The website for the Federal Deposit Insurance Corporation states that "no depositor has ever lost a penny of insured deposits since the FDIC was created in 1933". This covers $250,000 per account and applies to both the initial principal and any interest earned. Still, mistrust toward banks and financial institutions in general has caused a number of more fearful individuals to seek alternative avenues to park their capital. Others may simply be avoiding the banks on principal, given the banks' roles in contributing to the reckless lending that led up to the bursting of the housing bubble and the Great Recession. Fortunately, if you fall under this skeptical category, below are five options on where to keep your money if you no longer trust the banks.
SEE: Is The Housing Bubble Over?
Under a doomsday scenario where financial markets cease to function, holding physical gold, silver and other metals such as platinum or copper would definitely hold some value. The realities of having to return to a barter system with physical goods are likely minimal, but it may make sense to hold a certain percentage of your assets in this form. For the peace of mind, there is also the potential for them to appreciate in value.
It's good to learn about the Treasury and the Federal Reserve, especially since they would be more than happy to take your funds and issue a security to you in return. A U.S. government security still qualifies in most textbooks as a risk-free security, or as close as one can get to holding an asset that has minimal risk of not being returned on maturity. The only problem is that many individuals and institutions already have this idea and have bid interest rates to minuscule levels. A 10-Year Treasury Note's yield is currently around 1.50% to qualify as one of the lowest ever.
Other Real Assets
Metals form the basis for a currency and have been used in coins historically as a way to literally prove their worth. Other physical assets may have less certain values, but are certainly also something that can be touched and seen, as opposed to a bank account statement that could be hard to collect on if the respective financial institution ceases to exist. These hard assets include fine art, cars, watches and other jewelry, and just about anything that qualifies as a collectible.
SEE: 6 Major Collectibles Payoffs
Under Your Mattress
Although there are always new rules for safe investing, and hiding your cash and assets under your mattress has become cliché, it is still one of the most verifiable ways to ensure it can be found and used if necessary. Of course, the need to be creative on where to hide your assets (such as in a safe deposit box) is important, as is keeping a mental or physical record of where they are located. Again, this method qualifies as a doomsday scenario and should likely not be relied on for large amounts, but the peace of mind can again be helpful, especially in times of a short-term liquidity crunch.
In a Business
This category is also general, but buying a business can ensure a return on your investment, provided the business generates a profit. Buying a farm and owning farmland qualifies as it can produce a return. Plus, it fits a paranoid mindset as the land can produce food in the off case of a global calamity or melt down of the global financial system.
SEE: How To Calculate Your Investment Return
The Bottom Line
The financial industry is looked upon with suspicion these days. Some of the scorn is warranted, especially where greed was excessive or innocent homeowners were forced to move out. There is also always the risk that technology fails and bank account information becomes unverifiable. For the especially wary, the above alternatives to a traditional bank may make sense for at least a percentage of your net worth.