Sunday, 27 November 2011

Storing money in troubled times

Whatever happened to those days when it was safe to keep money in the bank.
Admittedly in troubled times having any money at all is a luxury, but there are those who end up with the money and have to make tough decisions about where to keep it. The pensioners are also a population who should have a sum of money which represents their life savings that needs to be put somewhere.

In these times of low interest rates, troubled banks, sliding property values, debt ridden economies, a sinking  stock market and worthless bonds where does one keep his/her money? A financial commentator, one of those who always appear to have figured everything in situations such as these, came on the TV recently and said that the Euro was going to sink and that everyone in Europe were going to lose their savings!

Now, I am not as knowledgeable as this guy, but I would guess that you cannot use a word like 'everyone' in a situation like this, as there are always a set of people who seem to have 'insider' knowledge and manage to rescue their cash before its too late, including I might add, the commentator in this case. I will not ever forget one day when my boss where I worked in Venezuela, asked me if I had a lot of money in local bank. It must have been Wednesday or Thursday, because on the Friday Venezuela had to remove the link of its currency from the US dollar, a move that immediately reduced the value of the 'Bolivar' to half of its value the previous day. It then continued to slide so that after only a couple of months it had touched one fifth. Lucky for me I did not have much money in 'Bolivars'.

Now what did my boss know that I did not? However let us leave that to one side and get back to my original question, which is where should we keep our money, assuming we have some. I dont think we should rush out to buy Greek government bonds or those of Italy or Spain because of the risk associated with them. Banks are an option, however only a small amount is guaranteed to be safe in case of failure of the institution. However lately many countries have opted for rescuing ailing banks in fear of a collapse of the entire financial system teetering because of the heavy debts.

I am rightly confused and no longer laughing at the suggestion to keep all your money in cash under the bed!

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