Most of us understand the need to save money. We don’t really know what could happen in the future, but a decent amount of savings can act as a great cushion against life’s many surprises –- welcome and otherwise.
The question then is this: where should you put the cash that you save? With several banks falling victim to the recession and the subprime mortgage disaster, it is no wonder that some people have become wary of trusting their money to any bank.
3 Good Reasons Not To Hide Money Under Your Mattress
But if you are now glancing at your mattress and wondering whether you have spotted the safest place to keep your cash, think again. Here are some very good reasons why mattresses are not designed to be safe hiding places (hidey holes) for any amount of cash.
1. You won’t earn any interest on your cash. Okay so the interest rates at the moment may not be ideal. But they are darn better than the big fat zero you’ll get for putting all the money you have under your bed. Shop around for the best deals, and find some top online savings accounts for liquidity and higher than average returns on your cash:
| Online Bank |
Savings Product |
Interest Rate |
Min. Balance |
| EverBank | Yield Pledge Money Market Account | 2.25% | $1,500 |
| EverBank | FreeNet Checking Account | 1.02% to 1.46% | $1,500 |
| EverBank | Yield Pledge CD | 0.75% to 3.39% | $1,500 |
| Sallie Mae | Sallie Mae Savings Account | 1.30% | $0 |
| FNBO Direct | Online Savings Account | 1.10% | $1 |
| Ally Bank | Online Savings Account | 1.25% | $0 |
| Ally Bank | Classic High Yield CD | .74% to 2.74% | $0 |
| Ally Bank | No Penalty CD | 1.32% | $0 |
| Ally Bank | Interest Checking | 0.50% to 1.05% | $0 |
| HSBC Advance | Online Savings Account | 1.10% | $1 |
| HSBC Advance | Online Payment Account | 0.85% | $1 |
| HSBC Advance | Online CD | .10% to 1.70% | $10 |
| ING Direct | Orange Savings Account | 1.10% | $1 |
| ING Direct | Electric Orange Checking Account | .25% to 1.25% | $1 |
| ING Direct | Business Savings Account | 0.95% | $0 |
| ING Direct | Orange CD | 0.75% to 1.25% | $0 |
| WT Direct | Savings Account | 1.21% | $1 |
2. You are not insured against loss. Can you imagine burglarizing a home and finding the owners have stashed several thousand dollars under the bed? You’d be in paradise, while these foolish homeowners would be up the creek. Now put yourself in the place of the people who have just lost their life savings. Why would you risk the money you have worked so hard to earn in this manner? Your money could be much safer in an FDIC insured account. All you need to do is perform enough research so that you can be comfortable about the safety ratings of the bank you do business with.
On this note, suppose a natural disaster of some kind wrecks your home? Yes I know it probably isn’t too likely. But heavy rain storms, floods, hurricanes, tornadoes and countless other disasters affect thousands of people every year. So it does happen –- and there is no reason why it couldn’t happen to you. If a tornado decides to come along and rip your roof off, your cash stash could go up and away before you have a chance to do anything about it.
3. The value of your money will erode, not thanks to inflation. Because you aren’t investing your money, you won’t see any return on it –- and that means you will actually lose money in real terms. A lot of people don’t think about this. But you only have to look at the cost of buying basic everyday items over the last few years (or whatever time period you care to look at) to realize that this is true. If you’ve got $5,000 stashed under your mattress, it won’t go as far in 5 years as it will do so today. If you put it away, you will at least be earning interest on it –- and the longer you can tie it up in an investment with a decent ROI, the more you will earn on it.
Can you see just how daft it is to stash money at home when it could be working harder for you? By all means, have a small amount in a safe if you feel you need it. But it should be a SMALL amount. The rest needs to go in a variety of accounts that will pay you real dividends over time. Don’t let your money go to waste –- make it work harder by putting it in smart investments.
That’s extremely conservative approach to retain your savings. One way to grow your money is to invest in Treasury notes, bonds. If you can take some risk and stay in the kitchen even if it gets hot, then investing in stocks might be a better way to grow your money. Before you do that, find a good reputable financial adviser. However, even though it’s hard to do, stay away from Madoff look-alike kind of humans.