savings

Gold's glitter tempts frustrated saver

Don Taylorq_v2.gifDear Dr. Don,
My husband and I have $90,000 just sitting in a savings account and we are trying to decide where to put it. We are really afraid to do any stock market things because we have lost so much money investing in stocks. We thought about applying more to our mortgage as well, but that's not really saving us much. We have also thought about investing some in gold. Can you help us out?
-- Tammy Tactical

a_v2.gifDear Tammy,
There's a lot of frustration with the low rates currently available in savings and money market accounts, but not many of those frustrated savers are considering a move into gold. If the stock market is too risky for you, then investing in precious metals isn't the answer.

Yes, gold has had a heck of a run over the past few years, but stocks did, too, in the late 1990s. Buying historical performance isn't the answer to your investment problem.

Bankrate readers tend to be conservative investors. On the whole, they're more concerned about the preservation of capital than protecting the purchasing power of that capital. You need to be concerned with both.

Your experience with the stock market shows how market losses deplete the portfolio's value. Your more recent experience with low-yielding savings speaks to the purchasing power issue. If you're making less than 1 percent on your savings, then -- after taxes and inflation -- your investment's purchasing power is losing ground.

You haven't told me anything about your ages, financial goals or sources of retirement income. My prescription is to sit down with a financial planner and discuss your current money picture and future financial goals before deciding where to invest this money.

Two recent columns, "Look for holistic financial planning" and "Financial adviser can map retirement," will provide some guidance in finding that planner.

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

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