Contemplating where to allocate your savings? Alternates to a bank or the stock market may be on your radar. Yet neither of these offers a flawless choice.
Although the stock market has a long run since 1957 through 2024, it has also experienced declines that shake investor confidence. A notable instance is the downturn in 2000, which demanded a recovery period of 56 months or approximately four and a half years.
Delve into seven alternative venues to place your money, going beyond conventional banks and stock markets.
Federal Bonds and Real Estate
Secure and trustworthy, federal bonds are a seemingly safe bet, though returns might not always impress. In contrast, putting resources into real estate can yield income but also comes with its set of complexities and risks. An intriguing alternative to traditional financial tools includes precious metals, especially gold. Cash, however, kept under your mattress, offers neither security nor return, with its true value dwindling against the inflation tide.
Precious Metals and Tangible Options
In scenarios where financial systems might falter, metals like gold, silver, platinum, or copper are expected to retain value, if not increase. Their past performance data stays somewhat elusive, however. While typically lagging behind stock market returns, these metals can see rapid appreciation, sparked by robust market phases or heightened demand that propels their value forward.
Real Estate as a Viable Investment
A U.S. government initiative saw a rise in the federal funds rate in 2022, aiming to counterbalance high spending in investments. Becoming a landlord is an option; for many, it’s a straightforward, convenient, and cost-effective approach to building a real estate portfolio. Conversely, executed wisely, real estate holds its own financial advantages: as of January 22, 2025, a one-year return of 6.12% from the Dow Jones Equity All REIT index was recorded. However, the 10-year return stood at a more modest 1.61%, underscoring its volatile nature.
In the short term, real estate provides protection for cash and securities within customer accounts at numerous brokerages, ensuring coverage up to $500,000 per account.
Currency in the Home
While stashing cash under a mattress seems cliché, having funds readily available at home can be comforting, though not as secure as banking systems. Even more extreme circumstances, such as natural disasters or cyber threats, may limit access to banks. Your financial institution, markets, or the entire system could be unavailable for prolonged spells. Vigilance over your home cash reserves is crucial, as inflation gradually undercuts currency value.
Entrepreneurship and Agricultural Investments
Investing in a business can be rewarding, giving you financial returns if you employ staff for day-to-day operations. Those with a survivalist perspective might find owning farmland appealing as it might provide sustenance during societal upheavals or a global economic collapse.
Cryptocurrency: A Modern Venture
Entering the cryptocurrency market offers a singular chance to be part of a developing technology. Keep in mind the risk factor—despite bitcoin reaching extraordinary peaks, it too experienced a sharp decline.
Understanding Banking Practices
Banks are trusted repositories for customers’ funds, typically offering modest interest rates. They utilize these deposits to earn profits exceeding their payouts through loans to businesses and individual consumers, banking on interest payments. Moreover, banks charge fees for various client services and invest a portion directly in assets like real estate, bonds, and stocks.
Acquiring Precious Metals
Gold and silver bars or coins could be purchased from local banks or dealers in precious metals. However, it is crucial to research storage and insurance conditions thoroughly.
If you’re wary of banks and the stock exchange, these seven alternatives could diversify at least part of your portfolio. A well-rounded collection of investments is vital.
Fast Fact
Cash placed within a safe deposit box at a bank is not covered by insurance.
