A Chicken is a Chicken
Money is just Money. Many people mistakenly believe that there is a set amount of cash in the world and in order to get some it has to be taken from someone else. A common analogy to this mistaken philosophy is a pie. There is one pie that represents all of the money and if you want a larger slice of pie (more money) then someone else must get a smaller slice (less money). This is simply not true.
Through the Federal Reserve Bank, in conjunction with the Department of the Treasury, the United States Mint, and Congress; more money is made all of the time.
Money no longer represents any type of physical commodity (such as gold). Money now represents people's desire to either have "it" or what "it" can buy. Since money only represents buying-power there is little need to worry about its security (there really is none; remember, it doesn't represent anything) but rather how to store it so that it can grow and you can have access to it.
Growth & Access: These are the two factors that you want to keep in mind regarding where to "stash-your-cash."
Growth:
Money has a price; it's called Interest. You can earn it or you can pay it. The choice is yours (here we focus on earning it.) By putting your money in a Bank, Credit Union, or Online Bank you are giving them permission to use your money for a price. Really, all you are trying to do here is diminish the negative impact of Inflation (the general rise in the cost of goods). You CANNOT save your way to Retirement!
Credit Unions and Online Banks generally PAY MORE for Savings Accounts and CHARGE LESS for Loans.
Banks typically PAY LESS for Savings Accounts and CHARGE MORE for Loans.
Access:
We generally favor Credit Unions and Online Banks over traditional Banks. However, Banks have their advantages (there are lots of them and many are international) and depending on your life-style you may need a Banks "size" in order to provide access to your money.
The Managing Your Cash section has ideas on how to Save money (reasonably short-term – extremely safe places to stash your cash.) All of these ideas are on the bottom level of the risk pyramid. Meaning they are all risk averse and most are insured up to a quarter of a million dollars.
Questions:
1. What does money represent?
2. Where are three places to "stash-your-cash?"
3. Of the three options which would you use and why?
Resources: