Where Do You Save Your Money?
Rental Property Investor · Effingham, IL · Member since 2021 · 46 posts · 22 votes
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending. But it means they don't have enough "cash on hand" for the depositors. Most banks have less than 10% on hand so 90% is not available to return to depositors
A bail-in provides relief to a financial institution on the brink of failure by requiring the cancellation of debts owed to creditors and depositors. Bailouts help to prevent creditors from taking on losses while bail-ins mandate creditors & depositors take the losses.
The problem arises when there is a problem in the economy and you want or need your cash and the banks "close the window". That occurs as in the “bank runs” of previous recessions and depressions. Everyone wants their money Now! And you are stopped from getting your money. Yes, the FDIC insures up to $200,000 of your deposits but they don't guarantee to give you that money when you need it most. It is in their timing that they dole out what is rightfully yours.
The banking problem of 2008 was that the velocity of money stopped. No one had money to lend on the overnight exchange. If a bank like Chase can’t get money, you are surely not going to get your money. That’s when you want and need it most. That is when a fire sale on commodities is on since everyone is selling to get a hold of cash. You want availability of cash so you can buy things up cheaply.
Also, Banks have recently been granted the right to take and use your money in order to stay solvent. And you have no say in the matter.
I don't follow. You are saying, rather than putting cash in the bank, I should buy physical silver, baseball cards and artwork. How would that be more solvent than putting money in an FDIC insured bank account? If there is a run on the banks, I have trouble believing the baseball card and art collectable market will be much of a sellers market.
I had no trouble accessing my cash in my banks during the 2008 financial crisis. I guess it depends on what bank you are doing business with. I actually sold off some baseball cards a few years ago and the collectable market was brutal. I realize it has now recovered, but we are in an asset bubble right now. A friend recently sold a Mickey Mantle baseball card for over $50K at auction. It was mint and graded. He paid a few hundred for it back in the 1980's. Nice investment, however if the grading had come back one level lower, he said he would have gotten a couple thousand for it. I personally think the collectable market is way too risky. I do own silver, but not a significant portion of my wealth.
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
Why is fractional reserve banking a reason to not put money in a bank? I agree not to put money in the bank for this purpose, but I don't see FRB as one of the reasons why.
@Lieren Schuette
Brokerage account can supplement standard checking and savings accounts.
@Lieren Schuette
BlockFi, Gemini Exchange offer 8-9% interest on stable (pegged) crypto coins.
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending. But it means they don't have enough "cash on hand" for the depositors. Most banks have less than 10% on hand so 90% is not available to return to depositors
A bail-in provides relief to a financial institution on the brink of failure by requiring the cancellation of debts owed to creditors and depositors. Bailouts help to prevent creditors from taking on losses while bail-ins mandate creditors & depositors take the losses.
The problem arises when there is a problem in the economy and you want or need your cash and the banks "close the window". That occurs as in the “bank runs” of previous recessions and depressions. Everyone wants their money Now! And you are stopped from getting your money. Yes, the FDIC insures up to $200,000 of your deposits but they don't guarantee to give you that money when you need it most. It is in their timing that they dole out what is rightfully yours.
The banking problem of 2008 was that the velocity of money stopped. No one had money to lend on the overnight exchange. If a bank like Chase can’t get money, you are surely not going to get your money. That’s when you want and need it most. That is when a fire sale on commodities is on since everyone is selling to get a hold of cash. You want availability of cash so you can buy things up cheaply.
Also, Banks have recently been granted the right to take and use your money in order to stay solvent. And you have no say in the matter.
I know what FRB is. This doesn't answer my question.
@Lieren Schuette good question, but I think this question is over hyped in our investor minds.
When you run a ROI calculator for 2-5 years, presumably the length of time one is saving for RE from a W2, at risk free return rates, the return is largely immaterial to the principal, and the risk of capital preservation is substantially higher than the value of the interest received.
In my opinion, anywhere you are willing to save for your personal emergency fund is as good a place as any to save for your REI.
My 2 cents.
I agree on not putting large sums of money into banks at the current time, but I think $100,000 was the threshold for bail ins when they happened in Greece, so unless you need to save for a 25% down payment in a high cost area, I generally think the “lost return” from a saving vs investing decision is immaterial.
Good luck, and do what’s best for you.
Look, are you talking about small money like sub 100k and you just want an easy FDIC insured place to hold it short term?
