Safe Places for Your Money

All of us have become more concerned about finding safe places for our money.  During the heyday of the housing bubble, we might have been a bit more concerned with getting excellent returns.  Today we're more worried about not losing our money.  Unfortunately, "safe" is a very subjective term and finding a safe place for your money is not as easy as it might sound.

What Does Safe Mean?

To most of us safe means you simply won't lose your money.  By that definition hiding it in your mattress might be the safest solution.  Unfortunately there are several effects that make "not losing" your money a tricky proposition.  Even as your money is sitting in your wallet you can be losing money, without spending a dime.

Inflation

Many of us might make the choice to put our money into low yield savings accounts to make sure our money is safe.  Or even worse we might put it in a safe at home.  While these feel safe, there is an invisible force that can be eating away at your money.  Inflation represents the decreased buying power of your money over time.  While there's nothing that states that there has to be inflation, over time this has been by far the more prevalent outcome.

If your money isn't earning any interest, or isn't earning enough interest to overcome inflation, you are actually losing money.  While you may have more dollars, those dollars won't have the capacity to get you as much.  Hence they're actually worth less.  Dollars have no intrinsic value and are only worth what you can get with them.

Loss Risk

Another fear is the loss of money to theft or negligence.  If you keep your money at home, you have the potential to have your money stolen.  This is a serious risk that you are generally not exposed to at the bank.  Even if your money is stolen from the bank it is insured and you are not at risk.  Unfortunately, banks have their own set of risks.  Namely, the bank could fail and your money could be lost.  FDIC insurance protects you from this, but only up to a set amount.

The Safe Money

In the end the only way to protect your money is to become educated.  The more you know about your investments and savings the less likely you are to lose them.  While this may not seem like something you want to spend your time and energy on, the consequences can be dire.  Thus everyone should invest in their own education when it comes to their finances.