Do you keep precious metals, valuables, or large amounts of cash at home?
Ted Bauman, writing for the investment advisory site Banyan Hill, discusses in his article about a recently deceased relative who had wealth and had tried to follow Bauman's recommended practices for protecting that wealth. The relative used to keep a liquid reserve of valuables, such as collectibles, gemstones, precious metals, and cash, outside the financial system.
However, one critical recommendation that his relative did not follow was to keep his liquid assets in an unprotected state in his home office, exposed to theft and other mischief.
As the economic and political climate heats up, investors are moving their wealth into cash and other asset classes. Bauman now considers it very timely to evaluate other reasonable options in place of risky home storage.
Tallessa is - until it is not
The risk of Bauman's relative becoming a victim of theft was low, but not entirely eliminated. As a retiree, he spent a lot of time in his home office, where he could keep an eye on his assets. However, he would have been better off investing in proper secure storage.
What is proper secure storage? This, of course, depends on the risks you assess.
If the risk of theft is low, a small safe will do the job. These can be found in hardware stores. They may be small, but they are heavy and their locks work well. If such a small safe is hidden carefully, it provides good basic protection for valuable assets stored at home.
There are differences even in small safes; the essential thing is that they are both fireproof and waterproof. Gold and silver melt at low temperatures, and while we may value cash, it is still just paper. In the event of a fire or if you live in a flood-prone area, the waterproofing of the safe is crucial.
Instead of a cheap small safe, you might want to consider a larger and heavier model that can be bolted down. If you have firearms or other larger valuables at home, it is worth exploring options more thoroughly.
Property secured outside the home
Storing liquid assets at home may feel safe, but this is not always the case and it is not always practical. In fact, a diversified wealth storage strategy should also include secure storage outside the home.
Bauman lists several storage options:
- A safe deposit box at a domestic bank.An easily accessible option, but there are also downsides: the contents of a bank's safe deposit box may not be insured, so insurance typically needs to be arranged by the individual. Governments also have the ability to require banks to surrender the contents of safe deposit boxes to them, as happened in Greece during the recent economic crisis.
- A safe deposit box at a foreign bank.If you can obtain a bank account in a secure jurisdiction like Switzerland, you can also access a safe deposit box. A foreign safe deposit box is outside the reach of both government and judicial seizures. Jurisdictions that respect privacy typically do not enforce orders from foreign courts. Anyone seeking your assets would have to initiate legal proceedings from the beginning before a foreign judge.
- A vault other than a financial institution's vault.. Storing wealth in a vault instead of a bank adds an extra layer of security. Governments and courts have significant power over heavily regulated banks. Unlike banks, vaults require formal legal proceedings before revealing a customer's identity and assets.
- Foreign vault. Vaults are not subject to banking regulations or mandatory reporting requirements that the IRS imposes on foreign banks. Physical cash, precious metals, and similar assets are not considered under the Foreign Account Tax Compliance Act (FATCA).
The vault of an ordinary person
Switzerland, Austria, and Singapore offer services specialized in wealth storage. However, these are often expensive and require physical presence to open an account.
When choosing a vault, it is advisable to select a reliable provider that allows account openings without an on-site visit and from which you can ideally purchase precious metals and deposit them directly into the provider's own vault, recommends Bauman.
Source and image: Banyan Hill, 5 Ways to Disaster-Proof Your Valuables
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