Preserving Savings: Stocks, CD’s, or Precious Metals?

Economic recession, declining dollar, rising gas prices, growing budget deficit… In the times like these I wish I was a small child and didn’t have to worry about anything. But I am not and this is why I am spending this night trying to figure out what my investment strategy should be for the next 2-3 years.

This is a really tough decision for me. For my IRA account the investment vehicle of choice hasn’t changed, I stay loyal to stocks. For the shorter term savings however I consider these options:

Stocks and Mutual funds

You know the drill. Open an account with a brokerage and invest in the names you trust. The stocks that perform well in recession are staples, health care, energy, tobacco & beverages and gambling. VICEX is the mutual fund that tracks many of these companies. You might also want to consider some foreign stocks. The economies of China, India and Russia are booming. Also check out these recommendations from Seeking Alpha, a very popular blog among investors.

CD’s and Savings

The rates banks offer on savings accounts and CD’s keep going down and the last 75 points rate cut by Federal Reserve has brought more new announcements. I just received emails from ING, WaMu and I am sure there were many more that followed. However if you look just a little harder you can still find savings rates well above 4%. One of such bargains comes from Natinal City who currently offer a 48 months CD with 5% APR. A great resource for tracking these offers is the Bank Deals blog.

Precious Metals

This is a venue which I have avoided so far. Gold has always looked too expensive and I feel too uncomfortable with other alternatives. However I think I found a silver bullet and it came from nobody else but Robert Kiyosaki, the guy who wrote “Rich Dad Poor Dad”. His last article on Yahoo Finance is somewhat gloomy but if you skip the “inconvenient truth” of the first part, the last two paragraphs offers some sound investment advice.

Silver is consumed in many industries, and it’s reported that the world has less than a 10-year supply of it left. That’s why I believe silver is currently one of the best investment opportunities there is — even for people with limited financial training.


I don’t believe in fortune tellers. No one can predict where we are going to be in a few years from now. Therefore my strategy will probably be a mix of some of these investment vehicles. Have you given it a thought? Please share your own approach in the comments.

See also:

7 Responses to “Preserving Savings: Stocks, CD’s, or Precious Metals?”

  1. 1 Debbie M Mar 26th, 2008 at 9:14 am

    I’m not sure what you mean by “shorter-term” savings, but if it’s shorter than five or ten years, stocks may not be appropriate, at least if you’re saving for something that will happen at a certain time, like going to college. But if you’re just saving until you have enough, like to remodel your house, then stocks might be good.

    For short-term savings, I have used the following over the years:
    * savings accounts
    * CDs
    * I-bonds
    * online savings accounts

    Yes, CDs (and I-bonds) have “substantial penalties for early withdrawal,” but sometimes the interest rate is so much higher than for your other options that it’s worth the risk. That substantial penalty is generally never more than all the interest you’ve earned so far (but do check it out before investing).

  2. 2 Alex Mar 26th, 2008 at 10:56 am

    VICEX is expensive and according to many forecasts including respected sources like Kiplinger’s and Stratfor we are not heading for a full blown depression so I figured the doom and gloom is not quite there yet.

    My personal strategy is to move my IRA to bonds to minimize the short term damage and get the cheap financial indexes while you can.

    I wanted to buy gold tracker last year but i didn’t have balls to do so and now I am beating myself over my indecision.

  3. 3 Alex Mar 26th, 2008 at 10:58 am

    there’s a good thread on FW regarding profiting from recession

  4. 4 Yan Mar 26th, 2008 at 11:30 am

    Thanks for the tip. I like the #2: “open pawn shop”. LOL

    Seriously though, I don’t think I am about to invest in sin stocks (out of my beliefs) but I should probably take a closer look at silver as an investment (3-5 years?).

    I did buy a few CD’s last year when the rates were not as low as they are now.

  5. 5 Alex Mar 26th, 2008 at 11:40 am

    “There’s no sin in making money from the sinners” – something to keep in mind ;)

  6. 6 Alex Apr 3rd, 2008 at 10:07 am

    I thought I’d share this info: If you are into stocks there are companies that actually are profiting from the economic downturn. If tabacco/alchohol is not your venue perhaps this would get you interested.

    FTI Consulting

    Portfolio Recovery Associates

  7. 7 Yan Apr 3rd, 2008 at 10:38 am

    I like the FTI story, but I am afraid it is too late to jump on that train. Just as the ending says, FTI is no stock for bargain hunters. I wish I would have discovered them a year or so back though.

    Since stock market is usually ahead of economic news, it may be that we have seen the worst and now is a good time to invest in big cap growth stocks. I particularly like Google and Toyota Motors, both are leaders with what they do, both have plenty of foreign exposure and most importantly each has a big bet on future technology.

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