"Don't Keep Your Cash In The Bank": 6 Assets That Are Better & Safer Than Cash

Summary

The video challenges the idea that keeping money in banks helps it grow, arguing that inflation erodes its value. It recommends six assets for building intergenerational wealth: precious metals like gold and silver, industrial commodities, safe-haven currencies, government-backed securities, value stocks, and real estate. It also highlights the potential of collectibles such as vintage cars and rare art. These assets, it suggests, offer better returns and protection against inflation than cash, helping individuals preserve and grow wealth over time.

Takeaways

• 💰 Cash in bank accounts loses value over time due to inflation, even if the nominal amount grows.
• 🏅 Precious metals like gold, silver, and platinum are valuable assets because they can't be easily created and tend to increase in value during inflation.
• 📈 Industrial commodities such as silver, cobalt, and copper are highly valuable due to their growing demand in industries like electronics and electric vehicles.
• 🏦 Safe haven currencies like the Swiss franc offer stability during economic turmoil and geopolitical instability, making them valuable investments.
• 💸 Government securities or 'sovereign guarantees' are considered safe because governments are the least likely to default, offering a stable investment option.
• 📊 Value stocks and mutual funds are a low-risk way to earn higher returns compared to holding cash, offering dividends and steady price appreciation.
• 🏡 Real estate, particularly land, is a scarce and valuable resource that tends to appreciate over time, acting as a strong inflation hedge.
• 🏢 Real estate investment trusts (REITs) allow investors to gain real estate exposure without having to buy properties directly, offering a way to earn from real estate investments.
• 🖼️ Collectibles such as vintage cars, rare art, and luxury items can appreciate significantly in value over time, especially when they are scarce or unique.
• 📚 Online platforms now allow fractional ownership of collectibles, making it easier for average investors to gain exposure to high-value items.

Q & A

Why is keeping cash in the bank considered to erode wealth over time?

Keeping cash in the bank erodes wealth because the interest rates offered by banks often lag behind inflation. While your money grows in number due to interest, its real value declines as inflation increases the cost of goods and services, meaning you can buy less with the same amount of money over time.

What is the primary reason financial experts recommend investing in precious metals like gold, silver, and platinum?

Precious metals like gold, silver, and platinum are recommended because they are scarce, valuable, and cannot be easily created or replicated. Unlike fiat currencies that can lose value due to inflation and excessive money printing, precious metals tend to retain or increase in value over time, making them a reliable store of wealth.

How have gold prices changed from the 1950s to 2023, and what is the forecast for the future?

In the 1950s, an ounce of gold could be purchased for $400. By 2023, that same ounce is priced above $2,000. According to Prime XBT's forecast, the price of gold is expected to rise to $10,000 by 2032, potentially increasing fivefold in about 10 years.

How can someone invest in gold without buying physical gold?

Investors can gain exposure to gold without physically buying it by investing in gold ETFs (Exchange-Traded Funds). Gold ETFs track the price movements of gold, allowing individuals to invest in the commodity without dealing with storage or physical ownership.

What role do industrial commodities like silver, cobalt, and nickel play in investment portfolios?

Industrial commodities like silver, cobalt, and nickel are in high demand for their utility in various industries, such as electronics, medical equipment, and electric vehicle batteries. Investing in these commodities or related companies can provide significant returns as industrial demand rises, making them a valuable addition to a portfolio.

Why is the Swiss franc considered a 'safe haven' currency?

The Swiss franc is considered a 'safe haven' currency because of Switzerland's stable geopolitical environment and strong economy. In times of global instability, such as during financial crises, investors often move their wealth into Swiss francs to protect it from currency depreciation, boosting the franc's value.

What does it mean when a dollar note states 'this note is legal tender for all debts public and private'?

This phrase indicates that the U.S. dollar is recognized by law as an acceptable form of payment for all debts. Since 1971, the dollar is no longer backed by gold but by the full faith and credit of the U.S. government, which ensures its use as a medium of exchange.

How do government securities (G-secs) help protect wealth, and what are the risks involved?

Government securities (G-secs) are considered safe investments as they are backed by the government’s ability to repay its debts, offering stability in uncertain economic times. However, the strength of the issuing government is key—weak or unstable governments, like Greece during its 2009 debt crisis, can pose risks if they default on their obligations.

What is the difference between value stocks and growth stocks?

Value stocks represent companies with stable, established demand, offering steady returns and dividends. Growth stocks, often from the technology sector, are riskier as they involve companies working on innovative ideas or technologies that may fail. Investors often choose value stocks for stability and growth stocks for higher potential returns.

How can small investors gain exposure to real estate without owning property?

Small investors can invest in real estate through REITs (Real Estate Investment Trusts), which are mutual fund-like structures for real estate. REITs allow investors to buy shares of income-generating properties, such as commercial spaces or healthcare facilities, without the need to purchase or manage physical properties.