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?

Precious Metals
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.

Uncle Sam
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.

Related Articles
  1. Savings

    How Americans Can Open a Bank Account In Thailand

    Have your paperwork in order and be sure to shop around.
  2. Insurance

    How the Federal Deposit Insurance Corporation (FDIC) Works

    Learn more about the Federal Deposit Insurance Corporation (FDIC) and what happens to your deposits over $250,000 if a member bank fails.
  3. Economics

    Federal Deposit Insurance Corporation (FDIC)

    The Federal Deposit Insurance Corporation (FDIC) insures deposits in banks and thrift institutions.
  4. Wealth Management

    How To Open And Access An Offshore Bank Account

    Opening an offshore bank account does not require a high level of financial sophistication. It’s a lot like opening an account at your neighborhood bank.
  5. Mutual Funds & ETFs

    Are Vanguard ETFs a safe investment?

    Learn about safe ETF funds available from Vanguard. Learn why bond funds have low volatility, but still do have certain risks for investors.
  6. Credit & Loans

    Banks Can Notarize Your Documents for Free

    Learn how you can obtain the services of a notary public for free at your local bank branch, along with other places where you can have a document notarized.
  7. Savings

    4 Ways to Ditch Bank Overdraft Fees

    At $35 a pop, overdraft fees can mount up quickly. Here are 4 different strategies for avoiding them.
  8. Investing

    Would an Infrastructure Bank Help America's Faltering Roads and Bridges

    Politicians are now calling for a National Infrastructure Bank to create jobs. But would a bank provide adequate funding to fix our roads and bridges?
  9. Economics

    What is the Cost of Funds?

    Cost of funds is the interest cost financial institutions pay to use the funds they deploy in their business.
  10. Investing

    What to Make of a Zero Percent Yield

    Interest rates hit a new bottom earlier this month when three-month Treasury bills (T-bills) were sold at a zero percent yield for the first time ever.
  1. Are 401ks FDIC insured?

    The Federal Deposit Insurance Corporation (FDIC) works as a protector for customers when banks and financial institutions ... Read Full Answer >>
  2. Does the FDIC cover identity theft?

    When a third party gains access to your bank account and conducts transactions without your consent, the FDIC does not have ... Read Full Answer >>
  3. Does the FDIC cover credit unions?

    The Federal Deposit Insurance Corporation (FDIC) does not cover credit unions. The FDIC only insures deposits in banks and ... Read Full Answer >>
  4. Does the FDIC cover business accounts?

    Bank deposits owned by corporations, partnerships, limited liability companies (LLCs), and unincorporated associations, including ... Read Full Answer >>
  5. How long does a stock account have to be dormant before it can be escheated?

    A stock account is typically considered dormant and eligible for escheatment after five years of inactivity; however, this ... Read Full Answer >>
  6. Are variable annuities FDIC insured?

    Variable annuities are not insured by the Federal Deposit Insurance Corporation (FDIC), which regulates only bank products. ... Read Full Answer >>

You May Also Like

Trading Center