In the period of crisis, most people is more careful with any investment because the economic condition is so bad and most company suffer financial loss because the sales of company has been decreasing. The automotive big company like Ford, General Motor, Chrysler suffer decreasing sales. Some company decide to house the employee even they fire some of the employee and give employee small separation pay.

The employee which has fired does not know what to do with the separation pay especially the employee who has no financial education. As a traditional man, he put the money at certified deposit or bank account. He think he can get interest monthly and his money will grow. In underdeveloped country, bank account and cd's are the most famous investment. Only few people recognize capital market. rich people can invest at the capital market. Mutual fund which is cheap and could be bought by  poor people is not famous because the people knowledge is not same with United States people and there are just little mutual fund company.

The people uses the interest to fulfill their need and they do not think that saving in bank does not guarantee the value of money.  Government just saving the value of nominal but not the real value.

Let me give description:

Last year a man opened a bank account for $ 100 with interest rate 2% per year. Meanwhile the inflation rate in average is 3%. Today, your money is $ 102. You will not get $ 102 because the bank will charge you interest tax and administration fee. With $ 100, you can bought a blender. Today, the blender price is $ 103.

From above story, we can take the lesson that saving does not give the saver more money than increasing product price. The saver still have 100 dollar but the value of money is decreasing.

Saving at risk free asset does not guarantee your money even government promises your nominal of money. Therefore, you need to invest at various investment to increase your wealth. Try some risky investment such as shares. If you still afraid, you can try put only 10% of your money at shares.

Real interest rate

The interest rate which the bank has promised is not real interest but nominal interest rate. In some case, saving does not give you any penny even the money decreases every month.

For example, a kid saves $ 100 in a bank account with interest rate 12% a year or 1% a month. The bank charges 1.5 dollar for administration fee monthly and tax so the kid money is decreasing in the bank.

 

The ancient people is clever that modern man

My ancestor saved his money at gold coin in a vases. He want to use for hajj pilgrim to Makkah, Saudi Arabia. Most people in his era also used to save in  gold. They did not recognize interest, bank,investment, and shares. The life was more comfortable than modern man who need much money.

Today, modern people who has good education but saving money inefficient. They save money but they do not get return even their money is decreasing.

Therefore, modern people need gold for their saving too. Gold is strong from economic crisis.