“Don’t Keep Your Cash In The Bank” – 6 Assets That Are Better & Safer Than Cash

6 Assets That Are Better & Safer Than Cash

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Have you ever felt like your hard-earned money is disappearing right before your eyes? Many of us diligently save our cash, hoping it will grow over time. Yet, contrary to what banks often imply, your money may not be as secure as you think. While your bank balance might show an increase due to interest, inflation could be eating away at its real value faster than you realize.

In this article, we explore six key assets that can help protect and grow your wealth. From precious metals to real estate, these investment options offer ways to preserve your money and potentially create intergenerational wealth. By making informed choices, you can shield your savings from the stealthy erasure caused by inflation and ensure a more secure financial future.

Key Takeaways

  • Precious metals like gold and silver offer inflation-proof investment options.
  • Investing in industrial commodities can boost your portfolio due to high demand.
  • Safe-haven currencies and sovereign guarantees provide stability in uncertain times.

Wealth builds lays out this concept very well in a recap of Robert Kiyosaki in the following video:

YouTube video

Precious Metals as Wealth Protection

Gold, Silver, and Platinum

Banks often claim that your money grows in their accounts. The truth is, while the numbers may increase, the actual value decreases due to inflation. Precious metals like gold, silver, and platinum provide a safeguard against this hidden erosion.

Gold, silver, and platinum are scarce resources. You can’t create them easily, unlike paper money. An example of this value increase is gold. In the 1950s, an ounce of gold cost around $400. Today, it’s worth over $2,000. Some forecasts suggest it might even reach $10,000 by 2032. Imagine your investment growing fivefold in ten years. This is why many wealthy individuals keep part of their portfolio invested in these metals.

Gold ETFs and Alternative Investment Methods

If holding physical gold isn’t your thing, there are other options. One popular method is investing in Gold ETFs. These are highly affordable and let you benefit from gold price movements without the need to store physical gold.

Investing in Gold ETFs requires less money upfront and avoids the hassles of storage. This method makes it easier for everyday investors to diversify their portfolios with gold, providing a hedge against inflation and currency devaluation.

Cash Value Life Insurance

Cash value life insurance is a type of life insurance policy that not only provides a death benefit but also includes a cash value component. This cash value grows over time as premiums are paid. Unlike term life insurance, which only offers coverage for a specific period, cash value life insurance lasts for the policyholder’s lifetime, as long as premiums are paid.

Key Features:

  • Death Benefit: The primary feature, providing a lump sum to beneficiaries when the insured passes away.
  • Cash Value Growth: Part of the premiums goes into an account that grows over time, often at a guaranteed rate.
  • Access to Cash Value: Policyholders can borrow against or withdraw from the cash value component, though this may affect the death benefit.
  • Tax Advantages: The cash value growth is typically tax-deferred, meaning taxes on the earnings are not paid until the money is withdrawn.

Types of Cash Value Life Insurance:

  1. Whole Life Insurance: Provides consistent premiums and a guaranteed cash value growth.
  2. Universal Life Insurance: Offers more flexibility with adjustable premiums and death benefits.
  3. Variable Life Insurance: Allows investment of the cash value in various accounts, offering the potential for higher returns but also increased risk.

Benefits:

  • Financial Security: Provides lifelong coverage and a death benefit.
  • Savings Growth: The cash value can serve as a savings component, growing over time.
  • Borrowing Options: Policyholders can borrow against the cash value for emergencies or other needs.

Choosing the right type of cash value life insurance depends on individual financial goals and needs.

Industrial Commodities

Applications for Industry Metals

Industrial metals like silver, cobalt, nickel, and copper have specific uses. Silver is crucial in making electronics, medical tools, and even nuclear reactors. Cobalt has become essential for electric vehicle batteries. Since 2020, demand for cobalt has surged, leading to its price rising from $20,000 per ton in 2012 to $40,000 in 2022. This doubling over just a decade illustrates the high demand.

