Bank Guarantees Withdrawn

According to The Age's Bank Guarantee to be Withdrawn, deposits at the bank, including money in savings accounts and term deposits, will soon no longer be government guaranteed. I was thinking of opening up a Ubank account but after hearing of this maybe it's not a good idea because if the bank collapses then wouldn't it mean you money would be gone?

If you put money in a term deposit or savings account in a bank and suffer from downside risk if the bank collapses, you may as well be exposed to upside risk as well by buying the bank's shares.

Another idea to get government guarantee is to buy Commonwealth Treasury bonds, which are government guaranteed.

Do you guys agree with my reasoning? Do you think it's a waste now to open up a Ubank account or put money in bank savings and term deposits?

 

Hi Norak

The safest place to put your money is under your pillow. When you make an investment(even a bank account) the assumption is, that there is risk. The risk is of loss.

The Government guarantee removed this loss. With that gone its business as usual. If you are really worried, have multiple bank accounts.






Cheers, Johny.

 

This is probably smart advice. I'd also look into keeping some money in some credit unions (they traditionally are less leveraged than banks), plus keep a little cash on the side and maybe a little bit of gold - or just tailor to your own needs.

 

I have both a cash management account and Bond Index Fund. The cash account has high interest and is at call. The bond fund invested in RBA bonds and is as safe as the Government. Both are low risk.





Johny.