How Safe Are Our Saving In This Financial Storm?

[lnicol01]

I cannot help to be a little bit concerned about the safety of my savings within the UK banks.

How likely do you reckon could be that if banks start go bankrupts, savers will not longer able to access their money? Just like it happens in 1929 when everyone lost everything that was in the hands of the banks.

What is the best option in time like these for us savers? Would it be better to dig a hole in the garden and deposit all our hard earned cash in there as soon as possible?

[eightiesgirly]

I cannot help to be a little bit concerned about the safety of my savings within the UK banks.

How likely do you reckon could be that if banks start go bankrupts, savers will not longer able to access their money? Just like it happens in 1929 when everyone lost everything that was in the hands of the banks.

What is the best option in time like these for us savers? Would it be better to dig a hole in the garden and deposit all our hard earned cash in there as soon as possible?

This is something that has bothered me recently, at the moment I have moved some money into 3 different bank accounts, some into NS&I bonds some into physical cash 'in hand' and some gold coins .

I don't have much savings and it has taken me a long time and much hard work and discipline to accrue them so I don't want them evaporating just because the world went on a mega-spending spree.

[Guest tbatst2000]

I cannot help to be a little bit concerned about the safety of my savings within the UK banks.

How likely do you reckon could be that if banks start go bankrupts, savers will not longer able to access their money? Just like it happens in 1929 when everyone lost everything that was in the hands of the banks.

What is the best option in time like these for us savers? Would it be better to dig a hole in the garden and deposit all our hard earned cash in there as soon as possible?

If you bury your cash in the back garden, there is a greater chance of it being eaten by rats than there is of a major UK bank going bust. If you're really, really worried, move your cash in accounts across the big clearing banks (HSBC, LLoyds, Barclays, RBS/Gnat-West, HBOS etc) and NS&I but, quite frankly, that's probably a waste of time and it will cost you in terms of lost interest too.

[Goldfinger]

I cannot help to be a little bit concerned about the safety of my savings within the UK banks.

How likely do you reckon could be that if banks start go bankrupts, savers will not longer able to access their money? Just like it happens in 1929 when everyone lost everything that was in the hands of the banks.

What is the best option in time like these for us savers? Would it be better to dig a hole in the garden and deposit all our hard earned cash in there as soon as possible?

I like your avatar! BTW, in 1929, not every bank in the US went bankrupt, 'only' 25% or so of them did.

In general: For believers in paper money (Sterling, Dollar, Euros), the safest place now are short term government bonds (long term is more exposed to interest rate fluctuations). The only real safe haven is of course gold (but you need the guts to ride out its volatility). If you have a lot of cash in a bank, spread it over several different institutions (many banks are actually belonging to the same super-bank, like RBS or HBOS, so, watch out) such that all of it is below the deposit insurance threshold.

[Leonard Hatred]

Safe as houses

[eightiesgirly]

If you bury your cash in the back garden, there is a greater chance of it being eaten by rats than there is of a major UK bank going bust. If you're really, really worried, move your cash in accounts across the big clearing banks (HSBC, LLoyds, Barclays, RBS/Gnat-West, HBOS etc) and NS&I but, quite frankly, that's probably a waste of time and it will cost you in terms of lost interest too.

Thanks for taking the time to reply, we don't have a huge income and I have budgeted very carefully to make sure we have a safety net, so it's comforting to know a wipeout isn't likely.

Cheers.

eightiesgirly.

[lnicol01]

Thanks for taking the time to reply, we don't have a huge income and I have budgeted very carefully to make sure we have a safety net, so it's comforting to know a wipeout isn't likely.

Cheers.

eightiesgirly.

Yeas, same for me, we don't earn a lot, but we save each single penny - that does not need to finance my landlord lifestyle or end up in gordon's black hole.

Big clearing banks make sense, and to be honest I am already resigned to get little interest as long as we dont end up paying for the consequences of the greediest whilst we have always tried to behave like salmon swimming against the currents

cheerio

[It is different this time]

I cannot help to be a little bit concerned about the safety of my savings within the UK banks.

How likely do you reckon could be that if banks start go bankrupts, savers will not longer able to access their money? Just like it happens in 1929 when everyone lost everything that was in the hands of the banks.

What is the best option in time like these for us savers? Would it be better to dig a hole in the garden and deposit all our hard earned cash in there as soon as possible?

