Since October of 2000, 555 banks have failed in the United States.

It is only fair to mention that 465 of these closed in the period from 2008-2012.

During a bank failure, people who have deposited their money in the bank would be completely unable to withdraw it. Almost all bank accounts are insured by the FDIC up to $250,000, so the odds of loss in a true bank failure are relatively slim.

But that doesn’t mean there are no reasons for storing some of your money elsewhere…
Big Bank Risk

Just because your account is insured by the FDIC up to $250,000 doesn’t mean that you are without risk. Let’s be honest: in a list of things that the government is really good at, saving people money is not high.

There are some things that are just better off in our own hands and under our own control.

Now I’m not saying that you should go withdraw every dollar from your checking account and stuff it under your mattress; that’s just not reasonable.

But I am saying that there may be more risk to having all your money in checking/savings accounts, stock market investments, and outside of your control than you initially imagine.

In no particular order, here are some risks I could think of:

All of these risks essentially have one characteristic in common: if someone else in government or big business wants your money, they can take your money.

When push comes to shove, the amount of control you have is minimal.

Eliminate Risk: Take Control

The primary way we recommend reducing risk is through increasing control.

Think of it this way: if you could control every single car around you, would you ever get in an accident?

No! Definitely not.

Imagine your wealth as one big highway. But on this highway, you can’t control the cars around you.

In fact, as long as your money is where someone else can access it, you aren’t even driving your own car.

And when you aren’t driving your own car, there is no one in the world to stop you from getting in an accident.

The only way to keep yourself far from danger is to take the steering wheel, put your own foot on the gas, and begin to take control of the car.

When it comes to finances, there’s no truly easy way to take 100% control of your wealth. For your entire life, at least some of your wealth will be in the hands of others.

I make it my personal mission to reduce the amount of wealth that others can control in my life.

There are many ways to do this, each of which falls under one umbrella:

Diversification: One way to make sure that others don’t control your wealth is to diversify it. Is it extremely dangerous to use a checking account? Absolutely not!

Is it extremely dangerous to have the majority of your money in one place?

Absolutely.

Diversification takes many forms. Here are a few ways I personally have diversified my funds.

Diversification is an excellent practice and a good habit to get in to, but not all diversification is created equal.

Some forms of diversification are best for protecting your wealth (playing defense) while other forms of diversification are best for increasing your wealth (going on the offense).

Keeping What You’ve Got

I think that often, there is a misconception about a defense that it is a weaker, more cowardly way to play the game.

” No one ever won playing defense,” they tell you.

But no one ever won without stopping the other team.

Making sure that you keep what money you have is just as important as getting that money in the first place.

After all, what use is a million bucks today if you lose a million and one bucks tomorrow?

Two of the strategies I listed above are primarily used for defensive purposes. There are other defensive strategies which I will address in a bundle at the end.

Keeping multiple checking/savings accounts: This strategy is useful because it takes out the inherent danger in the FDIC’s insurance of up to $250,000.

The more you have to save, the more that this defensive play will help you.

This is also a useful tactic for budgeting your finances and keeping in control of what you spend, but an in depth discussion of budgeting is outside the realms of this post.

My preferred way to keep multiple accounts is to…

Use separate banks: This accomplishes a few things. First, it eliminates a lot of the risk if one bank will fail.

Second, I have found that it is never a bad thing to have friends inside a bank. I’ve made it a habit to go inside my bank as often as possible, cultivate relationships, and always be friendly.

If I ever need them, they will be there for me.

This tactic is especially effective when using multiple banks.

Third, it is nice to be able to take advantage of several banks and their respective strengths.

One of my banks has my savings account where I draw some interest, but another bank has an interest checking account.

Of course, since these are separate accounts, it is a doubly strong defense against the insurance limit of $250,000, bank failure, or a loss of bank liquidity.

Finally…

Other methods of defensive play: This includes things like burying cash in your back yard, storing various currencies in your Bible, or utilizing some previously-unused space in your walls to shelter some greenbacks.

