Summary: In this article, RealWealth® Co-Founder Rich Fettke shares his views on the best places to invest money in today’s market. Learn about financial tips to protect yourself during these uncertain times as well as potential deals for investors.
What Are the Best Places To Invest Money in 2023
Today, everyone seems to be talking about the economy, inflation, a recession, bank failures, and on and on. This has many people asking: where are the best places to invest money right now? It’s a tough question to answer given that this current situation is unique — as it usually is with most economic cycles.
In my opinion, the best places to invest or keep your money right now are in (1) gold and silver, (2) cash in a safe in your home, (3) a maximum of $250,000 in FDIC insured banks, (4) farmland, (5) affordable rental properties, (6) possibly paying off your home. I’ll also talk about helpful financial tips during these tough times.
Here are 6 of the best places to invest money right now…
#1 – GOLD AND/OR SILVER
I recommend that you invest about 10% of your net worth in gold or silver. The reason for owning gold or silver is that it acts as an insurance policy. That is, actual, physical gold, not ETFs. It’s best practice to keep your gold and silver in a safe storage by a reputable company. It’s also a good idea to keep some physical gold in your own safe at home for worst case scenarios.
If the market crashes and all other stocks are lost, gold should follow historical trends and go up, or at least hold most of its value. Gold is a great way to protect yourself from losing everything during these times of uncertainty.
A few recommendations for how to buy gold:
- For storage, Kathy and I use: https://hardassetsalliance.com/
- For delivery of physical gold and silver we use: https://www.jmbullion.com/
But there are several options out there as well. These are just the ones that I’ve researched and found are best for our needs.
#2 – Cash
You should also have a good amount of cash on-hand. I’d suggest that you keep around 10% of your net worth in a safe box at home. This might seem like an outrageous amount to some, but we’re in uncertain territory here. The closest thing to the financial impact from the Coronavirus pandemic that we’ve seen is the Great Recession of 2008. And back then when everything in the finance world was in disarray, allegedly banks were just hours away from freezing all accounts temporarily in which case no one would have access to their money. In fact, this is exactly what happened in Greece when their economy crashed, causing bankruptcy.
Plus, since banks pay almost zero interest, it’s not like you would be missing out on all those interest payments.
#3 – FDIC Insured Banks & Accounts
Spread your money out in smaller amounts in FDIC insured banks. Never put more than $250,000 in any one bank, because the FDIC will only insure “$250,000 per depositor, per insured bank, for each account ownership category.”
Recently, with the collapse of Silicon Valley Bank, Silvergate Bank and Signature Bank, there is concern about the safety of our funds held in banks.
What the FDIC Covers
- Checking accounts
- Negotiable Order of Withdrawal (NOW) accounts
- Savings accounts
- Money market deposit accounts (MMDA)
- Time deposits such as certificates of deposit (CDs)
- Cashier’s checks, money orders, and other official items issued by a bank
What the FDIC Does Not Cover
- Stock investments
- Bond investments
- Mutual funds
- Life insurance policies
- Municipal securities
- Safe deposit boxes or their contents
- U.S. Treasury bills, bonds or notes*
*These investments are backed by the full faith and credit of the U.S. government.” [Source: FDIC.gov]
However, it’s important to note that FDIC insurance may change if our economy tailspins into a complete financial meltdown…
In the past, during dire circumstances, the government has adjusted how much the FDIC would insure. If our national economy continues to decline, there is a small chance the government could change how much they will insure, or how they will insure it.
Your best bet is to have your money in big banks (like JPMorgan Chase and Bank of America), because they have a lot of capital. In fact, recently the Fed stated that big banks have $2.9 trillion in high quality liquid assets, plus $1.3 trillion in common equity.
Since the Great Recession of 2008, regulatory minimums and buffers of capital and liquidity have been raised substantially. According to the Fed, “These capital and liquidity buffers are designed to support the economy in adverse situations and allow banks to continue to serve households and businesses.” In recent times, the Federal Reserve has launched unlimited QE in order to keep the banks liquid in these uncertain times. They have also lowered reserve requirements.
#4 – Farmland
A recent report by Hancock Natural Resource Group showed that there were widespread economic consequences from the Coronavirus. However, with the constant demand for food, agriculture commodities are expected to remain more stable than others.
Our company owns 800 acres of farmland in Costa Rica where we planted over 10,000 fruit trees and a fully operational farm based on cutting edge permaculture practices. We are also building a residential community for people who prefer to live near the food they grow, with clean air and plenty of fresh water streams and waterfalls.
