It's not enough if you have money, you should also be able to store it safely, otherwise you won't have it for much longer. It is important to know where to store it, and in what form to store it, in the safest possible way, otherwise you risk losing it. In this article I will examine this question.
First of all, when I talk about how, I refer to it's form, for example cash vs asset or crypto-currency vs fiat, and so on. When I talk about where, I refer to it's location and method used to put there. Revealing how you store your money, is only a matter of privacy, but revealing where you store it, is a matter of security.
RULE 1: Never tell anybody where you store your money!
It theoretically doesn't matter where you store it, as long as it is a secret, well yes hiding your cash on your office table is obvious, but if nobody knows it except you and your secretary, it's less risky, than if you were to tell it on Facebook, so that every burglar will have an eye on you. It does matter where you store it technically, but as long as it is a secret, you massively reduce the risk of theft.
How & Where to Store Money?
Well let's analyze each different scenario, I am going to list here a few popular forms, and we will look at their risks:
| Form | 356-D Volatility Risk | 365-D Supply Inflation | Risk of Theft | 365-D Return | Stability |
|---|---|---|---|---|---|
| USD Cash | 0.220% (USDX) | 8.588% (M1 supply) | Low | -8.368% (USDX-M1) | High |
| USD Savings Account | 0.220% (USDX) | 8.588% (M1 supply) | High (Bail-in + Civil Forfeiture) | -8.368% + 1.05% = -7.318% | High |
| USD Cash Deposit (1Y) | 0.220% (USDX) | 8.588% (M1 supply) | High (Bail-in + Civil Forfeiture) | -8.368% + 1.30% = -7.068% | High |
| USD S&P500 | 13.649% (USDX + SPY) | - | High (Bail-in + Civil Forfeiture) | +5.061% (USDX - M1 +SP500 return) | Medium |
| Gold | 15.237% | - | Medium (Civil Forfeiture) | +6.869% (Gold - USD Return) | High |
| Silver | 29.569% | - | Medium (Civil Forfeiture) | +21.201% (Silver - USD Return) | High |
| Bitcoin | 150.884% | - | Low (Hackers) | +142.52% (BTC - USD Return) | Medium |
*TAXES & FEES NOT INCLUDED
The data spans from 2015 Sept to 2016 Sept to be in sync with the FED's M1 numbers. Yes I don't use CPI for inflation, I think it's BS., we use the M1 supply to measure inflation, because it really measures how much cash is injected into the circulation via paper + checking accounts. We base this analysis on the USD since it's the reserve currency, but you can calculate it for your local currency as well.
We always have to include the Forex returns - Inflation, to be able to see how much a currency produces or loses for our money. We can see that the US CPI numbers are bollocks, since they show a 1.5% inflation, while it is really >8.5% in reality.
So good luck saving money in a bank account, it's not just that you probably lose 7.318% of your wealth yearly, but you also expose your money to bail in risk, which could be anywhere from a 50% to 100% theft of your wealth.
The stock market gives some returns, but I think the risks still overweight the gains. Another crisis can come any time with big time crashes, so I would not put my money in stocks either.
Precious metals are Ok, but only if you store it in a safe place, and not hold paper metals (certificates), because those could be not be repaid. Gold certificates are insanely leveraged so your exchange will probably not have enough gold to deliver to everyone, so make sure you physically hold your metals.
And of course the best one is still ( * DRUM ROLLS * ):
BITCOIN
The good old Bitcoin, it's still the HOTTEST investment out there, with over 142% real return vs the USD, it is a no brainer that anyone with half a brain should hold some BTC on their portfolio (or even the majority of it). Unless you are stupid enough to hold your coins on scam exchanges (MTGOX) or exchanges that don't invest in their security (Bitfinex), you should be Ok.
Of course securing your BTC still takes knowledge, like not clicking on malware e-mail attachments, and so on, but it is usually easier to hide than a stash of gold bars, and you definitely wont get robbed "civil forfeited" if you carry Bitcoins in your trunk:
- http://www.huffingtonpost.com/2013/04/04/ton-gold-bullion-hidden-car-switzerland-border_n_3017140.html
- http://www.nytimes.com/1985/04/23/us/judge-gives-the-government-6-million-found-in-car-trunk.html
- http://www.zerohedge.com/news/2016-04-06/greeks-confiscate-largest-amount-gold-ever-smuggled
- https://en.wikipedia.org/wiki/Executive_Order_6102
So yes, Bitcoin will protect your wealth from thieves and hackers, if you have advanced security methods. And you might also earn a nice return on it, so why not store money in Bitcoin?
Disclaimer: The information provided on this page might be incorrect. I am not responsible if you lose money using the information on this page! This is not an investment advice, just my opinion and analysis for educational purposes.
Sources:
http://www.investing.com
http://us.deposits.org
https://fred.stlouisfed.org/series/M1SL#0