What do you do with your spare cash if you don’t want to put it into a bank account? Your savings should be as safe as possible. So what’s the alternative to bank accounts?The Moneymagpies firmly suggest that you don’t pull your money out of your bank accounts. As long as you don’t have more than £85,000 in one financial institution, you’re covered by the Financial Services Compensation Scheme. So don’t worry.
Also bear in mind that if inflation goes up and your money isn’t earning you any interest, you’ll be effectively losing out. It’s because cash will gradually buy you fewer things – and therefore it’ll be worth less.
But if you’ve truly lost all faith in the banks, there’re other ways. In this day and age you can manage your money without relying on your local bank manager.
- A home safe
- Safe deposit boxes
- Large physical assets
- Small physical assets
- Offset mortgages
- Prepaid options
The original and classic place to stash your cash is in a safe. Before cast iron containers were cheap enough for the average person to purchase, people used to store their cash in wooden boxes. Unfortunately, these were easily accessible to all. All you needed was an axe.
But today cast iron safes are affordable and secure. The standard variety can be installed in basements and cellars, and bolted to a concrete floor. They don’t have to be huge vaults. A small security safe can fit on a shelf in your office and it costs as little as £39, including delivery.
Just as well, you can easily spend thousands on bigger, sturdier safe boxes, though. A medium-sized safe is more reasonable at £299 – and hopefully big enough for all your cash.
Equally, many are designed not only to keep your cash safe, but also to keep it hidden. You can find a tiny safe that fits in the wall and looks like a plug socket. Enough to outwit a clever thief.
Alternatively, try a safe that looks like a can of Heinz tomato soup. You can stash it in your larder and no one will ever know.
Safe deposit boxes are essentially mini-safes. What makes them special is the added bonus of the high-security protection provided by your bank or safe deposit company. Storing items of value or cash in these boxes carries significantly less risk than storing them in your own home. The bank or company that store them will also be jointly liable should anything be stolen.
You can store anything you like and enjoy full privacy. At Metropolitan Safe Deposits in London, you’ll find different sizes of boxes. They range in price from around £95 per year for the small ones (45x110x410mm) up to as much as £2,523 per year for the largest (640x610x458mm).
You can rent a box only you’ll be able to get to, or add in access for your family. Typically, you’ll pay your rent annually or quarterly.
Unlike with bank accounts, if the bank storing your box fails, your cash is safe. Simply put, the bank stores your money rather than invests it. It’s physically in the building rather than being a number on a spreadsheet. So if the bank folds, you just go in, empty your box and put the contents elsewhere. The only thing you may lose is your rental payment.
Although storing your cash in a safe deposit box protects it from thieves, it doesn’t save it from inflation. You could lose a lot of money if your savings are just sitting in a box untouched.
Get around pesky inflation by converting your cash into assets. You can do this buying things that will retain – or hopefully grow – in value.
During a recession, the appetite for gold goes through the roof. People view it as a stable investment: gold is always wanted. You can actually buy gold bars and store them in your house. Use your safe deposit box or the facility offered by the company you purchase gold from.
You can buy it online from sites like BuillonVault. We wrote about investing in gold in our article here.
Another fairly safe bet for investment is oil. While the price can go up and down, it’s a finite resource which means that as supplies dwindle, the price will rise. You can buy commodities like oil as part of an Exchange Trade Fund. Get more info in our full article here.
Investing in property might not seem like a good idea considering the uncertain political landscape and lower sales volumes. Plus, according to the BBC, house prices have been going up. But if you plan for a long-term investment and understand your local demand and market, go for it.
See our guide to getting a housing bargain here.
If you don’t have enough cash for big investments, others things can help you retain the value of your cash without bothering with bank accounts.
Designer clothing is a favourite for many. Classic pieces from brands like Yves Saint Laurent, Chanel or Vivienne Westwood actually grow in value the longer you own them. The key is to think simple and classy. Splashing out on crazy neon colours and huge shoulder pads is a little risky.
You can increase value by buying a collection of items from one designer and then selling all the pieces off at the same time. The best thing about it is you can enjoy wearing them as well as keeping the value of your cash.
Toys are another big area for alternative investment. Classic dye-cast toys, such as Hornby trains and Corgi cars, are extremely popular and change hands frequently at large auctions. You can invest in a collection and then sell it on at a profit. Vintage teddy bears are also popular because they date from a very specific time in history and few remain as they’re easily damaged.
More modern toys like comic books and action figures also grow in value – but only if they’re in absolutely pristine condition. See our full article on collecting action figures here. The hottest modern toys that are set to grow hugely in value are Urban Vinyl figurines. These have an individual piece of artwork imposed onto an action figure. Each is unique or manufactured in very small amounts, which raises its value. Prices range from a few pounds to hundreds.
With all assets, there’s no guarantee that the value will go up. Risk is inherent when investing. However, these are some of the more reliable options before you hit the stock market full on.
Possibly one of the most practical things to do if you don’t want to store your savings in bank accounts is to put them into an offset mortgage.
Offset mortgages bundle up your current account, savings account and your mortgage into one product. This means that any credit in your current or savings accounts is ‘offset’ against your mortgage.
Got lots of savings? You’ll pay less interest on your mortgage if you get an offset deal. That’s because your savings are technically paying off a chunk of your mortgage. But if you need money, you can still access your savings. Technically, they still belong to you and not the bank.
If your bank goes bust, you won’t lose your savings as they’ll be incorporated into the part of the house you own.
Offset deals are a bit more expensive than fixed rate mortgages simply because they’re more flexible. But perhaps they’re the right thing for you?
If you don’t have a huge amount of savings, but you still don’t want any of your cash in the bank, you can opt for a prepaid credit card.
These are just like normal credit cards and they’re accepted almost everywhere. The fundamental difference is that they don’t advance your money. You have to top them up with funds before you spend, just like a pay-as-you-go mobile phone.
You can do this online by transferring money or top up at a paypoint using cash. It’s becoming increasingly popular for people to have their salaries paid directly onto those cards, cutting out the need for bank accounts.
At Moneymagpie, we like the Kube Prepaid Mastercard. It has a great online facility that lets you pay bills and transfer money on and off of your card without the need for a separate current account.
For more information about prepaid cards see our full article here.