Keeping $100k at home in the safe is frightening

Suzanne has put aside a bundle of cash for her kids to use when they’re older

QI have put aside two lots of $50,000 in cash ($100,000 total) for each of my children to use for either a wedding or house deposit in the coming years. Currently, the cash is hidden in fireproof satchels in a home safe.

I’m concerned about – with the talk about becoming a cashless society – whether I should change this cash for money orders or deposit it into a secret account? I don’t want the kids to know about this gift until the time is right, which may be another five to 10 years or so.

Goodness, Suzanne, I am very admiring of your efforts to put cash aside for your children and love the use of the fireproof satchels, but unless I am missing something, I don’t think we are at huge risk of a war, invasion or the next Great Depression. But the money does have one near certain, insidious risk: inflation.

If the money sits in the fireproof bags for, say, the next 10 years, and inflation averages, say, 3%, the buying power of $100,000 will be less than $70,000. The next problem is that property tends to appreciate, on average, by around 5% to 6%. So, if buying a property were an objective, in 10 years the value of property could easily be 50% higher, or more.

I do understand why you would like to keep the amount of money you have put aside to yourself. It is a very generous gift. Let’s look at your options. First, we are moving to using less cash, but I really don’t see a cashless society for many decades, so I don’t see money orders being a great idea. Second, by ‘secret account’ I imagine you mean a secure, high-interest bank account. This appeals to me a lot more. The money would be secure from theft and you would earn around 5%. This would keep the kids’ money closer to inflation.

So, my vote is to pop the money into a secure bank term deposit or high-interest account. Frankly, keeping so much cash at home frightens the daylights out of me due to the risk of a robbery and its value being destroyed by inflation.