I suggest you read 'Financial Services Compensation Scheme' and spread your savings across different banks if necessary. The maximum level of compensation for your deposit is £31,700 per person, providing the firm/the bank you claim against is authorised by FSCS.

http://www.fscs.org.uk/consumer/key_facts/...nsation_limits/

[eightiesgirly]

I suggest you read 'Financial Services Compensation Scheme' and spread your savings across different banks if necessary. The maximum level of compensation for your deposit is £31,700 per person, providing the firm/the bank you claim against is authorised by FSCS.

http://www.fscs.org.uk/consumer/key_facts/...nsation_limits/

Phew! That's cool then, panic over. Cheers for that. I knew there was some sort of safeguard, just not how much. I presume these amounts can be adjusted and so maybe it might be worth keeping an eye on them occasionally.

[Soul Reaver]

I cannot help to be a little bit concerned about the safety of my savings within the UK banks.

How likely do you reckon could be that if banks start go bankrupts, savers will not longer able to access their money? Just like it happens in 1929 when everyone lost everything that was in the hands of the banks.

What is the best option in time like these for us savers? Would it be better to dig a hole in the garden and deposit all our hard earned cash in there as soon as possible?

I am in the process of putting together a survival Ebook and some tins of spam. I also do a range of air rifles and crossbows that I handmade our of some sticky back plastic. If a major bank goes down your paper money will be the last thing on your mind as everyone rushes to Tescos for that last tin of beans!

Can we start talking about moon landings now?

I miss Cg

PS

And your bag of gold will only be good enough to hit people on the head with as they come to rob your house

[Justice]

I am in the process of putting together a survival Ebook and some tins of spam. I also do a range of air rifles and crossbows that I handmade our of some sticky back plastic. If a major bank goes down your paper money will be the last thing on your mind as everyone rushes to Tescos for that last tin of beans!

Can we start talking about moon landings now?

I miss Cg

PS

And your bag of gold will only be good enough to hit people on the head with as they come to rob your house

Yeah good joke and i hope you remember it when you are hungry and it will make you smile if the $hit ever happens.

Nothing is wrong with taking precautions and with food prices now seeing double digit inflation it makes scence too.

[Shmoo]

Interesting thread on this lawyers website:

http://www.rollonfriday.com/forums/disc_topic.asp?topic_id=287813&forum_id=41&sort=&page=&Topic_Title=Credit+crunch+again+%28sorry%29&forum_title=Discussion&M=False&S=True

[bobthe~]

I am in the process of putting together a survival Ebook and some tins of spam. I also do a range of air rifles and crossbows that I handmade our of some sticky back plastic. If a major bank goes down your paper money will be the last thing on your mind as everyone rushes to Tescos for that last tin of beans!

Can we start talking about moon landings now?

I miss Cg

PS

And your bag of gold will only be good enough to hit people on the head with as they come to rob your house

This is errant nonsense.

Corned beef is much nicer than Spam.

[ruggedtoast]

TBH if the banks went bust and the compensation scheme didnt work we'd all be so royally rogered that your money would be worthless even if you could get to it.

You'd be much better off researching ISAs and high interest deposit accounts so your money is working for you instead of squirreling it away into current accounts that pay you nothing.

I had a with profits bond that I took out in 2002 with Standard Life, it lost a load in the dotcom crash and just about made back what it would have done if Id left it in the bank by last week when the markets went down again.

Must admit i turned chicken and cashed it in! Once bitten and all that, trust Standard Life as far as I can throw them anyway.

[Guest Bart of Darkness]

And your bag of gold will only be good enough to hit people on the head with as they come to rob your house

I'm thinking gold dust. Throw it in their eyes and then kick 'em in the goolies while they're blinded.

This is errant nonsense.

Corned beef is much nicer than Spam.

Have to agree with that. Although if I had to live on it for 6 months.........

[Guest Popalot]

Cahoot/ Abbey have obviously made some rate decisions today (see other threads). I have a chunk of money in cahoot.....May move it esp as Banco Santander exposed to subprime.... Anyone know the best of the "big 4" banks rates?

[Guest tbatst2000]

Anyone know the best of the "big 4" banks rates?

http://www.moneyfacts.co.uk/savings/default.aspx

[Jason]

Interesting thread on this lawyers website:

http://www.rollonfriday.com/forums/disc_topic.asp?topic_id=287813&forum_id=41&sort=&page=&Topic_Title=Credit+crunch+again+%28sorry%29&forum_title=Discussion&M=False&S=True

Welcome Shmoo.

Your link doesn't work, so I've corrected it (click)

[Tiger Woods?]

Re the comments about major banks not going bust: NatWest nearly went bust in the credit crunch of the 70s. Banks went bust in the 1930s, but money still had value for those who had it. How soon we forget. Spread your risk around. It costs very little.

