As investors grow older, as the baby boomers find themselves inheriting large sums of money or liquidating real estate for capital gains, the question arises, "what does one do with new money"? If your investment time horizon is only 10 to 20 years rather than 30 or 40 years, your investment decisions change. I just sold my home and am confronted with that very decision.

I have my stock account, my speculative money, and my investment portfolio. But where does one put new money if he wants liquidity plus security -- right now? If we choose government bonds, such as 10 or 30 year bonds which provide 2.3 to 3.3% yields currently, if interest rates rise we will be trapped in a falling investment. That's not what I call safe.  If inflation goes back to normal levels we can even lose much of our principle and interest. The yield hardly justifies the risk.


If we choose gold and silver, we stand to lose money if the market continues lower. It is said that gold is a store of value, and it has been, over the long term. But in the short to intermediate term, gold can fall for five years, ten years, or even twenty years, and has. Gold may be a good insurance policy against uncertainty, inflation, and disaster, but it is not a full proof place to maintain purchasing power.


Dividend paying stocks or giant companies with a proven track record or a combination of both, could be a good place for safety and liquidity. But after years of non-stop gains in the market and a possible recession looming? What if these stocks are at their high's and we are about to go into a prolonged period of falling or stagnant prices? Once again, long term a well diversified portfolio may do very well. But in the short to medium term you can go through hell watching your stock portfolio deteriorate. And if and when you want the money, you may be forced to sell at a large loss.


There's real estate, but that's one of the least liquid investments one can make especially in a deflationary world? Demand for most things is low and supplies of most things are high, pushing prices lower. Even as almost every major nation in the world is in the process of some sort of quantitative easing program and pursuing a low interest rate policy, prices are falling or barely rising. China just reported a fall in inflation to 1.3%. The US is running about the same. Japan is falling back into deflation even after the most aggressive QE attempt in history, and so is Europe. Real estate as a place to live is fine -- but as an investment?  Everything seems to be a gamble.


So what's safe?


I've come to the conclusion that at least for me, and for the time being, the only safe place to put money is in an FDIC insured savings account. You wont make any money but you wont lose any either. Come hell or high water, what you put into savings you will get out. Hedge that with some gold and silver coins and physical cash on hand in case of hack attacks or bank closures, inflation or deflation, and you are safe. There is no gamble in an insured savings account.


Things can change, of course. We can go back into inflation, fiscal policy can change for better (or worse) as can monetary policy if central banks change monetary tactics and strategies, but for the moment, stocks look iffy, bonds look vulnerable, commodities look weak, and real estate looks good but only for the very young and liquid.


For those closer to retirement age, or in retirement, all investment avenues are fraught with danger. I will continue to speculate, trade, and invest with a small portion of my assets. This year I've had several 30% plus gains on trades, but the lion's share will be locked up in savings -- real savings.


It's a sign of the times that some nations have turned to negative interest rates as a monetary tool. Even our Fed is talking about the possibility of utilizing them if deflation becomes a problem. Negative interest rates are when the bank charges you a fee to keep your money in the bank. It's like a storage fee for gold or silver. If you want real security, you will have pay for it.


What's safe? Pretty much nothing. And if negative interest rates become a reality, even our savings will fall as fees replace real interest rates. That's the kind of world we live in today.


There's an old investment adage: "take what the market gives you". Today the market is giving us little or nothing. Until things change, better safe in savings than sorry as far as I'm concerned.


Paul Nathan