Key Applications Table

MetalUsageNotable Increase in Demand
SilverElectronics, Medical EquipmentConsistent demand
CobaltElectric Vehicle BatteriesDemand skyrocketed since 2020
NickelAlloys, BatteriesStable demand
CopperElectrical Wiring, PlumbingConsistent demand

Investing in Mining Firms

Investing in raw materials directly can be challenging due to the high costs and storage requirements. Instead, one can invest in mining stock, mutual funds focused on mining, or various financial derivatives. Some major mining companies include Rio Tinto. These investments allow individuals to gain exposure to industrial commodities without the logistical hassles of owning the physical materials.

Safe Haven Currencies

Swiss Franc Stability

In times of global uncertainty, the Swiss franc remains a strong and reliable currency. Switzerland’s political and economic stability has earned the franc a reputation as a safe haven. Historical events, like the Eurozone debt crisis of 2009 and the global financial crisis of 2008, saw significant capital move to Switzerland seeking safety. During the recent Russia-Ukraine conflict, Russian trade switched to the Swiss franc due to U.S. sanctions, boosting its demand and value. As of early 2023, one Swiss franc equaled 1.1074 U.S. dollars, leading to substantial gains for those holding the currency.

Currency ETFs and Forex Investments

Opening a Swiss bank account isn’t the only way to invest in foreign currencies. Currency ETFs (Exchange-Traded Funds) and Forex (Foreign Exchange) brokers make it accessible for smaller investors. Platforms like forex.com allow you to start with as little as one hundred dollars. These financial tools let individuals invest in foreign currencies without the need for large capital or complex setups, giving more people the chance to protect and grow their wealth through currency investments.

Government-Backed Assurances

Investing in Government Securities

Investing in government securities is considered one of the safest routes due to the sovereign guarantee they carry. Banks often tell us that the best way to grow our money is by leaving it in our savings accounts. But, with inflation outpacing interest rates, this advice may be more harmful than helpful.

By investing in government securities (G-Secs), you essentially lend money to the government in exchange for a secure return. These securities come with an investment-grade credit rating, which assures their safety and reliability. Remember the financial crisis in Greece in 2009? The aftermath showed us how important it is to consider a government’s global standing before investing. So, only opt for G-Secs from stable governments to ensure your money’s safety.

U.S. Treasury Securities

In the United States, Treasury securities like bills, notes, and bonds offer another way to invest with a sovereign guarantee. These financial instruments are backed by the U.S. government’s strong global economic position, making them a secure choice.

Unlike letting money sit in a bank, Treasury securities offer modest, predictable returns. Investors can purchase these securities directly from the government via the TreasuryDirect portal or through other markets. These investments may not make you rich overnight, but they provide a steadfast way to protect against inflation and preserve wealth.

Value Stocks and Mutual Funds

Comparing Value and Growth Stocks

When thinking about investing in stocks, it’s important to understand the difference between value stocks and growth stocks. Growth stocks are often in the tech industry, showcasing new and innovative ideas. While they can provide high returns, they also come with high risk due to potential failure of these new ideas.

On the other hand, value stocks represent companies with established businesses. These companies have proven demand for their products, making them less risky. For instance, companies dealing in industrial metals fall under this category. Value stocks generally provide stable dividends and steady price appreciation, both of which are attractive to investors looking for a more secure investment.

Investments Focused on Dividends

Investing directly in value stocks can be daunting as it requires a deep dive into each company’s fundamentals. This can be time-consuming and overwhelming for individual investors. Dividend-focused mutual funds offer a practical solution.

These funds pool money from multiple investors and invest in a diversified portfolio of stable, dividend-paying stocks. For instance, the Vanguard High Dividend Yield Index Fund Admiral Shares is known for its strong history of dividend payments. Such funds are ideal for retail investors looking to earn regular income without extensively researching each stock.

By investing in these mutual funds, you can gain exposure to a variety of value stocks, which reduces risk and increases the potential for stable returns.

Real Estate Holdings

Land as a Non-Depreciable Resource

Land doesn’t lose its value over time as it is limited and always needed. From housing to farming and business spaces, the demand for land keeps increasing due to an ever-growing population. Because of this, owning land acts as a safeguard against inflation, making it a wise investment choice.

Property Investments

Residential homes, office spaces, and commercial properties built on land also retain value. They provide stable income streams through rent and appreciate over time. Investing in these types of real estate not only offers protection against inflation but also helps in building wealth that can be passed on to future generations.