Is My Money Safe in the Bank?
Most people live under the illusion of the old cliché, “It’s like having money in the bank”. As an American growing up in the 1960s, I put every dime I made in the bank in the hopes to save money, preserve capital and make some interest. It really doesn’t feel the same as when I was growing up and that’s because the world has changed. We live in volatile, uncertain times as terrorists try to disrupt our lives and socialists try to mandate our lives. If you think the government needs to control our lives and oversee every aspect of how we live and give through force-feeding us socialistic policies, STOP READING! You won’t like the rest of the article.
We are inundated every year with new legislation with the bottom line being that the government wants to control every facet of our lives. Just look at how well they’re doing now. They want us to believe that they are there to protect us but in fact they are there to steal what we’ve earned and then they decide what to do with the money they’ve stolen from us. FORGET IT FOLKS. There’s no free lunch! If you want a better life, then do something about it. Don’t expect the government of any country to protect you and especially don’t expect them to provide for you.
If you want something in life, it’s up to you. Too many people have this crazy notion for all these social programs to provide for us. Phooey! The government doesn’t make any money, they just steal what they can in taxes and print the rest until they’ve paid for the programs that they think you should have. Meanwhile, the increase in the money supply is devaluing our hard earned dollars and the cost of goods continues to go up.
Did you get that? As government continues to print money, your money is worth less and the cost of what you buy continues to go up. No, your money is not safe in the bank because inflation is chewing up your capital and as the government prints more money, yours is worth less.
You probably thought this article would be about your money being safe in the bank and protected by the FDIC. Let me address this issue quickly and then return to my personal reasons. In the USA, we have almost 3000 banks in trouble with Arizona and Florida leading the way. 7 out of 10 banks in these two states are vulnerable. There will be hundreds of failures in the year 2011 and let’s hope yours isn’t one of them.
If your bank fails, the FDIC will cover your account up to $250,000. If you have any more than that in one account – move it! But, the FDIC doesn’t cover investments you may have in bank-holding companies, such as common or preferred shares, bonds or debentures.
The FDIC doesn’t guarantee the continuation of your interest or lines of credit. Ultimately, if your bank fails, you will have some interruptions, inconveniences and delays of services. Here’s my main point… Your money is not safe in the bank because it’s not working for you. IF you can see your money on a bank statement, it’s not invested and you’re going backward. You’re paying income tax on interest while your capital is being ravaged by the effects of inflation.
The purpose of working and creating a business is so that you can accumulate investment dollars so that you can invest them. The idea is to have your money work for you so you don’t have to. By keeping your money in the bank earning marginal returns, you are losing investment capital.
So, where do you put it? That’s up to you and it depends on how much you have, how old you are and what your financial goals are.
I’ve been indoctrinated in the single family house business for over 30 years and my mind probably works a little different than yours. You see, I see the housing bust as the biggest boon for safe dollars to preserve capital and earn double digit yields. And, I’m totally goal oriented and know what I need in income to have a comfortable life. Do you?
My income perspective is based on how many fee and clear houses I need to preserve my life style. Right now, I can buy newer, maintenance-free houses in the Atlanta area and, after rehab, my average investment will be $65,000. After management fees, real estate taxes and insurance, I would net on the conservative side $600 a month. My lifestyle, with no debt, for a comfortable retirement, requires $15,000 a month which is really more than I need. But that’s my number and, with no debt, will allow me to live in a way that I am accustomed to. Based on $600 net a month, I need 25 free and clear houses. Here’s how I determined this: $15,000 per month divided by $600 a month income per house equals 25 houses, times $65,000 = $1,625,000. Put another way, I need $1,625,000 of investment capital to buy the houses to attain a monthly 9income of $15,000 per month.
Folks, my goals are clearly in front of me so I know exactly how many dollars I need to buy the houses to give me the monthly income I required to never have to work again. In my position, I can do this with a lot of creative buying strategies; but for most of you readers, you just need to buy the houses and let the income come in.
The key is to buy the right houses in the right area that are undervalued and maintenance free. This cannot be done everywhere in the country because your cash flow on free and clear houses is impacted by real estate taxes, homeowner’s insurance and repairs. I invite you to our website, www.buycashflowproperties.com and get the free ebook: Buy Right and Retire Rich.
This book tells a story and if you like the idea of buying houses for cash flow, then you’ll love this book.