How safe is money in the bank? options?

[againsthegrain]

I am 99% in cash this year, with all the recent talk of this place going down and that place going bankrupt a few have already touched on the topic of the banks.

No big bank has ever gone bust in Aus, no bank did during gfc, realistically how worried should we be, what are the rough odds?

I have been in cash for a while, didn't like the way things were looking since 2017.

Disclosure: 305k~ in Anz
Petty cash in Nab
25K cash (cash) for rainy day

Should I move 50K from Anz to Nab for the 250k govt guarantee? Is this guarantee written on toilet paper in the event a bank goes down in current climate?

I don't think anything is safe atm (since im worrying even about cash in bank)

For the crappy $300-$400 interest on 300k in a decent savings account I could also be making 1k~ rent a month on a roughly 300k IP, but I have been holding cash as I am paranoid about everything lately.

Hopefully holding and getting totally ripped on bank interested vs return on property can pay off lets say in 6 - 12 months when a 400k property will be worth 300k~.... but still need capital in the bank for/if that scenario happens (getting more likely everyday with corona virus)

anyway this is not about property, what is everybody doing for safety?

What are some ideas?

p.s This is in no way asking for financial advice, I will 99% stay parked in a bank unless everybody starts doing bank runs....
Just ideas what others are doing and thinking and hoping everybody will tell me I'm a bit too paranoid

 

[basilio]

Don't think your paranoid at this stage. I'd say everyone "in the market" has dropped at least 20% in the past 6 weeks and no one thinks we have reached bottom either on the market or in teh real world

I would switch the 50k to NAB. Who knows how it will all go and at least there is the nominal guarantee to $250k.

Wouln't be a hurry to buy property. As you say property prices will be under pressure.

 

[sptrawler]

I personally doubt any of our banks will go down, our Banks were very exposed to overseas lending in the 1987 crash, which is what sent them into a tailspin when the overseas Banks called in the loans.

From memory it was one of the major reasons for starting the superannuation system, Australians had very little personal savings and the Banks had to obtain funding from overseas, to supply money in Australia.

The situation now is much different on many fronts, one our banks are fairly well self funded, also Australians have embraced the cashless payment system, therefore the requirement for people to do a 'run' on the Banks for cash has diminished to a large degree.
So unless we have a 'toilet paper' episode IMO the money system should remain robust, if a 'run' started my guess would be it would be nipped in the bud very quickly and limits put on withdrawls.
That is my guess and I have a lot in cash in one account, so it would be a real problem for me, as I'm retired.

 

[wayneL]

I've got more money in the bank than I'm comfortable with at the moment and I am worried.

But also there are mountains of risk elsewhere too.

 

[InsvestoBoy]

I keep my money 25% in cash/bank deposits/short term bills of various currencies, 25% physical gold, 25% long term Government bonds, 25% equities and sleep like a baby.

If the banks fail, the gold will more than make up for the difference and I can always liquidate bonds for whatever crap the Government prints to pay me out.

Occasionally I'll buy puts or a collar against one of those asset classes roughly equivalent to the value of my holding if I think volatility is cheap to get exposure to volatility as well.

Permanent Portfolio rocks!

 

[HelloU]

info:
uBank is 1.85% gteed
xinja at 2.25% gteed (but they are not opening new accounts for a little bit?)

 

[satanoperca]

Just for your own information, do some research on this :

I would switch the 50k to NAB. Who knows how it will all go and at least there is the nominal guarantee to $250k.

While in simple form correct, but get into the detail is incorrect.

Yes there is a $250K deposit guarantee, but that does not mean if the bank fails you get back $250k.

The guarantee only covers each major bank $20B, then go have a look at how much deposits say the ANZ bank has.
I cannot remember, last time I look when trying to assist my retired parents, if the put $250K in Anz and it failed, they might get $0.20 for each dollar deposited.

 

[Dona Ferentes]

bet ya Xinja hasn't got a $20bill cover

 

[HelloU]

https://www.guaranteescheme.gov.au/qa/deposits.html
https://www.apra.gov.au/financial-claims-scheme-0
Banks pay a fee for this gtee.

 

[satanoperca]

bet ya Xinja hasn't got a $20bill cover

I bet you a $1 you are correct. It only cover the major banks in Australia, might be wrong but approx 12.

 

[matty77]

i have a shirt load of money in the bank at the moment in an offset account but still less then my actual home loan, so if it does turn to crap at least my bank will owe me I guess...

Good time to have cash ready on the side though and the big question becomes when is the right time to enter the market...

I think if the banks go under then the whole financial system will go with it, then if that happens there will be bigger things to worry about then banks (like go buy a gun to protect yourself) as it will be chaos. I highly doubt that will be the scenario, in a way the Corona virus might be a silver lining for the global financial system, it could force a world wide recession, slow markets down and reset it and Governments have an excuse for it - a virus how convenient. For those that believe the end of FIAT is going to happen I just dont think this will be it. I think when this is all "over" what ever that means we will see some very strong economies (like the USA) and so there could be a boom of sorts. In the meantime rough sailing..