Goldman offers an online, no hassle, no fee savings account. They'll wire your money anywhere you want with no fees when ever you want to move it, and if you work their referral system, it pays 1%, .5% otherwise.
No gimmicks, no hassles. Used them to hold small liquid money for years.
the goal is to park it safely until you are ready to use. if you are buying soon, put that downpayment in a savings account. dont worry about high yield right now.
these other post recommending illiquid or risky investments are not right. you may find yourself not able to persue the good real estate deal when you find it.
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending. But it means they don't have enough "cash on hand" for the depositors. Most banks have less than 10% on hand so 90% is not available to return to depositors
A bail-in provides relief to a financial institution on the brink of failure by requiring the cancellation of debts owed to creditors and depositors. Bailouts help to prevent creditors from taking on losses while bail-ins mandate creditors & depositors take the losses.
The problem arises when there is a problem in the economy and you want or need your cash and the banks "close the window". That occurs as in the “bank runs” of previous recessions and depressions. Everyone wants their money Now! And you are stopped from getting your money. Yes, the FDIC insures up to $200,000 of your deposits but they don't guarantee to give you that money when you need it most. It is in their timing that they dole out what is rightfully yours.
The banking problem of 2008 was that the velocity of money stopped. No one had money to lend on the overnight exchange. If a bank like Chase can’t get money, you are surely not going to get your money. That’s when you want and need it most. That is when a fire sale on commodities is on since everyone is selling to get a hold of cash. You want availability of cash so you can buy things up cheaply.
Also, Banks have recently been granted the right to take and use your money in order to stay solvent. And you have no say in the matter.
I don't follow. You are saying, rather than putting cash in the bank, I should buy physical silver, baseball cards and artwork. How would that be more solvent than putting money in an FDIC insured bank account? If there is a run on the banks, I have trouble believing the baseball card and art collectable market will be much of a sellers market.
I had no trouble accessing my cash in my banks during the 2008 financial crisis. I guess it depends on what bank you are doing business with. I actually sold off some baseball cards a few years ago and the collectable market was brutal. I realize it has now recovered, but we are in an asset bubble right now. A friend recently sold a Mickey Mantle baseball card for over $50K at auction. It was mint and graded. He paid a few hundred for it back in the 1980's. Nice investment, however if the grading had come back one level lower, he said he would have gotten a couple thousand for it. I personally think the collectable market is way too risky. I do own silver, but not a significant portion of my wealth.
I think this is a difficult question just because of the timing and where the market/economy is currently.
-Cash in the bank. Yes, this are low risk, but with inflation surging you are loosing buying power on your cash.
-CD's- Low risk, but the interest rates are so low it is not even worth the effort.
-Bonds- Low risk, but the interest rates are so low it is not even worth the effort.
-ETF's- In more normal times I usually put a substantial amount in VOO ETF or SPY as suggested by Warren Buffett. However the S and P 500 is incredibly overvalued right now according to the Buffet indicator.
-Individual Stocks- You can still find individual stocks that are not overvalued, but it is hard to pick individual stocks.
-Bitcoin- I do not know enough about this investment to have an opinion.
-Mutual Funds- Fees associated with mutual funds do not legally have to disclosed to clients. So I stay away from these.
I have to say that I recommend doing your due diligence and research all of these and form your own opinion.
I have personally recently invested cash in BRK.B Berkshire Hathaway. The P/E ratio is the lowest it has been in over a decade which indicates it is undervalued. I feel like the BRK.B has a significant moat as well as hedged by an array of great companies in different sectors. Berkshire just did 3 massive stock buybacks in less than 2 years with its retained earnings. Not to mention it is run by the best investor of all time, Warren Buffet. I plan on holding this stock for longer than a year so I am paying long term capital gains instead of short term capital gains. Then you get to keep more of your money.
Another option I have invested in recently is a Vanguard Global ETF the expense ratio is .08% with an average annual return since inception of almost 8%.
Please read a bunch of books about the greats including Warren Buffett, Peter Lynch, Joel Greenblatt, Jack Bogle, Bruce Greenwald.
@Account Closed
Great information. I am in the same situation where I'm saving money. My initial thoughts were to simply leave it in my bank being I will be using it for a property, but it makes sense to continue to have the money work for you while saving as well. Good thing I read this!!!
