| A lot of people often ask me: What is the safest | | | | faster than you can blink. Any of these |
| place to invest money? This question is problematic | | | | uncontrollables make real estate easily not the safest |
| because there is no definitive answer. Everyone | | | | place to invest money. |
| wants a safe place to invest money, but in reality no | | | | Then what about CDs? Certificates of Deposit are |
| such place exists. I'll explain. | | | | usually thought of as one of the safest places to |
| To begin, what are the most common ways you can | | | | invest money. People usually think CDs are safe |
| invest? Before I get to the safest places to invest | | | | because they are really just like giving a loan to a |
| money, let's take a look at the possibilities. Usually | | | | bank. And since we usually think of banks as being |
| people suggest the stock market, real estate, CDs, | | | | very stable, lending them money would be as well. |
| savings accounts, and the mattress as the safest | | | | However, the truth is that banks are just like |
| places to invest money. But are these options really | | | | businesses. Just like businesses, banks can go |
| safe? | | | | bankrupt and swallow with them all the money they |
| I'll start with the stock market. The stock market is | | | | had in their possession. What this means is that if a |
| a roller coaster of possibilities. Why the stock market | | | | bank were to collapse while you have your money |
| is not be the safest place to invest money is that | | | | buried in a CD, you could lose it all, even the 3% ROI. |
| the market is nothing more than a place to buy | | | | One good thing about CDs, though, is that they can |
| pieces of paper which can represent anything from | | | | be insured. Insurance makes CDs about the safest |
| physical food products to foreign currency to | | | | place to invest money. But there is still more to read. |
| company shares. Whatever those pieces of paper | | | | Let's look at savings accounts next. Savings accounts |
| represent can be impacted by incidents that will | | | | are a lot like CDs because they are basically just like |
| lower or dissolve their value. If a company goes | | | | lending to a bank with a promise that you will not |
| bankrupt, all it's shares drop in value to nothing. If | | | | lower your account below a certain level. But, again, |
| you bought 'shares' of potatoes right before a hidden | | | | ff the bank dissolves, so does your cash. The main |
| stash of billions of potatoes were discovered, the | | | | reason a savings account can be considered safer is |
| inventory would sky rocket and the demand | | | | because the money is more liquid. |
| plummet, which in turn would devalue your 'shares' | | | | Finally, we come to keeping your money under the |
| drastically. And so on. Many of the risks are usually | | | | mattress. The problem with this is that you're |
| rather small and can vary depending on the market | | | | susceptible to theft, fire, or more. But the real |
| type and investment. The point is that the market is | | | | problem here is actually inflation. Inflation slowly eats |
| probably not the safest place to invest money since | | | | away your savings. If inflation averages 3% annually, |
| it will ALWAYS suffer the risk of dropping the value | | | | the buying power of your money will reduce by 3% |
| of your investment because of some potentially | | | | every year. This means that in 33 years your cash |
| unforeseen situation. | | | | will be worth nothing. |
| So how about real estate? Real estate happens to | | | | So what does all of this mean? There is no safest |
| be my own personal favorite. The positive potential | | | | place to invest money. Everything you can invest in |
| of real estate compared to it's risk is phenomenal. | | | | carries with it a unique risk. How risky an investment |
| But the problem is whether or not real estate the | | | | is is something only you can measure for yourself. |
| safest place to invest money. No, of course it's not. | | | | would watching your cash erode at 3% a year every |
| Why? Real estate is unpredictable and full of similar | | | | year riskier than letting a financial institution borrow |
| uncontrollable risks. It is possible to buy a house and | | | | from you? Is natural disaster too frightening to risk |
| then discover afterward that it was built on a toxic | | | | investing in real estate and watching your money |
| dump site and watch are left to watch as the | | | | double every 5 years? These are questions that only |
| property value drops to almost nothing right before | | | | you can answer for yourself. |
| your very eyes. The property could also suffer | | | | So what is the safest place to invest money? That |
| irreparable fire damage or collapse after an | | | | question is something you will have to answer. And |
| earthquake. What if a drug dealer moves in and turns | | | | so, I ask YOU, what IS the safest place to invest |
| your rental property into a meth house? Any one of | | | | money, for YOU? |
| these scenarios could zero out your investment | | | | |