Take your money and run!
Thursday, February 26, 2009 at 01:32PM 
One of the things that have been really stressing me out these days is the future of my money. I mean the money that is in the 401K, IRA, and 529 accounts, as well that invested in individual stocks/funds. The housing market has let us down. The credit market has let us down. The stock market has let us down. The banks have let us down. One day you have news about AIG execs planning exotic vacations, the next day UBS being sued by the US government for giving shelter to tax evaders, followed by Mr. Madoff’s ponzi scheme , Sir. Allen Sanford’s bank fraud, Merril’s payment of exec bonuses prior to being acquired by BofA. The list goes on and on. I guess I am not so sure any more whether these financial entities are good, honorable, and trust-worthy custodians of my hard earned money.
The trust has been broken. The news and stories that I have been reading about the irresponsible behavior and cavalier acts of the different financial institutions do not really give me the warm ‘n fuzzy about what their real intentions are. I honestly think that these guys have gotten greedy to the extent where they will sell their mother just so that they can meet their numbers. The financial service providers have always been pretty creative in the way they advice us on how we can “multiply” our money but all that was fine during the good times. Cash flow was good, confidence was high. Banks and financial institutions were making money, without necessarily having to twist the laws or cook their books/statements. Well now that things are going South and all of a sudden these guys are not making anywhere close to what they were a few years ago, their new strategy is to move from the “hook” approach to the “crook” approach. The people who are supposed to provide oversight to these financial institutions have been woefully lacking in their commitment, efforts, and imagination. Well the likes of the SECs are part of the government – what were you really expecting from a government agency?
I guess I have to ask myself this very important question – Should I take my money out of these systems and put in a place where none of these guys can touch it? Oh do not get me wrong; I am not suggesting that the Main Street stops doing business with the Wall Street. All I am trying to do is think of a way to cut short my losses and step aside for the time it takes the government and the financial institutions to, collectively, get their act together. Until that time, I am not going to leave my life savings with a bunch of people who are desperately trying to keep their own jobs and earnings intact. It will be a while before they earn my business.
What do you think? Is your money in safe hands? Do you trust these guys? What would you do?
Breaking the trust only takes one dumb act but building or repairing it takes a 1000 sensible acts.
Reader Comments (4)
Uday,
Where do you move the money to that is not in some way influenced by the guys you intend to turn away from?
Biju,
Thanks for your comment. And yes, you are correct. The intent of my posting is to alert people on the worst case scenario, which I believe is yet to come. Its our money and we need to realize that if shit were to hit the roof, we would be left holding the short end of the stick (a number of us already are). We need to keep a very close eye on our investments and potentially think about moving them to some safer (less risky) locations. Times like these, cash is king.
Cheers,
Uday
Uday,
How have you been. I like your article and I too believe that the worst is yet to come. My most recent attempt to protect wealth has been moving into gold and silver. I have little confidence in the dollar or any other currency.
I found this to be an interesting video. What do you think? By the way, it takes a moment to start.
http://video.google.com/videoplay?docid=-9050474362583451279
-Michael Bradley-
Mike,
Good to hear from you and trust you are doing well. I've actually seen this particular video and yes, it is quite an eye opener. You may already know about the concept of the "Money Multiplier", which is how money grows. Ex: A bank starts with $100, gives $90 loan to you, and holds $10. You turn around and give $80 to a friend and hold $10. And so, so forth. The $100 has now multiplied to $270 (100+90+80).
As for your investment strategy, I would reccomend a well balanced portfolio. Investing in gold/silver is a pretty goo idea but I would not put all my eggs in that basket. Diversification is key to long term financial success. US$ as a currency still enjoys the "credibility" status and in bad times, people will still want to hold on to US$ because it is the currency of a stable, credible nation.
Take care,
Uday