• The post you are reporting:
   
  Hi Helen. Well if they are not allowed to fail or if they think that they will get bailed out then that would encourage too much risk taking and we have seen what results from that.
  
  What is important is not that banks might fail but your savings are protected by a decent compensation scheme and currently the UK (and EU) depositor protection scheme guarantees £85,000 per person. Therefore a failing bank would not result in a loss for anyone with less than that in the bank.
  
  You need to be careful therefore not to have more than £85,000 with any one institution or 'grouped' institutions, not per bank account. Money needs to be spread around, diversification is vital as part of risk mitigation in any savings/investment portfolio.
  
  If you have money that is being invested for long term needs then you need to be very careful about where it is invested. Currently bank deposit rates are worse than inflation and that is not set to get better. Any money you have with a bank is losing value by way of purchasing power even if interest earned is being rolled up. People taking interest as an income flow are being hit by a double whammy because their capital is losing value quite fast and their income is appallingly low. QE will reduce returns further on bank interest while boosting inflation so the picture is set to get worse.
  
  Bank accounts (cash deposits) are important and are the right place to invest save for emergencies and shorter term (under 5 years) capital needs.
  
  I cannot go beyond that as once I start going into other investment assets and alternative homes for investment money I will hit regulatory problems and must not go into that.
  
  I hope I have answered your question though I suspect it was not what you might have been expecting.

Report Post

Your Name

Reason