Where to Put Your Money if You Don’t Trust Banks: A Detailed Guide

Many people today are wary of entrusting their hard-earned money to big banks. Between risky lending practices, massive security breaches, and unethical fee structures, it’s no wonder that trust in these institutions is at an all-time low.

If you’re looking for alternatives to parking your cash in a traditional savings or checking account, you have options. In this comprehensive guide, we’ll explore the pros and cons of 7 common places to stash your money if you don’t trust banks.

Why Don’t You Trust Banks?

Before we dive into the alternatives, let’s first address the elephant in the room: why don’t you trust banks in the first place? Here are some of the top reasons people are losing faith in these financial giants:

• Risky lending practices, The subprime mortgage crisis and bank bailouts of 2008 led many to believe banks participate in predatory and irresponsible lending

• Security breaches. Big banks have had major data breaches that have put customers’ personal information at risk. Many feel banks aren’t doing enough to protect customers.

• Unethical fees Banks have been accused of nickel-and-diming consumers with maintenance fees, overdraft charges, ATM fees and more

• Lack of personalized service, Megabanks tend to treat customers like account numbers rather than individuals The lack of a personal touch is a turnoff for some,

• Too big to fail. There are people who say that megabanks have gotten so big that taxpayers will have to bail them out again if they go bankrupt.

Knowing why you distrust banks will help guide your decision on where to put your money instead. Now let’s explore some of the most popular alternatives.

1. Credit Unions

Credit unions are nonprofit financial cooperatives owned by their members. They offer the same things that banks do, like loans, credit cards, checking and savings accounts. However, they are distinct from banks in the following ways:

• More personalized service. Credit unions focus on serving their members.
• Not profit-driven. Earnings go back to members in the form of better rates and lower fees.
• Less risky lending. Credit unions generally avoided the subprime mortgage crisis.

Pros:

• Higher interest rates on savings accounts
• Lower fees overall
• Some are open to anyone (not just military, teachers, etc.)

Cons:

• Fewer locations compared to big banks
• Limited hours
• Online/mobile banking may not be as robust

Bottom line: Credit unions are a safer, more consumer-friendly alternative to big banks. Just be prepared for the possibility of less convenience.

2. Real Estate

Real estate investing has been a safe way to make money for a long time. Real estate can be a stable asset when other markets are unstable because it is a physical asset. You can put your money into real estate in a few different ways besides the stock market:

• Become a landlord. Use rental income to pay off mortgage.
• Flip houses. Buy, renovate and resell for profit.
• Invest in REITs. Gain exposure to real estate without being a landlord.

Pros:

• Tangible asset that tends to hold value
• Potential for cash flow from rentals
• Tax advantages

Cons:

• Requires large upfront investment
• Responsibilities and headaches of being a landlord
• Risk of vacancy and renters not paying

Bottom line: Real estate investing requires significant capital and can be risky. But over decades, it has delivered stable returns for many buy-and-hold investors.

3. Precious Metals

For centuries, gold and silver have been recognized as trusted stores of value and safe haven assets. Investing a portion of your portfolio in precious metals can provide protection against inflation, economic turbulence and currency devaluation.

Pros:

• Tangible asset that retains value
• Limited supply
• Historically holds value when other markets decline

Cons:

• No cash flow like rentals or interest
• Price volatility
• Storage/security concerns

Bottom line: Precious metals can diversify your holdings and serve as insurance when markets sink, but they come with risks too. Invest prudently.

4. Cash Under the Mattress

Keeping some physical cash at home can provide comfort and peace of mind when banks seem risky. It also ensures you have access to funds in an emergency. But there are some downsides to stashing cash at home:

Pros:

• Immediate access
• Maintains full purchasing power

Cons:

• No returns
• Susceptible to loss or theft
• Loses value due to inflation over time

Bottom line: Keeping a small amount of cash at home makes sense, but large sums may be best kept elsewhere.

5. Cryptocurrency

Cryptocurrencies like Bitcoin operate independently of banks and governments. For those who distrust centralized financial systems, crypto may be appealing:

Pros:

• Decentralized, no third party risks
• Potential for high returns
• Limited supply supports value

Cons:

• Extreme volatility
• High-risk speculative investment
• Still a nascent asset class

Bottom line: Crypto offers an alternative but should only be a small part of your holdings due to volatility.

6. Farmland

Agricultural land can provide food and revenue from crop sales. For self-reliance types, owning farmland can hedge against total financial system failure.

Pros:

• Tangible asset
• Diversifies portfolio
• Food production as ultimate backup

Cons:

• Management challenges unless hired out
• Subject to weather/crop risks
• Low liquidity

Bottom line: Farmland offers self-sufficiency but requires substantial upfront investment and ongoing management.

7. Starting a Business

For entrepreneurial types, starting a business can provide income and an alternative way to grow capital outside traditional investments.

Pros:

• Potential for high returns
• Satisfaction of building something yourself

Cons:

• High risk of failure
• Time commitment
• Need experience/skills

Bottom line: Starting a successful business requires significant effort, experience and risk tolerance. But it can be very rewarding financially and personally for some.

Key Tips for Safe Money Storage

• Diversify your holdings across asset classes to reduce risk. Don’t put all your eggs in one basket.

• Prioritize liquidity in case you need to access funds quickly. Not all alt investments are easily converted to cash.

• Invest for the long haul. Don’t try to get-rich-quick chasing speculative gains.

• Don’t invest in anything you don’t fully understand. Do your due diligence.

• Accept that all investments involve some risk. Don’t expect guaranteed returns.

• Consider consulting fee-only financial advisors to plan the optimal allocation for your situation.

The Bottom Line

If you don’t trust banks, you have alternatives. But each option has unique risks and tradeoffs. Diversifying your holdings across multiple asset classes can help balance security, returns and access to your money. With prudent planning, you can reduce dependence on banks and still grow your wealth over the long term.