Those who believe in investing in assets and stocks may find cash saving absurd. However, a recent survey revealed that nearly 43% of Americans prefer to keep their savings in cash. Interestingly, more than half of these Americans plan to stash their money in secret home safes. On the surface, it might seem like a brilliant idea. There is, however, a downside to stashing cash.
Before delving into the risks involved, we should review the reasons behind the rising trend of keeping money in home safes rather than banks.
Why Are Americans Opting for Home Safes?
The leading reason is mistrust. Over the past two decades, Americans have seen enough financial distress to stop trusting banks and government-funded financial institutes. Similarly, the last decade was full of unexpected tax hikes, and many banks have increased the fees they deduct solely for letting you keep your money in their lockers. Home safes, in contrast, seem like a one-time investment where your one-dollar bill will remain a one-dollar bill no matter how long it stays there.
Economic instability has also shaken public trust in investment vehicles like stocks. It is one reason many people believe that they might as well keep their savings in cash rather than take the risk of investing it. Unsurprisingly, they are stashing cash instead of making an investment.
Do not forget that keeping money in a secret safe is a sure way to evade heavy taxes on your savings.
All of these factors have played a role in driving a growing part of the population back toward saving money on home safes.
Better Safes with Better Security
Additionally, there are a few developments that make home safes seem safer. First, companies develop more innovative and safer products that make you feel like you have more control and freedom. Second, many insurance companies provide insurance for the money you keep at home.
Is Stashing Cash a Good Idea?
Stashing cash might seem brilliant, but the drawbacks are real. Here are some reasons it may not work as much in your favor as you expect.
First, it is not safe. Stashing cash at home makes it vulnerable to more threats than keeping money in the bank despite the insurance policies. Most insurance policies cover theft or robbery, but some incidents can turn that cash into trash. Whether fire or flood, your money will be worth nothing if it is ruined in an incident that the insurance provider does not cover. Worst-case scenario: Imagine your pet or toddler find your cash and tear it to bits. This is the kind of incident insurance providers are not likely to protect your savings against.
Cash Does Not Grow
As the value of currency changes, the worth of your cash decreases; while your one-dollar bill will remain a one-dollar bill decades later, you may hardly be able to buy half of what you can buy now. On the other hand, a standard savings account will earn enough interest to cover the time value of money.
Simply put, money kept in your home is hardly even safe.
When Is It Best to Stash Cash?
Keeping cash at home for the sole purpose of keeping your money safe is not prudent. However, it does not mean it is always a bad idea for everyone. The only good reason to keep cash at home is when you do not plan to save it for long or finally take out all your savings and spend it.
Not relying on banks and hiding your savings from the watchful eyes of the government may seem like a smart move, but it limits your chances of making more money out of the cash you have.
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