[mash]

I'd go for the NS&I, such as index linked saving certs which are tax free. The country / banking industry has never been in the situation it is now, we are in uncharted waters. The scale of the private and government debt mountain is massive and growing all the time.

Low risk = low returns, but to be honest the difference you'd loose between NS&I and the high street rates will not be a life changing amount of money, but loosing your life’s savings could be a life changing event..

Remember pensions - they used to be untouchable, safe as houses, something you could rely on for the future, the companies had to keep the monies separate blah blah - look what's happened there. We are now resigned to the situation that it’s accepted that no ones pension is safe and the same change in attitude may well happen with savings accounts.

The £30k protection is meaningless, do we really think there is a massive fund of money actually existing around the institutions ready to bail out their competitors should the worst happen ?

Just like the pensions, when it comes to the crunch we will find it’s been raided and companies have been acting irresponsibly.

Also when this protection originally came out I bet the debt levels / exposure of financial institutions were nothing compared to today ?

[Guest tbatst2000]

Re the comments about major banks not going bust: NatWest nearly went bust in the credit crunch of the 70s. Banks went bust in the 1930s, but money still had value for those who had it. How soon we forget. Spread your risk around. It costs very little.

It's certainly true that retail banks go bust; I imagine I'm not the only person on this forum who remembers BCCI for example. Also, many banks in the US went bust in the 30s as you point out. However, you need to look at the bigger picture to see why these banks failed and why, except in the case of true economic meltdown (in which case your pounds, whether in a bank account or in the form of folding notes, will be worthless anyway), the failure of a large UK or US bank is extremely unlikely.

Firstly, the US: the Federal Reserve had only been created a few years prior to the start of the depression and was faced with attempting to look after a highly fragmented and regionalised banking system. It failed singularly to do that with the result that many small banks when bust taking people's money with them. After the worst of the turmoil was over, FDR passed a bill setting up the Federal Deposit Insurance Corporation which guarantees depositors money up to 100K USD (I think, it may have changed since I last looked it up). The modern banking environment in the US is very different as the companies involved are much larger - this makes it a great deal easier for the Fed to intervene in the case of say, Wachovia, getting into trouble. It might cost a lot to provide the liquidity to keep a big bank running but the Fed has show quite conclusively over the last few weeks that it's willing to do that.

Secondly, the UK: the BoE has a long history as the lender of last resort and has not allowed any bank that it considers a core part of the financial system to go bust in a long time (like hundreds of years). The UK has a system similar to the FDIC but slightly less generous (you get something like 90% of the money up to 30K - there's a thread elsewhere on this). I don't recall the NatWest bank ever being near to failure although it didn't make much money for a large part of the 80s due to failed expansion attempts and incompetent management. Do you have any references that would back up your statement?

Spreading your risk around makes sense if you have very large sums to invest but will cost you substantial amounts of money if you don't. The best long term rates of interest are always available for people with larger amounts to invest, breaking your pot up into little chunks will mean you don't ever get the best long term deal - you might have the illusion of a better short term rate but moving money around to catch the best deals inevetibly ends up costing you in terms of withdrawal penalties and so on. It's also a real pain in the backside.

The summary is that, so long as your money is with the big players or NS&I, you're unlikely to find anything safer. Sure, spread things about a bit between them but, assuming you're not looking at investing hundreds or millions, there's very little point in having more than one account until you get past the 30K mark and, even there, you're just being paranoid quite frankly.

You can get some more background on UK bank failures here if you're interested.

http://www.bis.org/publ/bcbs_wp13.pdf

[Guest tbatst2000]

The country / banking industry has never been in the situation it is now, we are in uncharted waters.

What's your evidence for this?

[redgenieuk]

I'm thinking gold dust. Throw it in their eyes and then kick 'em in the goolies while they're blinded.

Have to agree with that. Although if I had to live on it for 6 months.........

Six months on corned beef? Mmmmmmmmmmmmmmmm..... especially if there was some green giant to go with it! yum yum!

[Guest tbatst2000]

Six months on corned beef? Mmmmmmmmmmmmmmmm..... especially if there was some green giant to go with it! yum yum!

Best pack some charcoal tablets too in that case.

[nigwell]

Barings was a top rated UK blue stocking bank but the BofE let that fail too, I suppose to enforce the idea that there was such a thing as moral hazard.

Gillts - the short variety, are the safest haven.

Those offering market high interest rates do so for good reasons - or bad! Buyer beware.