Tom answers your questions on the safest place for your cash today

Question: Tom, if I want to hold cash right now, what’s the safest place and way(s) to do so? I’m worried about having all my cash in banks…

Palm Beach Research Group Founder Tom Dyson’s Answer: I don’t trust my bank. I don’t trust the ATM machine. I don’t trust my money held in digital form. So, I’ve started to build cash balances. I’ve begun withdrawing cash—in packets—and I’m hiding them someplace safe.

Store your money in a fireproof safe on your property. If you’re planning to store a large amount of cash, say, more than $100K, I’d keep two safes—one big one and one small one.

Put the small safe somewhere really discreet, and put 95% of your cash in it. Then, put the big safe somewhere less discreet, and put 5% of your cash in there.

If you ever get burgled, the thieves will assume they’ve found your valuables in the big safe. They won’t keep looking for the small safe.

I rent my home, and I don’t have a safe. So, I do the next safest thing. I learned this in 2007 when I owned a lot of gold coins.

I fill PVC pipes with valuables, then I seal them. Then, I do a little “midnight gardening” and bury them somewhere safe.

(You can find PVC pipes in the plumbing aisle at hardware stores.)

This technique is as old as ownership. If you’re smart about this, no one will ever find your treasure. But make sure you tell one other person where you’ve hidden your loot, in case something happens to you.

  How can you protect yourself from a banking system rigged against “the little guy?”

Question: Tom, do you think traditional banking is stacked against/a bad deal for the regular guy today?

Tom’s Answer: The banks make enormous profits from your deposits. In return, they provide services: checking accounts, savings accounts, money transfers, online banking, ATM withdrawal, etc. And a little interest, I guess.

As long as you don’t hold too much money in the banking system, I’d say you’re doing okay. And avoid all fees like overdraft fees, check-bouncing fees, and ATM fees. Those things eat up any interest you get from your bank.

Now that I know about Income for Life (IFL)—our way to use whole life insurance as a special, tax-advantage savings and investment vehicle—I never keep a significant amount of money in the bank. I keep just enough to be able to pay my bills.

I put everything else in IFL. With IFL, I get my own “bank” (I can borrow the money I’ve put in at any time, no questions asked), and I get to profit from my money in a way regular depositors don’t.

I think the convenience factor of banking is going away, too. With things like Apple Pay and digital currency bitcoin, banks are becoming outmoded. In a few years, traditional bank branches probably won’t exist anymore.

And our kids will have no idea what checks or money orders are. They’ll never experience “going to the bank.”

So, people won’t have much incentive to keep their money in banks and get paid such little interest. More efficient banks will prosper—ones that pay more interest—as less efficient banks suffer.

The banking system itself is also an issue. It’s currently set up for inflation, credit expansion, volatility, and distortion.

I won’t get into the details, but it has to do with a structure called fractional reserve banking. This allows banks to lend out far more money than they take in deposits.

The best book I’ve ever read on this is Harry Browne’s Money Book—99% of Everything You Need to Know About Money and Its Effect Upon the Economy.

So the banking system’s bad for the regular guy, too. It’s another reason I put such a large amount of cash into my IFL policies. Mutual life insurance companies—the ones we use with IFL—can’t lend out more money than they take in. They don’t use leverage. This makes them far, far safer than banks.