Or everything implodes and I go live under the ground with my gun.

 

[HelloU]

https://www.apra.gov.au/list-of-aut...tutions-covered-under-financial-claims-scheme

for what it is worth, xinja are the most helpful bank that I have ever used. They even recoded their app to do something special for me when i had an app issue.

 

[HelloU]

What peeps need to be aware of is that some ADI's are owned by other ADI's (banks own banks). You only get one bite under those circumstances - see westpac.

I thought Woolies used Macq bank but maybe not ?

 

[TLS]

An interesting article that I saved a while back regarding the "safety" of cash held in our banks ...

https://www.ainsliebullion.com.au/g...s-your-cash-now-/tabid/88/a/1722/default.aspx

 

[HelloU]

The $20B is a total amount that is limited to that from the Reserve Bank under current legislation. A legislation amendment will increase that if more money is required to meet guarantees. It is NOT a per bank figure, NOR is it limited to the big 4.

The list of FCS banks is long and posted above. They are all equal under the legislation. Is there 40 of them ?? I did not count them. Deposits cannot be bailed-in so do not go down with the bank.......

Frankly if banks started to fail and the government road blocked this then aussie has bigger issues than a broken "promise".


https://www.aph.gov.au/Parliamentar...e/Economics/CrisisResolutionPowers/Report/c02

2.37 Treasury confirmed that because deposits are not classified as capital instruments, and do not include terms that allow for their conversion or write-off, they cannot be 'bailed-in'.

 

[basilio]

An interesting article that I saved a while back regarding the "safety" of cash held in our banks ...

https://www.ainsliebullion.com.au/g...s-your-cash-now-/tabid/88/a/1722/default.aspx

Very interesting. I think the main point of the bank guarantee is to try and ensure people don't lose their nerve and start a run on the banks. It was also the mechanism to keep banks solvent. It was established in Oct 2008 when runs began on US banks and it was made clear to the government that unless there was some sort of Gov guarantee there would almost certainly be a run on our banks.

It worked exceptionally well and in fact earned the government $4.5B. Frankly I wouldn't want to see a situation where banks fell over and we had to rely on the Government to repay depositors. But where else can one safely store money ?

https://www.rba.gov.au/publications/bulletin/2016/mar/5.html

 

[TLS]

The $20B is a total amount that is limited to that from the Reserve Bank under current legislation. A legislation amendment will increase that if more money is required to meet guarantees. It is NOT a per bank figure, NOR is it limited to the big 4.

The list of FCS banks is long and posted above. They are all equal under the legislation. Is there 40 of them ?? I did not count them. Deposits cannot be bailed-in so do not go down with the bank.......

Frankly if banks started to fail and the government road blocked this then aussie has bigger issues than a broken "promise".


https://www.aph.gov.au/Parliamentar...e/Economics/CrisisResolutionPowers/Report/c02

2.37 Treasury confirmed that because deposits are not classified as capital instruments, and do not include terms that allow for their conversion or write-off, they cannot be 'bailed-in'.

Well one thing I've learned over the years is that these "sneaky" changes in the background are to our ordinary person detriment ...

 

[againsthegrain]

Well one thing I've learned over the years is that these "sneaky" changes in the background are to our ordinary person detriment ...

So far reading through and seeing how many people hold cash in the banks and are not worried makes me feel good!

also very good point about alot of people being cashless and only using plastic stops them doing a bank run.

keep holding cash, keep eyes open for opportunities and also risk in which case transfer 50k into NAB I guess 20c on the dollar is better then 0c but don't want to think about that yet

 

[tech/a]

Businesses hold very large amounts in banks as we do.
We need a constant 7 figures in surplus just to operate.
Self managed Super funds have massive amounts of Cash
in banks.

If Banks failed then so would the financial landscape of
the western world.
Businesses would cease employment
There would be no money for pensioners.

Anarchy would rain supreme and life as we know it
would not even remotely look like it does now.

The Corona Virus would look like a scratch prior to
your heart being ripped out!

Govts will lock banks up well before they get panic
withdrawals.

Relax its not going to happen.
This WILL pass.
In 2 years time it will be ANOTHER type of Flu we need to deal with
and be vaccinated against.

Now I have 10 excavators if anyone needs a Bunker let me know
Cash and Food supplies along with military supplies accepted.

 

[bluekelah]

1oz to 10oz gold coins or gold bars. 1oz is AUD 2500+ now. 10oz is 25k. so 10 of those buried in your backyard and bobs ur uncle.

With all the rate drops and helicopter money the gov is dishing out, AUD will just devalue and not worth a thing in the near future, especially during this coming recession. Bank deposits will be eaten up by negative rates.