Master Your Card

Let’s face it, the average savings account earns you anywhere from .10% to 2.50%. Whoop-de-do! That doesn’t really help you much in the long run, especially with official inflation rates running at roughly 5% (and some unofficial sources put it way higher). However, it is a safe, liquid place to store your cash. If you need access to your cash for short-term reasons or you’re deathly afraid of losing money, then you may settle for .10% to 2.50%, and there’s nothing wrong with that if it’s right for you. However, most people want a little more.

A word of advice, though. You may be tempted to shift your money from bank to bank trying to get the best rate. That’s fine, in fact, follow the deals whenever possible. However, if a bank is offering a savings rate of 6.45%, be very cautious of their reasons. They need the money so they can fund their FDIC fund. That causes me a bit of pause and it should for your as well. Before moving funds to a bank offering above market rates, look into the stability of the bank. They may very well be one of the next to fail (we’re up to 11 banks this year), so protect yourself as best you can.

OK, so on to other vehicles that you can put your money into that might earn you more money. Keep in mind, some of these may require more risk on your part, but it’s at least an option.

1.) Collectibles

Yes, this sounds a little hokey – and you probably couldn’t retire comfortably off of collectibles, but they do have merit. Take the beanie baby craze, for example. If you were one of the lucky ones who timed that market well, you probably turned a $10,000 collection into $50,000 easily. But, there’s a lot of risk involved with this because you have to be well informed about the markets. If you are, then you may be able to get a much better return than your bank can provide you.

Collecting, as long as you don’t get emotional about it, can also be a pretty fun pastime if you find something you’re interested in. Start educating yourself on prices here. If you go the collectibles route, make sure you also read up on keeping your acquisitions in mint condition. You’ll need to keep them in a safe and secure environment, and insurance is a must.

2.) Bonds

Most bonds aren’t doing much better than savings accounts, but you can certainly get into some that are. Junk bonds, like junk stocks, tend to have a higher rate of return simply because they’re riskier. But, there’s other bonds that are much safer than junk bonds earning better returns. You can find a good little introduction to bonds here, but it’s really worth speaking with a financial advisor to see if this option is right for you.

3.) Stock Market

I know, the idea of dabbling in the stock market now is rather daunting. But, you can still make a good deal of money in the stock market, regardless of current conditions. This type of vehicle isn’t just reserved for stocks, either. You can get into many different things such as mutual funds, annuities, REIT’s, and a multitude of other things.

4.) Real Estate

Yes, even real estate still holds a little value and is considered a good investment. Now, that doesn’t mean you go buy a house you can’t afford in hopes of flipping it. Right now isn’t a good time for flipping simply because the market is down. But, eventually, it will rebound like most things do. Now might be a good time to take advantage of lower rates and lock into an investment property. You can rent it out or sit on it, but the return when the housing market rebounds will be higher than 2.50% by industry experts’ predictions.

As always, don’t skimp on researching the market before you make any decisions. Zillow is a great place to start, but should only be used as just that: a starting point. A couple of weeks worth of thorough research could net you a big payout in several years time.

5.) Certified Deposits

Compared to your other options, this is the safest by far. But, it’s also the most likely to earn you the least amount of money. Some banks have higher rates of return on their CDs because they need the money. Again, proceed with caution. But if you’re simply risk adverse and want to earn higher rates than your savings account can offer, a CD is the way to go.

6.) Online Accounts

Sometimes you can get lucky and find a great rate online. That’s been the case even before the housing and credit crises. So, look into some online accounts – especially with brokerage firms – and see if you can’t find a decent rate. Always make sure the company is sound before coughing up your dough, but if they are, then take advantage of their great rates. These accounts get better returns because costs are so much lower. However, you’re usually not allowed to access the funds at any physical location and there are a number of restrictions. Just be sure you’re comfortable with them before proceeding.

7.) Precious Metals

Gold and Silver are currently trading at two to three times their 2000 prices, due in large part to worried investors looking for a safe place to ‘park’ their money. Unlike paper (or ‘fiat’) money, which is less than 500 years old in the ‘Western’ world, gold and silver have been used as forms of currency by most civilizations for many thousands of years, and up until very recently, each US dollar was actually redeemable for a set amount of gold.

Many gold and silver bugs contend that the explosion in prices we’ve seen so far is only the tip of the iceberg, while some more bullish pundits contend the precious metals are presently far over-valued and destined for a fall any day now.

8.) Fine Art

Hollywood has made so many art heist movies over the last 50 years that we all know some pieces art are ridiculously valuable. It’s not uncommon for a Picasso piece to go for $6 or $7 million, and a Rembrandt can go for up to three or four times that.

Further, a paper from 2002 contends that annual value increases on well selected art collections (roughly 6%) actually tend to outperform fixed income securities (like bonds or CD’s).

Having said that, you might want to hold off on heading down to the local gallery with a fist full of bills until you hear the pitfalls. The biggest obstacle is that if you want to do it yourself, you obviously need to know what you’re doing – you can’t just pick a piece of art at random and expect fantastic returns. For those of us not interested in a lengthy education in art theory and valuation, there are some funds that will do it for you, but not without taking a cut for themselves.

9.) Wine and Whiskey

You might never have considered this, but (assuming you have the willpower not to drink it) certain types of alcohol – especially wine and whiskey – make a terrific investments because of the way they improve over time. Talk about a liquid investment! (sorry.)

Wine has been an especially lucrative over the past 10 years (especially as demand from Asia soars), with some vintages growing in value many times over. Again though, you’re going to want to read up before you make any purchases, as less than 1% of wines worldwide are considered to be ‘investment grade’, and failing to carefully educate yourself about the best way to store you investment could leave you feeling very sour indeed.

10.) Antiques

All of us are looking for a link to the past – and some of us are willing to pay good money for one. Enter the fascinating world of antiquing.

Take heed though: just because it’s old, doesn’t necessarily mean it’s valuable. According to this guy, just one tenth of 1% of antiques are of investment grade.In other words, out of all the old junk you find lying around your house (or in the local garage sale), only 1 in a 1000 items is likely to be worth anything of consequence. Generally the rule is to buy the best quality products you can, even if that means paying top dollar for them. You’re also far more likely to succeed if you confine yourself to one or two narrow areas of expertise, like antique firearms and 19th century Chinese porcelain, for example.

By keeping interest rates artificially low, the Federal Reserve is devaluing the dollar and creating inflation. The bottom line is that every dollar you put in the bank today is worth slightly less tomorrow, and responsible savers are being punished as a consequence. In uncertain economic times like these, you’ll need to think unconventionally to protect and grow your wealth.

What other vehicles have you placed your money in to earn better returns than your savings account? Has your bank or credit union offered to rate match for you?