On the metro this morning I saw a gentleman reading the Wall Street Journal. I politely asked to borrow the section with an article headline that caught my eye: 7 Smart Places to Stash Your Cash.
I should mention that once the gentleman gave me the section I realized that the entire page was one big advertisement for buying US Coins and armored safes. The page was disguised to look like a legitimate news article in the journal (go check it out – page A7 in today’s WSJ) but clearly, further investigation was necessary.
The article gave seven ideas on what to do with your money to keep it safe. Each idea is in the order they gave followed by my reaction.
- Be sure your institution is insured – This is sound advice. If your bank is FDIC insured you have nothing to worry about in terms of keeping your money safe (if you are approaching the $250,000 limit then you may want to look at splitting your money between different institutions).
- Start and grow a coin collection – What? This is the second smartest place to stash your cash? Anyway, this is not a bad idea for hobbyists, but the author describes the coins as never losing their cash value (which is true), however inflation will make your newly minted never circulated coins worth a few percent less next year. The author of another article on the page mentions that a specific uncirculated coin from 1974 has seen a 500% increase in collectors value. It sounds like speculation to me and I would rather have money in the market (By the way, the Dow Jones was around 600 or so back in 1974. Even at its weak 8000 today, that is over a 1000% increase. Do the math!)
- Keep cash safe at home – This is another suspect idea. If your money is at home it is (a) not earning any interest. (b) available to be lost or stolen, and (c) susceptible to being lost completely if something tragic (like a fire) takes place.
- US Savings Bonds – I have no qualms with bonds, but this article was talking about tangible paper bonds. I personally view individual bonds as a bit of a hassle. It’s much easier to invest electronically in bonds and saves you the hassle of keeping these documents on hand until they mature, which would be my preference. J. Money over at Budgets are Sexy talks about his bond experience here.
- Gold and silver – Another idea that I have no issue with. I am not personally interested in the precious metal market, but I always hear buying gold is a relatively safe investment. Then again, this requires more research. I do know that a lot of PF bloggers say to steer clear of buying gold, and they have spent more time considering this issue than I have.
- Hold on to real estate – I fail to see how this relates to stashing your cash, except that you are likely to need a home just to store all the coins and bonds that the article recommends.
- Buy a good safe – Here is the whole point of the article (err, advertisement), they want you to buy one of their safes. This sounds more like spending your cash then stashing it to me. The utility of a safe exists, especially a fire safe that can house important documents and valuables.
The moral of the story is to be careful what you read. I was suckered into this article for a minute or two until I noticed it was an advertisement. This “article” speaks to people that are scared and frightened of the economy right now and it’s looking to take advantage. Similar to all media, you need to question what you read and think critically about the material. If you are thinking of taking a new avenue down investing, please check with a financial planner or with people that you trust before reallocating your wealth.