@Account Closed
Great information. I am in the same situation where I'm saving money. My initial thoughts were to simply leave it in my bank being I will be using it for a property, but it makes sense to continue to have the money work for you while saving as well. Good thing I read this!!!
Mainly needs to to liquid, safe, and not fluctuating around in value so when the time comes, it's dependable and accessible.
Look, are you talking about small money like sub 100k and you just want an easy FDIC insured place to hold it short term?
Goldman offers an online, no hassle, no fee savings account. They'll wire your money anywhere you want with no fees when ever you want to move it, and if you work their referral system, it pays 1%, .5% otherwise.
No gimmicks, no hassles. Used them to hold small liquid money for years.
Thank you for the information! Yes, I am talking about a smaller amount of money. I want to invest in single family homes, so I am saving for at least a 25% down payment + closing costs + rehab. Marcus is where I currently keep my emergency fund, and where I was planning on keeping my real estate savings unless I heard of a better option. I feel validated now!
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
This is interesting. I have considered silver in the past, but have not looked into these other avenues. I appreciate your reply!
@Lieren Schuette
Brokerage account can supplement standard checking and savings accounts.
Do you recommend a brokerage account from a specific place? Charles Schwab, Fidelity, etc.
@Lieren Schuette
BlockFi, Gemini Exchange offer 8-9% interest on stable (pegged) crypto coins.
Crypto is something I need to do my due diligence on. I have heard positive things about this type of investment, but don't feel comfortable putting my money somewhere I don't fully understand. Thank you for the suggestion!
@Lieren Schuette good question, but I think this question is over hyped in our investor minds.
When you run a ROI calculator for 2-5 years, presumably the length of time one is saving for RE from a W2, at risk free return rates, the return is largely immaterial to the principal, and the risk of capital preservation is substantially higher than the value of the interest received.
In my opinion, anywhere you are willing to save for your personal emergency fund is as good a place as any to save for your REI.
My 2 cents.
I agree on not putting large sums of money into banks at the current time, but I think $100,000 was the threshold for bail ins when they happened in Greece, so unless you need to save for a 25% down payment in a high cost area, I generally think the “lost return” from a saving vs investing decision is immaterial.
Good luck, and do what’s best for you.
Thank you for your response! This is what I was hoping to hear.
the goal is to park it safely until you are ready to use. if you are buying soon, put that downpayment in a savings account. dont worry about high yield right now.
these other post recommending illiquid or risky investments are not right. you may find yourself not able to persue the good real estate deal when you find it.
I agree. Thank you for your response!
@Lieren Schuette in assets :)
I know what FRB is. This doesn't answer my question.
No problem, I guess you didn't see the second part of the answer: It's called Not having ACCESSS to your money when you really need it.
"The problem arises when there is a problem in the economy and you want or need your cash and the banks "close the window". That occurs as in the “bank runs” of previous recessions and depressions. Everyone wants their money Now! And you are stopped from getting your money. Yes, the FDIC insures up to $200,000 of your deposits but they don't guarantee to give you that money when you need it most. It is in their timing that they dole out what is rightfully yours.
The banking problem of 2008 was that the velocity of money stopped. No one had money to lend on the overnight exchange. If a bank like Chase can’t get money, you are surely not going to get your money. That’s when you want and need it most. That is when a fire sale on commodities is on since everyone is selling to get a hold of cash. You want availability of cash so you can buy things up cheaply.
Also, Banks have recently been granted the right to take and use your money in order to stay solvent. And you have no say in the matter."
Hello everyone!
I am a new investor in the process of building my real estate savings, and I'd love to hear where everyone is keeping their own money while waiting to invest it into real estate. I want something with a high yield so I can earn as much as possible on my money. I know it's difficult to keep up with inflation right now, but my regular savings account just isn't doing enough for my money.
Thanks in advance!
If I was just starting out I would never put my money in a bank, especially with inflation whipping up. There are other reasons a bank is a bad place for your money. It's called " fractional reserve banking" and "bail ins" but I won't go into detail on those here.
For practical options, you could buy something of value that will go up as inflation goes up. Physical Silver - it's at $22 an ounce (don't buy paper silver - not ETFs), yes to collectibles, yes to things that can be bought wholesale, can be preserved, are "dense" in value and don't take up much space. These might include baseball cards, autographed art work etc.
