Thursday, September 3, 2009

Bank Failure: What to do with my savings?


please don't let folks highjack your blog for health care propaganda.

I believe the topic was bank failures. So what do the politicians do with their money to keep it safe? The only thing I have seen mentioned so far is swiss bank accounts. Besides precious metals, what do you do with your money?

I am too old to start over with nothing. What should I do with my savings?


There’s several things you can do. As always, everything requires doing research, a bit of effort and most important, persistence.
It’s the same old story folks, nothing is free or easy, at least nothing worth it.
If you ask me, today someone with a moderate amount of savings should give a long hard look to real estate, specially those places where the price has gone down to the bottom of their realistic price.
Again, this requires knowing the location you plan to invest on, so doing so close to home always makes sense since that’s what you know best.
For bomb proof saving you have precious metals, gold is a bit too expensive these days since it goes up during crisis, but silver is still more reasonable.
The Swiss bank account or international account is something doable and there’s no minimum account balance in some places.
Knowing how to open a Swiss bank account takes you one or two days of internet research, maximum. Finding what kind of product fits your needs.
Simply google up “how to open a Swiss bank account”.
Worth looking into, and maybe finding a bank in some other country if you’re planning on doing some relocation in the future.

Small apartments or studios are usually good, safe investments. Look for those located downtown close to where people work or near hospitals or college campus where demand will be greater.

You ask about politicians.
The politicians I know of invested in real estate (both here and in other countries) and have foreign accounts as well, as well as a safe with a nice amount of cash.
I know of one local politician that had gold and dollars in a bank safe deposit box. Not a bad idea but there were times when those were opened as well, private property be damned.

Amos, I’ve been having some long talks with my grandmother, taking notes, writing her insights down. Sounds silly but I never bothered doing so and I now understand how much life lessons she has to pass along.
What they did with what they had left of their savings?
My grandfather (before he died) spent a few weeks walking around the city, checking real estate agencies, checking out various neighborhoods.
He ended up buying two very small but nice apartments, and the rent from them allows my grandmother to live ok.
The crisis gets worse? Inflation?
The rent slowly readjusts to realistic values. The key is having a good contract.
My grandfather was +70 years old when he did that. And he was a farmer, then a carpenter, not a financial guru. But he knew the value of brick and mortar.
I don’t see a reason why anyone couldn’t do just what my grandfather did.

Fernando "FerFAL" Aguirre


Anonymous said...

I personally like manufactured housing, the kind that is in those big parks here in the US where somebody owns the land and rents a space to the owner of the mobile home, who owns his home but not the land it sits on.

I have a book that tells how to write mortgages on mobile homes in parks 100% legally. How do you think bankers make their money? Lending, that's how. They really don't care about people's meager savings deposits. They make money by putting little people in debt.

With in-park mobile homes in the US, anybody can play banker and write mortgages on mobile homes. It would be like selling brick shanties to the poor in Argentina, and getting mortgage payments for them, but not having to worry about running the neighborhood.

Fernando, except in a few cities like New York, Americans don't buy and sell apartments, they buy and sell detached houses, which is nice because they own the land too. There are plenty of small houses out there that can be rehabilitated in some parts of the US, but that requires access to that "hard money" I once mentioned, which in turn requires connections.

FerFAL said...

Americans don't buy and sell apartments??

What do you mean, there's no real estate business in USA anymore?
Guess it changed a lot since I last checked. :-)

Anonymous said...

People do buy small (and large) apartments here in the US -- only they are called condos not apartments.:)GSJ

Appraiser in CA said...

Apartments are sold as condominiums, or townhouses, in most US cities. In New York City, though, apartments are sold as apartments.

The recent drop in US real estate prices is making income properties a better buy, though a large correction needs to occur before most rents here will pay 100%+ of the mortgage, assuming 20% down & 6% interest, etc.

Anonymous said...


Oh, THOSE apartments. *slaps forehead* I know in New York they call a sellable apartment an apartment. In Florida it's a condo. Where I'm from a "condo" is more like an attached rowhouse. I have lived in San Francisco, where they do sell apartments, only they'll sell a whole floor of a small building which is called a "flat", or a condo. Now that Fernando is completely confused... :P

Ok, the thing with condos is, American law makes them a pain in the ass to manage. You have to deal with the homeowner's association, which is supposedly an elected board but is actually a lonely old woman who likes to bug everybody about meaningless stuff. She is also fond of making up stupid rules as revenge. She also has the power to seize your condo for any reason. This adds up to a mess.

In large cities there are "co-ops", which are a little better. But the HOA is a nightmare. That's why I don't like condos. A lot of real estate investors here, and I've talked to lots, hate the American condo system. It is definitely not set up for an investor.

Bones said...

Good real estate is better than gold or Swiss accounts. There have been reports that the US and other govts have finally convinced Switzerland to crack down on tax evaders. Gold prices are already high and have nowhere to go but down. A decent piece of real estate can provide income for decades regardless of the economy.

Anonymous said...

Ferfal, you can probably make some more cash by putting ads in your blog feeds. I don't think anyone would mind as people know this is quality info.
-Sundeep Singh

FerFAL said...

Thanks man, really don’t know how to do that (or what feeds are) but I’ll check it out :-)


Don Williams said...

1) Any investment strongly depends upon how the economy and government behaves.

2) In the US Great Depression, my great grandfather bought up a lot of land with coal under it at Sheriff's auctions. That is when the landowner does not have enough money to pay taxes and the local government seizes the property and sells it to highest bidder.

3) My great grandfather had recognized the warning signs prior to the 1929 crash and had pulled ALL of his money out of the banks into cash. Since he had cash --and many did not --he was able to buy property at extremely LOW prices. (Government just wants some money from taxes -- doesn't care if the landowner gets ANY of his equity back from the sale.)

4) A few years later, Roosevelt got us into WWII , the government was spending $Billions on steel for armaments, the steel industry badly needed coal and my great-grandfather made huge profits either leasing the coal or mining it himself. (OF course, his worthless children became playboys and nothing came down to me. Sigh)

5) As people here have noted, gold is kinda high at the moment. But there are a LOT of special rare earth metals that are largely found in CHINA and which CHINA recently decided to restrict on exporting. Some of those might be a better investment than gold.


I believe that the USA has to get most of its tungsten from China now.

Don Williams said...

The larger point being that products sold to the common citizens may not do well in hard times --because the citizens don't have the money to buy.

But the rich and large corporations will almost always have money to spend. Stuff THEY need will usually keep its value, provided supply is limited.

I don't disagree with Ferfal re Real Estate but caution that real estate has value only so long as the local economy does well --or at least maintains itself.

There are a lot of empty houses in depressed areas like Detroit (collapse of General Motors and Chrysler auto makers). In the past, I have seen housing values fall through the floor in some areas when the local economy collapsed.

But if you buy in a national capital -- like Buenos Aires or Washington DC --you are usually ok.
Although I have some doubts re Washington DC now because of the huge size of the US government debt.

Even house prices there fell in 1990 by about $60,000 (for a $250,000 house) with the huge defense cutbacks at the end of the Cold War.