is to purchase something today that will likely be worth more in the future. Jewelry and vehicles do not often fit into this category, but limited edition luxury watches or vintage cars may qualify. Generally speaking, you should only dabble in these rarities if you are well-versed in that particular subject. Otherwise, best to stick to gold or silver. Again, the goal is to turn your cash into something that will hold its value over the long haul – let your imagination be your guide.
Bear in mind that investments for security require a significant amount of, well, security. Forking over the money for a quality safe is something to seriously consider if you are going to store any meaningful quantity of investments within your home. Alternative storage sites include safety deposit boxes, hidden caches, or a simple hole in the ground. Just please, do not put everything under your mattress.
Join us tomorrow as we conclude this series and explore alternative investing for insurance.