I know it sounds odd, but that type of thing is the only hedge against inflation when you can't afford to buy land, houses, gold.
Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending. But it means they don't have enough "cash on hand" for the depositors. Most banks have less than 10% on hand so 90% is not available to return to depositors
A bail-in provides relief to a financial institution on the brink of failure by requiring the cancellation of debts owed to creditors and depositors. Bailouts help to prevent creditors from taking on losses while bail-ins mandate creditors & depositors take the losses.
The problem arises when there is a problem in the economy and you want or need your cash and the banks "close the window". That occurs as in the “bank runs” of previous recessions and depressions. Everyone wants their money Now! And you are stopped from getting your money. Yes, the FDIC insures up to $200,000 of your deposits but they don't guarantee to give you that money when you need it most. It is in their timing that they dole out what is rightfully yours.
The banking problem of 2008 was that the velocity of money stopped. No one had money to lend on the overnight exchange. If a bank like Chase can’t get money, you are surely not going to get your money. That’s when you want and need it most. That is when a fire sale on commodities is on since everyone is selling to get a hold of cash. You want availability of cash so you can buy things up cheaply.
Also, Banks have recently been granted the right to take and use your money in order to stay solvent. And you have no say in the matter.
I don't follow. You are saying, rather than putting cash in the bank, I should buy physical silver, baseball cards and artwork. How would that be more solvent than putting money in an FDIC insured bank account? If there is a run on the banks, I have trouble believing the baseball card and art collectable market will be much of a sellers market.
I had no trouble accessing my cash in my banks during the 2008 financial crisis. I guess it depends on what bank you are doing business with. I actually sold off some baseball cards a few years ago and the collectable market was brutal. I realize it has now recovered, but we are in an asset bubble right now. A friend recently sold a Mickey Mantle baseball card for over $50K at auction. It was mint and graded. He paid a few hundred for it back in the 1980's. Nice investment, however if the grading had come back one level lower, he said he would have gotten a couple thousand for it. I personally think the collectable market is way too risky. I do own silver, but not a significant portion of my wealth.
You and I are in a very different position than someone just starting out. The answer was for someone who doesn't yet have the means to invest in a property. Think of it from their perspective.
What the OP is wanting is ideas for a "safe" way to grow their money faster than the coming inflation. That is impossible without real estate, gold, platinum, or other more expensive options. Brokerage accounts won't come close. When using the CPI of the 1980's compared to today we are actually seeing about 15% inflation. It was adjusted to remove some elements that are embarrassing to the Fed and to the Administration. They claim 6.2% which isn't even close to reality.
So we are left with Collectibles and Silver which can be affordable for the average person wanting to preserve some wealth without losing out to the serious inflation that is coming. Crypto & stocks & commodities are way too risky and volitile. Bonds are a non-starter.
There is a market for selling silver and collectibles just like any other item.
Right now silver is at an 80:1 ratio with gold and for the whole of the 20th century, the average gold-silver ratio was 47:1. That basically means silver is a "buy" has a lot of upside potential. Silver could double in value and that wouldn't surprise the markets.
Yes I own silver, but no I don't run a silver selling service of any kind. It's Just a personal preference that makes sense.
Depends on how long to save to your goal. 6 months = put it in a regular checking/savings. 6 years….you can be a bit more aggressive such as stocks.
my crypto account can lose 15-20% in a day. I check it daily and it’s a roller coaster and I miss half the roller coaster by not checking it hourly.
Silver has a base price/oz. You’re likely going to end up buying it above that price and selling it below that price so silver has to go up in value for you to break even. Plus if you’re buying it online typical shipping costs can add to your price/oz.
@Lieren Schuette
Brokerage account can supplement standard checking and savings accounts.
Do you recommend a brokerage account from a specific place? Charles Schwab, Fidelity, etc.
I don’t have a horse in the race for which brokerage to use. The big houses are all pretty comparable in offerings but fidelity and vanguard had the best index funds with low expense ratios last time I was looking into it.
A savings account, CDs, bonds, and the stock market are all viable options. Liquidity isn't as much of a concern as physical items (e.g. silver or gold bars, collectibles, etc.), even if you need for forfeit a few months worth of interest or sacrifice a lower rate for a shorter term. If you look into the stock market, perform due diligence. If you do look to invest in mutual funds, consider reading about John Bogle (see Bogleheads) and Vanguard.