We all likely know someone, a member of an older generation, who did well putting a steady stream of cash into bank deposits over a long period of time. Many of these folks were products of the “Great Depression” and thus, did not trust the stock market.
I would like to do the same but my bank now offers interest rates of less than one percent per anum.
But all is not lost of my intention to “put money in the bank”.
How so?
Name a bank stock. Any will do.
Now, go look at that bank stocks five year stock price chart.
Now do a little research on the bank’s fundamentals. Examine their financial statements. See if you can compare current statements to past statements and connect the numbers to the bank’s stock price.
What are the analysts saying about the sector? Compare their assessments. Do you agree or disagree?
I don’t believe in “too big to fail” but I do believe that at a certain size, if a bank were to fail, it would likely occur amidst financial circumstances that would tend to auger poorly for most every other form of investment.
If you read the financial media you will likely see many predictions favoring the financial sector. In a sense it’s a case of “worst hit in recession and quickest to recover . . in a recovery”.
Am I invested in the banking sector right now?
Yes, but I’m not saying where as it’s up to everyone to perform their own due diligence and bear the burden, or rewards, of the risks taken.