Stop Letting Your Cash Sit in the Bank: 6 Safer and More Profitable Assets
Banks often claim that your money grows in savings accounts, but the reality is different. While your account balance may increase due to interest, inflation erodes your money’s real value. With rising inflation outpacing bank interest, keeping cash in the bank actually reduces your wealth over time. Here are six assets that can protect and grow your money effectively:
1. Precious Metals – Gold, Silver, and Platinum
Gold and other precious metals have long been a reliable store of value. Governments keep printing money, which can reduce the purchasing power of cash. In contrast, metals like gold, silver, and platinum are scarce and maintain value even during high inflation. For example, gold has increased from $400 per ounce in the 1950s to over $2,000 in 2023, and projections suggest it could reach $10,000 by 2032. If holding physical gold is not convenient, gold ETFs offer a cost-effective alternative to gain exposure without storage concerns.
2. Industrial Commodities – Raw Materials
Commodities such as silver, copper, cobalt, and nickel are essential in industries like electronics, energy, and manufacturing. Their scarcity and industrial demand make them valuable investments. For instance, cobalt prices doubled from $20,000 per ton in 2012 to $40,000 in 2022 due to its use in electric vehicle batteries. While buying physical raw materials may be difficult, investing through mining company stocks, commodities-focused mutual funds, or derivatives like futures and options is a practical approach.
3. Safe-Haven Currencies
In today’s world of fiat currencies, geopolitical stability matters. The Swiss franc, British pound, and Chinese yuan are considered safe-haven assets. For example, during financial crises or geopolitical turmoil, investors flock to Swiss francs, often increasing their wealth. While opening Swiss bank accounts may be difficult for most, currency ETFs and forex platforms allow small investors to gain currency exposure.
4. Sovereign-Backed Securities
Government-backed assets are considered secure because they carry the full faith and credit of a stable government. Examples include U.S. Treasury bills, notes, and bonds. These investments usually outperform bank interest while remaining low-risk. Only governments with strong credit ratings should be considered for sovereign exposure, as weaker governments can default, as seen during Greece’s 2009 debt crisis.
5. Value Stocks and Dividend Mutual Funds
Stocks can offer higher returns than bank deposits. Value stocks—like companies producing industrial metals—are less risky than growth stocks and offer steady price appreciation and dividends. Researching individual stocks can be time-consuming, so dividend-focused mutual funds, such as Vanguard High Dividend Yield Index Fund, provide a convenient option for retail investors seeking stable returns.
6. Real Estate and Land
Land is a timeless asset that does not depreciate and is always in demand for homes, offices, factories, and agriculture. Real estate properties similarly provide inflation protection and steady returns. Even small investors can gain exposure through REITs (Real Estate Investment Trusts) without owning physical property. Popular options include healthcare-focused REITs like Ventas Inc., or investing in rental properties that generate steady income.
7. Collectibles and Rare Items
Collectibles such as vintage cars, rare art, luxury handbags, limited-edition watches, and first-edition books can appreciate over time. Unlike regular items that lose value, unique collectibles often become more valuable. For example, a 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupe sold for €135 million in 2022, and Leonardo da Vinci’s Salvator Mundi fetched $450 million in 2017. While high-ticket collectibles may be out of reach, platforms like Masterworks and Convey allow partial ownership or smaller-scale investments in rare items.
Conclusion
Instead of letting inflation erode your cash in the bank, consider diversifying into precious metals, industrial commodities, strong currencies, sovereign-backed securities, value stocks, real estate, or collectibles. Each of these assets offers a way to preserve and grow wealth over time, giving you financial security and potential intergenerational wealth.