retirement investing

Recently with the economy going up and down (ok mostly down), I have been having conversations on where is the best place to save.
In the first 6 months of this year 51 banks have been shuttered by FDIC. The big banks are on life support from the feds. My 401(k) has lost money and stopped being contributed to by my employer.
Some say to buy gold because in case of complete economic collapse. My problem with that theory is that honestly if there is a global economic collapse I am going to be way more concerned with survival than retirement. However, I just don't choose to believe we are quite there yet.
So the question is what do you do with your money if you are looking to invest in a safe place with reasonable returns?
Here is an Op/Ed article I found that really reflects the conundrum and offers one possible answer.

The Real Bank of America

AFTER taxes this year, I found myself in the curious position of having a decent-sized refund and absolutely no idea what do with it.

See, I’m one of the hundreds of millions of Americans without a degree in finance. I also live in a state where foreclosures are high and 14 community banks have closed since the economic crisis began. If you look, you can see the seams tearing — empty houses and vacant stores beginning to rot because their owners have lost their shirts, the cost of using public transportation going up, and Atlanta’s property taxes being raised just to keep from having to close more fire stations.

I hear people saying it’s time to get out, especially after that tax increase was announced, but where are they going to go? California? Who is going to buy their houses? They’re stuck.

I know I’m one of the lucky ones: I have a spouse, a child, a dog, a car, a mortgage and, thankfully, I still have a job. And all I want is to grow — or at least, not shrink — my nest egg.

Easy? Not easy. Not when you add the rest of the story:

The country’s soaring deficit is making the dollar less valuable. State budgets are collapsing. The unemployment rate is steadily rising. And in banking, financial institutions may be out of the woods ...or not. Whatever was or wasn’t the problem that engendered the recession has either been fixed ... or hasn’t. The chaos is over ... or isn’t.

So what should I do with my money? Go to Costco and shore up for lean times? Pay down the mortgage on my depreciating house? Sock it away in my sock drawer? Maybe just use it for kindling?

Oh, the problems of being middle class! If I were rich, none of this would matter. If I were poor, none of this would matter. But this recession is an absurd kind of middle-class-only limbo. So in an attempt to salvage my economic status I spent a couple of days calling and visiting banks around the state, asking them why I should bank with them. It didn’t help.

“Aren’t most of the same folks who started this mess the ones working on fixing it?” I kept wondering. “Aren’t those bad loans still out there? Why isn’t anybody talking about the 45 banks that have closed in the United States this year? Is your bank safe?”

Most people I met scoffed or shrugged when I asked my questions. Almost all parroted the line that my money was covered by the Federal Deposit Insurance Corporation. It seemed this was the best they could do, but finally a few bankers sat down with me and assured me that they hadn’t made risky loans, hadn’t needed bailout money, that their institutions were stable and drama-free.

Which is how I ended up using my nest egg to buy a couple of low-interest certificates of deposit. By low, I mean abysmally low. But in the most stable, most conservative places I could find — Georgia Federal Credit Union and an Atlanta branch of the Royal Bank of Canada.

However, I still felt a fool to believe anything anybody in the banking industry told me about making, not losing, money; so my anxiety-fueled mind kept churning.

Where does the F.D.I.C. get all that money to do its insuring? Does it have a vault with enough cash in it to cover everybody? According to its Web site, F.D.I.C. funds come from premiums paid by banks (that have no money) and from interest on its own investments in securities at the Treasury.

And just like that, it hit me — as long as there is a United States of America, there will be a Treasury. Can’t I keep my money at the same place that the F.D.I.C. does? There’s a Federal Reserve Bank right here in Atlanta. They have money. They make money. Can’t I cut out the middleman and deal with the Man myself?

Lo and behold! It turns out, I can. No intermediaries, just me and Uncle Sam. All I have to do is open a free account at the Treasury’s Web site. Hey, it’s as good a deal as any to be had at the banks, and it’s safer. I can invest my dollars directly into the busy goings-on of the government. I can buy and sell securities. I can be my own F.D.I.C.

Marc Fitten, the editor of The Chattahoochee Review, is the author of the novel “Valeria’s Last Stand.”