If you have ever or know someone who has ever stored cash in their mattress, this is the tactic they’re using.
While this is a legitimate tactic that will preserve your dollars, it isn’t one that I recommend highly due to some inherent flaws.

First, this cash is often not very liquid. This means that it can be difficult to retrieve, especially if you’ve got it buried, stored in your walls, or in a safe under your floorboards.

Second, this cash can be too liquid. It can be too easy to access.  If you end up using your easy-to-reach cash, that pretty much defeats the purpose of storing it.

Third, dollars are subject to wear, tear, and decay under these conditions.

Fourth, you are losing an opportunity to do something with that money. This is addressed above and is called a lost opportunity ccost.It essentially means that if the money does nothing, then it’s not really doing you any good at all.

While defensive strategies are great and necessary, let’s move onto the more offensive tactics.

The Hybrid

Despite this subsection’s title sounds like it came from a bad horror movie, this part of the article must act as a sort of bridge between the offensive and defensive strategies.

These strategies listed below work both offensively to grow your wealth and defensively to protect it.

So with no further ado, here are some tactics that can work to preserve your wealth and expand your financial capabilities.

Spread your investments across traditional assets: The gist of this strategy is to do what you will read about in every finance blog on the planet: spread your investments through stocks, bonds, mutual funds, index funds, EFTs, etc.

This isn’t a financial site, so we won’t get into the nitty gritty of this strategy, but the strategy essentially works by making sure you don’t lose everything at once and still have room to grow.

Last week, I was stuck at a crosswalk with several other members. The crosswalk light was red, but very few cars were coming.

One of the members of the group started walking forward to the other side of the road. “Well,” he said, “they can’t hit us all.”

The rest of the people joined him and we all made it safely to the other side.

The defensive part of this strategy works in a similar way: if one stock, bond, or fund goes down, surely at least one of the other ones will survive.

The offensive part allows you to take advantage of market growth.

It’s a solid strategy. A version of this strategy is to…

Invest in non-traditional assets: This is my preferred tactic. Non-traditional assets can be anything, but usually, have the following characteristics:

For example, guns fit this description perfectly. They are a physical asset that can be used for other purposes than just wealth storage, can be traded, can increase in value, and have no digital footprint after purchase.

Investing in non-traditional assets gives you a bit of an edge, in my opinion. 

Not only do you have an asset that can increase in value without you doing anything, but you also have a tool.

These non-traditional assets can be nearly anything that can appreciate, but I often recommend guns, precious metals, and so on for people to purchase.

Going On The Offense
This is where the game gets to be a lot of fun if you know how to play it.

Get a resource-producing asset: The point of this strategy is to find or buy assets that have the ability to create wealth.

Wealth creation is different than appreciation.

If an item appreciates, it increases in value. Stocks, guns, homes do this.

If an item creates wealth for you, then it is generating an asset that can appreciate or be used.

Here’s an example.

If you buy a house, that house will appreciate over time. If you decide to let renters live in that house and pay you for the privilege to do so, then the house is still appreciating but it is also creating wealth.

There are tons of ways to do this!

One is through the use of a survival garden. A garden can produce a resource that you can use or trade for other items. 

My neighbor and I use this strategy together a lot. I do carpenter work for him, he gives me eggs that his chickens lay.

Another way to do this is by starting a business.

Got some land or buildings you don’t use? Figure out a way to make something happen there and you’ll have a source of wealth creation.

Invest in your skillset: This strategy is my personal favorite and the one that I have tried to master more than all the others.

Your skillset is something that is always with you and can never be taken away.

I’ve invested in my skill as a carpenter and if I wanted to, could get a job doing carpenter work.

I am also capable of doing home projects and have a nice little hobby.

The best skillsets to learn are the ones that can make you money (whether through a job or a business), can be used outside of a job or business, and are more-or-less enjoyable.

I am a believer that your personal skillset is the most important thing about you. As such, I highly recommend spending time developing yourself and mastering several skills.