In a global fiscal environment characterized by the lurking possibility of another major recession, it might be tempting to keep money closer to one’s person, but a long-time finance industry observer said that a more sensible move would be to invest one’s funds in real estate, or place it in the care of a bank.
In a piece for the National Post
, acclaimed reporter Tristin Hopper recounted his personal experience of finding an envelope containing $340, hidden in the basement cellar of his purchased home.
“The cash is all from the Bank of Canada’s Birds of Canada series, when the Queen’s face was still relatively wrinkle-free. And, according to an accompanying bank slip, it was left there in 1998 by the home’s now-deceased previous owner,” Hopper wrote.
“But while it’s a free $340 for me, the hidden cash is a tragedy of lost value,” Hopper stated. “According to the Bank of Canada’s nifty inflation calculator, when James Cameron’s Titanic was still in theatres $340 bought the modern day equivalent of $474.28.”
This is in stark contrast with having the money saved in a bank account, where the average interest rate of 2 per cent would have yielded an extra $122.40 in the interim. Hopper added, however, that not going for the bank option was understandable in context.
“Even in more stable times, the money’s owner would have lived much of her life in a world where getting cash from a bank required getting to a branch within their limited opening hours and waiting in line,” Hopper said.
Hopper noted that even greater returns would’ve been seen had the money been invested in gold, tech stocks, or real estate, especially in high-demand markets such as Toronto and Vancouver that have seen enormous growth in value since 1998.
Hopper cited economists’ estimates of $75 billion in cash currently not moving through the economy as liquid capital, “a fraction of which is undoubtedly under beds and behind electrical outlets.”
“So take heed from the saga of my $340. Put your money in the bank. Buy a savings bond. Take the libertarian route and buy some silver,” Hopper concluded. “Anything, except hiding it under a shelf in the basement where it will lose one third of its value and ultimately be found by the greasy reporter with bad skin who buys your house after you’re gone.”