What Do I Do With My Money?

Well, that seems to be the question everyone is asking. What do I do with the money I managed to save from the stock market crash?

Bonds, Treasuries, gold, commodities, silver, money market, CDs, mattress, safe deposit box, annuities? When you get down to it, how many safe places are there? Are there any?

This is really two different questions:  Where can I put my money so it’s safe?  or Where can I put my money so it will make money? If this past few months has you shell-shocked completely, you want the answer to the first question.  If you’re still in the game, the second.

Here are couple of points to ponder whichever side you are on.

The new FDIC limit of $250,000, insuring all your bank accounts,  is for one year only. Plus, in bailing out Indymac Bank, the FDIC used up half of its deposits. That is why other banks, such as Washington Mutual, are sold to other banks so as not to use up the rest of the fund.

How about the old stand-by- Savings Bonds?  Now even that is severely limited. In a nearly unprecedented move earlier in the year, the United States Treasury set major restrictions on the purchase of Treasury Bonds allowing only $5,000 of any one type during the year and making paper bonds more difficult to purchase than ever before.

Investment banks are now merged with retail banks. In eliminating the Depression-era separation of the two entities, the idea was that the massive debt of the investment banks in hedge funds and exotic instruments would be “offset” by the deposits of the regular banks. That is, your deposits in your bank would prop up the investment banks’ follies with “the full faith and credit of the U.S. Government.”

The FDIC can’t bail out everybody, so in the event of more bad news only one more big bank can be bailed out. The rest of us? Oh, we’d get a percentage of our deposits or the government could resort to just printing more money and running the risk of hyperinflation.

These truly are shaky times.  Yes, the stock market came charging back. Too late for me–I need to keep what money I managed to salvage and I won’t be giving it back to the madness that is Wall Street. I don’t really get all the other “safety nets”. How safe are they really? Gold has shot up to amazing heights, but, like Wall Steet, it can just as easily come tumbling down. The others, too, depend in one way or another on the “market”. Thanks, but no thanks.

To me, the only asset worth investing in today is a hard asset, like real estate. Yes, real estate values are declining in many areas. Here’s what I like about real estate. Real estate  provides a way for the individual investor to control his own destiny. Buy a fixer and put some sweat equity into it. Sell it at a profit or rent it for cash flow. Buy a multi-family home and rent it out, again providing cash flow. People have to live somewhere either renting or owning.

Here’s my advice: Take your dough and put it into a self-directed IRA and then invest it in real estate.