A few ways to invest in farmland:
- AcreTrader (An online platform that allows you to purchase shares in farmland)
- Farming Equities (Crop Producers, Seed Equities, etc.)
- Commodities (ie: Soybeans or Corn)
- Farming Mutual Funds & ETFs
- Farming REITs
#5 – Rental Properties
Due to the Coronavirus, more and more people are rethinking how they would like to live. For example, being cooped up in a New York City apartment during a quarantine is less than desirable.
Demand for single family homes has been increasing as city residents move out to the suburbs in order to have more space and back yards. There’s also still a huge lack of supply in the affordable housing market.
Generally during challenging times, more people are forced to rent, which could offer a great opportunity for investors looking for rental income from single family homes.
If you have money saved up already, now might still be a good opportunity to buy a rental property for the following reasons:
- Rental demand for single family homes continues to increase, along with rents
- Interest rates remain fairly low (about 7% interest on a 30-year fixed rate)
- There’s not a huge amount of competition because many people are afraid to invest right now
While I don’t expect mortgage interest rates to drop below record lows again, there’s a good possibility they will continue to remain fairly stable because of the turmoil that banks are experiencing due to the lending rate increases the Fed has been imposing each quarter.
Because a lot of people are hesitant to invest right now, this may be a great time to buy a rental property on the cheap and turn it into a cash flowing (or at least break even) investment for the long term.
Investor tip: Look to attract higher net worth tenants who will pay several months in advance for added security.
#6 – Pay Off Your Home
Another option is to take your cash and pay off your home. If you have a mortgage with a 3-4% interest then it might be wiser to invest your cash into investments that will most likely exceed that. However, if your mortgage is at a higher rate, you might want to consider reducing your loan balance so you can save on interest payments.
If you do decide to pay down your mortgage, only do this if you won’t have to pour most of your cash into paying off your mortgage because you’ll become more vulnerable during these times of financial unknowns.
If there is any chance of job loss, it might be more prudent to setup a home equity line of credit (HELOC) so you can access cash if necessary.
Paying off your home mortgage can be a wise financial decision depending on your personal circumstances and financial goals.
Some potential benefits of paying off your mortgage include:
- Saving on interest: When you pay off your mortgage, you save the interest you would have paid over the life of the loan. This can potentially save you thousands of dollars in interest payments.
- Reduced financial stress: Owning your home outright can give you a sense of security and reduce financial stress. You no longer have to worry about making monthly mortgage payments or the risk of foreclosure.
- Improved cash flow: Without a mortgage payment, you may have more cash available to save, invest, or spend on other priorities.
However, there are also some potential drawbacks to paying off your mortgage, including:
- Opportunity cost: The money you use to pay off your mortgage could potentially be invested in other assets that offer a higher rate of return.
- Loss of liquidity: Paying off your mortgage ties up a significant amount of your cash in your home. This can make it more challenging to access your equity if you need it for other purposes.
- Tax implications: Depending on your situation, you may lose some tax benefits by paying off your mortgage, such as the deduction for mortgage interest.
Ultimately, the decision to pay off your mortgage depends on your individual circumstances and financial goals. It may be a good idea to consult with a financial advisor or investment counselor to help you make an informed decision based on your specific situation.
More Financial Tips for These Tough Times
Move To More Affordable Places & Hunker Down
For those who have a nest egg and have lost your job, consider moving to more affordable places and hunker down. It’s possible for many people to buy a house outright in more affordable places.
For example, an A class property in a A+ school district in Cleveland, Ohio may cost less than $150,000. And if you prefer warmer weather, you might find a B+ home in Dallas, Houston, Atlanta, Tampa or Jacksonville, Florida for under $225,000.
Have Some Liquidity
One of the best financial strategies during this period of fear, panic, and volatility is to stay as liquid as possible–while using good judgment. By having physical cash, it doesn’t matter what the banks do. You would still have YOUR cash in YOUR hands and it would be ready to go in case you really needed cash for any reason.
What To Do Next
Many of the best places to invest money right now have shifted, just in the last few months. Keep in mind that there could be a lot of deals in commercial real estate over the next couple of years if we head into a global recession. Keeping some cash in hand for opportunity is always a good idea. The commercial market, along with stocks, have finally corrected, which like it or not, was much needed. The strongest companies will rise to the top. The question is, which companies? We will keep our eyes on how it unfolds and share it with you.
In 2023, the economy has already changed rapidly and will continue to change as we face the long-lasting impact of the COVID-19 pandemic, money printing, and financial policy changes. At RealWealth®, we help investors acquire affordable rental housing that provides positive monthly cash flow. No matter what the economy is like, people still need a place to live.