Where is the safe place for your cash?

By now, I'm sure most people, if not all, have known about the epic bankruptcy of the 16th largest bank in the US, Silicon Valley Bank (SVB). As it happened so fast and unexpectedly, there is no telling how much and widely the future impact it will have not only on the banking system but on the whole financial system! Most ironically, just a month ago, Fobes rated SVB as one of the best banks in the US (rated as the top 20th best one).  So where is the safe place for our money these days? Given a bankruptcy can happen to one of the presumed safest banks within 48 hours without any warning, I'm not sure we can say any bank is safe nowadays. Of course, for those savings below the FDIC insurance limit, $250K, it is safe as sooner or later, you will get your money back within this limit. But how about those who have more than $250K? I'd think for those near or already in the retirement age, it is not unusual for them to have a saving more than $250K. At least I won't feel safe to put my money in any bank. I will offer two ideas:

- One is to buy a short term Treasury bond, for example one to 6 months. Treasury bonds are the safest money in the world as we all know the US government will never bankrupt and they will always be able to pay the bills, at least in the foreseeable future. That's why it is much safer than the money saved in a bank. As long as we keep it in a short term like for one month to 6 months depending on whether or not we will use the fund for our daily bills, it is absolutely the safest place for our money. And nowadays, it is even more bizeird that the short term interest rates are even higher than the long term rates due to inverted yield curve (see the current Treasury yields). So if we save our money in a Treasury bill for 6 months assuming we don't need the money for these 6 months, we can easily look for hundreds of income per month for a saving amount over $100K. The 6 month Treasury bill annual interest is 5.17% as of now. So we can make $430 per month for a $100K treasury bond while keeping the money in the safest place!

 

The second idea is to "save" your money in a special Whole Life Insurance. The scariest thing any bank may face is a "Run on the bank" (挤兑). This is basically what happened to SVB when all the people came to request to withdraw their saved money around the same time when the bank had insufficient funds to meet the needs. But you will never see a 挤兑 for an insurance company, right? You won't see all the insured people suddenly all come together to request for a refund. It is just not possible. As such, as long as the underwriting insurance is fundamentally sound, it is a much safer place for your savings. You may be surprised how flexible and easy it is for you to use your "saved" money there whenever it is needed. It is kind of one money for two uses at the same time: one for your daily uses if you like and the other for your insurance needs. I have discussed in more detail in a blog a few years ago and you can review it here: Can you survive the next bear market?

In a nutshell, a good whole life insurance can integrate all the important wealth growth features into one simple plan: high interest earnings legally guaranteed, compounding growth, tax-free growth and tax-free use in your lifetime, legally protected, long term care and estate planning for tax-efficient wealth transfer. Just read the blog carefully as it has outlined each main point in quite details. 

I just want to emphasize one important point: I'm not talking about the IUL or Index Universal Life insurance, which is not what I feel safe at all as it is tied to the stock market. I have talked about its risks in this blog: A long term risk that should not be overlooked.

If you are interested to know more about the WL policy, feel free to contact me via Wechat. While I cannot advise you personally as I'm not a registered financial planner, I at least can share with you my personal experience: real life uses of my own WL policy money including paying off two houses worth more than a million in total as well as my son using his policy to pay his very expensive MBA cost. My personal experience has proved how easy it is to use the money whenever needed, just like a savings account🤗, while the money is also safely grown tax-free for my future retirement uses and post life asset transfer.