Ask Stacy: What’s Cloud Storage and Is It Safe?

Here's a simple explanation of cloud storage, as well as the reasons your documents are likely safer in the cloud than anywhere else.

Ask Stacy: What’s Cloud Storage and Is It Safe? Photo by carballo / Shutterstock.com

Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers.

Today’s question is about cloud storage; specifically, understanding exactly what it means and whether the stuff you store there is safe.

If you think you’re not in the cloud, you’re probably wrong. Facebook, Twitter, most email programs — all are already storing your life somewhere on central servers, otherwise known as “the cloud.”

So, is the cloud safe? Watch the following video to see what I think. Or, if you prefer, scroll down to read the full transcript and find out what I said.

You also can learn how to send in a question of your own below.

For more information on this topic, check out “7 Foolproof Organizing Tricks to Tame Your Paperwork” and “8 Smart Ways to Spring Clean Your Finances.” You can also go to the search at the top of this page, put in the words “cloud” or “organizing” and find plenty of information on just about everything relating to this topic.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, everyone, and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this question is brought to you by MoneyTalksNews.com, serving up the best in personal finance news and advice since 1991.

Here’s our question for today. It comes to us from Gwen:

“I may be old-fashioned, but I feel that keeping documents with sensitive info in the cloud is asking for trouble. There are loads of stories of people hacking websites and supposedly secure storage sites. Look at Equifax. I’d rather keep my tax data in my home, in my own filing cabinet, than trust anyone else to store it safely.”

Let’s begin by explaining what the cloud is.

The term “cloud” simply means keeping your data off-site. If you’ve used Facebook or Twitter, you’re already using the cloud, because those applications store your data on their servers, not your local computer. So, that’s what the cloud is: simply taking your stuff and — rather than storing it on your home hard drive — storing it on someone else’s hard drive somewhere on the planet.

What about Equifax? That’s an example of your data being stored on someone else’s hard drive, but it’s not really an example of cloud storage. The cloud is a whole bunch of data centers all over the world, all acting in concert to maintain your data. Equifax is one company that did a bad job of protecting your information.

While nothing’s impossible, it’s highly unlikely that your cloud storage is going to be hacked like Equifax was. Why? A couple of reasons. Cloud storage uses something called sharding, which is dividing up small packages of information and storing them in different locations. So, if one server gets hacked, the data won’t make sense without the data from another server. Dividing data among different data centers makes information less useful for a hacker.

Another reason cloud storage is safer is because prominent companies running cloud services — think Amazon, IBM and Microsoft — employ the best computer engineers on the planet. Amazon alone is bringing in $5 billion every quarter from cloud storage. Do you think that Amazon is not going to use the best possible security? The company has a lot to lose if it gets it wrong.

So, the cloud is probably one of the safest places to store information. It’s not the same as giving it to a company, like Equifax. And it’s certainly not the same thing as storing it on your home computer, which can be hacked relatively easily.

Another thing to remember: Even if you keep stuff in a file cabinet in your spare bedroom, nothing is totally safe. Your house can burn down. It can flood. A tornado could whisk it off to Oz. A burglar could rip you off. A lot of things can happen to paper documents whether they’re stored at your home or on your personal computer.

Bottom line? Cloud storage is one of the safest alternatives you can use. It’s backed up, protected by smart people and stored in a way that would be difficult for a hacker to make any use of it.

All that being said, anything’s possible and nothing is totally safe. No matter how you store anything, always use good passwords and whenever possible, two-step verification.

Now we’ll close with our quote of the day. This one comes from rapper Kanye West.

“Having money isn’t everything. Not having it is.”

Have a super-profitable day and meet me right here next time!

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

Got more money questions? Browse lots more Ask Stacy answers here.

Stacy Johnson
Stacy Johnson @moneytalksnews
I'm the founder of Money Talks News and have spent the last 40+ years in the personal finance trenches. I'm a CPA, author of a few books and multiple Emmy recipient. I'm ... More

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