Protecting Your Money

In America now we are experiencing a failing economy. The worst part of our bad economy is the failure of the banks and other financial institutions. Since the fall of last year, banks both great and small have been failing. Investors in the stock market and bank depositors have been losing money that they have been working so hard to accumulate. Many people are worried about how they can protect their money.

Although protecting ones money seems useless and impossible, there are some ways a person can secure his or her assets.

Liquid Low Risk Bank Securities
When a bank fails, the depositors are only guaranteed up to $100,000 of their deposits. This is very unfortunate for a person who has $1,000,000 in the bank. All he or she would receive is $100,000 and loose $900,000.

So if a person has less than $100,000 in savings he or she should let it remain in the bank. If a person has less than $100,000 in marketable securities, such as stocks and bond, he/she should cash in the investments and put the money in the bank. The money would be safe.

Banks offer low risk liquid securities, such as CDs and money market accounts. The interest paid on such accounts is a bit higher than the interest on a regular checking or savings account.

If a person's liquid assets are more than $100,000 but less than $200,000, place the difference or half the amount in a different bank. Or take the amount over the $100,000 and invest it in U.S. Treasury Bonds.

Income Property
If a person has a substantially large amount of liquid assets and Financial investments, the person should convert the investments to cash and strongly consider investing in residential income property. Regardless of how bad the economy gets people will always need housing. When the economy slows down people will rent instead of purchase homes.

Many national developers, who own large apartment complexes with 100 or more units, suffer great loses from the housing crisis. They have to sell off properties or have had their properties foreclosed. People wanting to invest in large apartment complexes can come together in a group and purchase such a property together. They can share in the income and costs.

The best type of rental property to purchase are trailers and manufactured homes, duplexes, and houses with two to three bedrooms. If one chooses to build rental properties, invest in the construction of duplexes.

Who To Rent To
Sometimes landlords thumb their noses at low income renters who receive government rent assistance. However, during a poor economy renters who receive government assistance can make the best tenants. Renting to people on rent assistance guarantees rent payments. The government pays a part of the rent and the renter pays an amount that he/she can afford.

Also a landlord can inquire to the state and federal government about special housing programs for senior. Under such programs the government will pay a tenants rent in full if the landlord dedicates his/her property for senior renters only.

A landlord can also inquire to an accountant about IRS Section 42. This is a special income tax credit given to landlords who agree to rent to low income people and keep the rent below market price by a certain percentage.

Invest In Government Securities
Government securities are a good diversification investment option. Government securities are safer than marketable securities. The principal and interest earned are guaranteed to be paid, however, the rate of return is lower than the interest rate on marketable securities. There are various types of government securities.

Treasury Notes
Treasury notes are a fixed rate of interest every six months until maturity. They are issued in terms of 2, 3, 5, and 10 years. At the end of the term a person will receive the principle and final interest payment.

Treasury Inflation Protected Securities (TIPS)
TIPS provide protection against inflation. They increase with inflation and decrease with deflation, as measured by the Consumer Price Index. When TIPS mature you are paid the adjusted principal or original principal whichever is greater. They are issued in terms of 5, 10, and 20 years.

Treasury Bond
Treasury Bonds pay a fixed interest rate every six months until maturity. They are issued on a 30 year term.

EE/E Saving Bonds
These are a safe low risk savings that pay interest based on the current market rates for up to 30 years. They earn a fixed interest rate, which accrues and is added to the bond monthly. The interest is paid when the bond is cashed in. The paper bonds are sold half of the denomination face value. The paper bond denomination values are $50, $75, $100, $200, $500, $1000, $5000, $10,000.

Treasury securities are an excellent way to finance education and supplement retirement income. If a person has a substantial amount of cash and does not feel comfortable in investing in the stock market, consider treasury securities.

Safe
The good old fashion safe is another place to stash hard earned money. One should have a safe install in a secret discrete locate at home, such as in a room or closet. Most people install safes in their dens or bedroom. However, I suggest installing a secret safe in the bathroom. Burglar do not think to look in the bathroom for a safe.

People can protect their saving by investing in a variety of low risk investments earn a rate of return that is lower than that of marketable securities. However, it is better to invest in low risk low return investments during a poor economy to prevent a big loses in investments.