Five Alternatives to Keep Your Money rather than Using Banks
Concerned about the stock market and banks? Take a look at these alternatives
People who are more afraid turn to other places to park their money because they have a negative perception of banks and other financial institutions. Given their involvement in the reckless lending that contributed to the housing bubble’s fall and the start of the Great Recession, some people may be avoiding banks out of principle.
Where Do Banks Place Their Capital?
Banks give their clients a secure location to store their cash in exchange for a small return on their investment. The banks then invest that money in an effort to generate bigger returns. They first lend it out as loans to companies and individuals, making money off of the interest payments. Additionally, they profit from the fees they charge clients for a variety of services.
Naturally, banks now appear to be safer after the extraordinarily turbulent stock market of the previous year. However, it’s still important to consider these seven possibilities. The best location to store cash is one in particular.
In addition, banks put some of their cash into stocks, bonds, and other assets like real estate.
Be aware that modern banking behemoths offer both commercial banking services and investment banking divisions. For businesses and affluent people, there is an entirely separate revenue stream that entails financial management and consulting services.
Real estate investment can be seductive amid uncertain times for the stock market and banks. turn into a landlord. Put a portion of your capital down on a property, do some repairs, rent it out, and let the renters take care of the mortgage. Or, if you want a more immediate possibility and have more experience, consider property flipping.
Real estate has a significant income potential when done well. However, it can also be a dangerous and somewhat erratic investment.
Investing in real estate can also be risky, particularly in the near term.
The housing bubble that burst and caused the Great Recession is an extreme example. Millions of individuals lost their jobs and houses as a result of the worldwide economic slump that started in 2007, which caused the housing market to plummet.
How the current economic climate will ultimately impact the value of real estate is unknown. Buyers’ capacity to raise money and motivation to part with it may be limited by the significant blow to the economy and employment.
Sellers that genuinely need to sell, though, could be prepared to accept lesser offers. Additionally, relocations brought on by people starting to work from home leaving crowded, pricey center-city homes have benefited some suburban and exurban areas of the country while depressing property values in other cities.
One doomsday scenario maintains that gold, silver, and other metals like platinum or copper will continue to hold their value, if not increase, even in the event that financial markets no longer function.
Although it is unlikely that you will need to use physical things as barter, it can still make sense to keep a portion of your assets in this form. A low or negative correlation between precious metals and other asset classes, such as stocks and bonds, means that when such assets decline, metals are unlikely to follow, at least not very far, and may even grow in value.
Fine art, automobiles, watches, gems, including diamonds and other precious stones, as well as nearly everything else that counts as a collectible, fall under this category of physical assets. In their favor, they are tangible items that can be held and observed, as opposed to a bank account statement that would be difficult to obtain if the financial institution where it was kept goes out of business.
However, luxury investments are far from a sure thing. Despite the lack of historical data, it is generally believed that their returns have lagged those of the stock market, with brief spikes in value brought on by either great financial market performance or periods of popularity, which raise underlying demand and subsequent prices.
Another alternate investing choice is cryptocurrencies. There are several options; Bitcoin is simply the most well-known. Individual investors have a special chance to invest in what is still very much a developing technology thanks to so-called “cryptos.”
Of course, there is a high risk/high reward component to this possibility. For instance, in 2018, bitcoin dropped almost three-quarters of its value after reaching sky-high levels. You shouldn’t put a lot of money—or any money—into Bitcoin if you want to rely on it in the future. However, the majority of analysts think these alternative currencies will endure, so daring investors might want to place a bet in the off-chance that they strike it rich with one of them.
Investment in a business
Investing in a business can secure a return on your money, providing the company makes a profit. Of course, businesses also suffer during extremely difficult circumstances. Even if it is not consistently profitable, a farm can be a highly concrete business.
With a so-called investment farm, you hire people to conduct the real agricultural operations, so you don’t necessarily need to get your hands dirty. A survivalist mindset fits well with owning farmland since it can provide food in the event of a worldwide catastrophe or collapse of the global financial system.