Wednesday, November 30, 2011

Its your money, or what do I do when the bank pays next to nothing

This is reprinted from my blog "ITS YOUR MONEY TODAY" and deals with the stupid returns we get from banks on our savings and how to combat that situation............Its about a year old but the situation just keeps gettting better.........

Whats in your Treasury ?

Top coin is the American Eagle with Walking Liberty on the front.                         The next coin, under the banknotes, or greenbacks, is the CANADIAN SILVER MAPLE.               Under that is the MEXICAN LIBERTAD.                  The American and Canadian's have been minted since '86 & '88 respectively.       All of the coins are ONE OZ. of  PURE SILVER, within everyone's economic reach.                                                                                                             
Well you could ask:  " Whats in your wallet ? ", like the Credit Card commercial, thank  you Capitol One.   I would more ask what do you keep in your family treasury?     Further, contemplate this:  " How much interest have you made since 1986 ?"   How do you provide for your family?   How do you hedge ?         Federal Reserve Notes?  Bank of Canada paper money?                                                                                            SAVING $10 per week since 1988 in the form of Silver coin.
Which would have yielded  your family greater wealth and protection, saving paper or saving silver? 

American Eagles and Canadian Maples
back  in the day 
sold for silver price + coin premium.               

Since you could own them legally as savings anchors for your family, you need realize that they now go for $22 & $23 respectively including the coin premium. Author Note, Today we speak of Maples and ASE's in the 35-40 dollar area, at local coin shops.

Since interest rates have tended downward during that time, to approach ZERO on any funds deposited while all your basic items purchased increased in price, as the value of your Federal Reserve Notes stayed static,  you would have been at a terrible economic disadvantage only holding banknotes, greenbacks or cash.

Saving for something, means, IMO,  you must save something of value to later have the value that  you were saving for.  If the price of what you were saving for, increased faster than your savings value, it would have been moving backwards economically despite the increasing numerical value of your savings.
SO THE REAL TRUTH is NOT "DONT LOSE MONEY", the REAL TRUTH is "DONT LOSE VALUE".

So if you had a $10K Certificate of Deposit, denominated in Canadian or US dollars in 1990, it would have bought you 2000 American Silver Eagles or Canadian Silver Maples.  Today, that same certificate would buy  you 444 of them, so the value of your savings would now be about 4.5 times greater than where you started.  Lets compare compound interest.   Had you had $10 K on deposit, over the same period @ an average of 5% compounded it would have returned 2.7 times its face.

In reality, you must ask  yourself what kind of risks you take, when offered "Deals" on savings.  I do think the real value is in thinking for yourself.

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