Large Amount in Savings - What Do I Do?

I have a pretty significant amount in savings, somewhere in the ballpark of 100-150k.

Until recently I was planning to buy property later this year which still may be the case but until I pull that trigger I'm feeling quite anxious about leaving the money as savings in a single currency. I'm not really looking at making a profit, more just focusing on reducing the risk of AUD crashing entirely or something.

What would you do if you were me?

Serious answers only please!

Comments

  • +2 votes

    ETFs? Gold?

  • +4 votes

    Crypto is going to launch again.

    • I really want to vote you UP to help my holdings - but heck, no not punt on crypto what you can't afford to lose.

      AU shares have tanked a lot, I'd assume at some point it would make sense to move your cash to shares. Now, when that is will be a VERY hard decision (well with my knowledge anyway).

      I intend to do exactly that if I can find an entry point. (I'm all ears here!!!)

  • Look into index options.

  • Mandatory comment re: transferring to my account

  • The best hedge against aud crashing is buying gold. Not only is it traded in usd, but is in of itself a valuable commodity that you can hold in your hands and trade for goods if necessary.

    • I still don't get the whole value of gold thing - like, I know it's a thing, I just don't get it.

      (IMO) gold is considered precious because of its appearance (shiny) and chemical properties (stable, doesn't easily corrode, tarnish etc). I can't eat gold, can't really use it for anything (everyday) as its a bad metal for tools and an electrical average conductor (an unlabelled can of Coke would probably do a better job).

      It's "value" is mostly in the value that the financial system places in it. If society goes to absolute hell (unrelated to the current situation), I'm not trading my toilet paper food for a piece of gold.

  • Silver, gold or take out and stash physical currency around your home to avoid bank bail in laws

  • I am in the same boat. Been saving up for the last 3 years to buy a property, but unsure if it is safe to leave it in a savings account with RAMS!

    I am a noob when it comes to financial planning, so I simply have been keeping everything in savings without investing in anything.

    Glad you raised it OP, as I am curious to read the feedback here!

  • AUD has already crashed, if you didn't notice.

    Though if you're going to buy property in Australia, having your savings in AUD mean you won't really be affected by changes in the value of AUD anyway. You're naturally hedged.

    If you really want, the traditional safe haven holdings of value in terms of economic instability is gold and/or US Treasury bonds.

    • It can get worse unless it's not worth anything at all.

      • "Can"? Sure. Even a reasonable probability? Not really.

        Australia's main exports are relatively basic primary production - ore, coal, meat, grains, etc. Demand for those will never disappear, it's just backed up because of international isolation due to coronavirus.

        Our biggest market (China) is already recovering, and so demand for Australian exports, and by extension Australian dollars to buy those exports, will recover accordingly.

        Given how weak it is right now, the AUD is possibly even a good speculative buy for Forex traders.

        I have clients who've effectively saved 20% on investments into Australia in their native currency.

  • Remove atleast %10 as cash and keep it stashed somewhere in your house.
    You want to have atleast something when the banks suddnely "go bankrupt".
    Also, we will have negative interest rates soon, so you will be paying %0.5 - %1 of all your savings as a yearly fee to the bank.

    • Banks are federally insured upto $250k.

      • Actually with the new bail in laws, the federal insurance is basically worthless. It only activated when the financial institution goes bankrupt.

        With bail ins they just use their customers deposits to stay afloat.

        • That's not what the bail-in laws are, at all, nor is that how they interact with the Federal $250,000 deposit guarantee. Please stop spreading this kind of misinformation.

          Just like panic buying, you can actually start a run on the banks from literally zero substantive factors entirely, and turn it into a self fulfilling prophecy.

          • @HighAndDry: https://www.ainsliebullion.com.au/gold-silver-bullion-news/s...

            Answers your questions.

            "So to be clear APRA must first try and rescue the ADI and if that fails it must gain the support of the Treasurer to go to court to declare the ADI insolvent, it must go through the court process, and THEN you get your money “generally within seven days”…

            All of the above also assumes some form of order and not mass panic and bank runs as we’ve seen more recently in Greece and Cyprus."

            • @garetz: Ok, this is always, and always the only site I see people link to back this up, and I only just realised why.

              It's a freaking business selling (shares in?) GOLD FREKN BULLION.

              You know what gold bullion is a natural competitor to? Cash. That you keep in a bank.


              Now, to answer those specific points, it's pure shameless fearmongering. Nothing in that process is special in insolvency. Hell, it takes a few days notice to make any large cash withdrawal from a bank even normally.

              • @HighAndDry: Just because you're paranoid doesnt mean they're not out to get you.

                You dont actually refute what is said in the article, you just make broad statements about how that site cannot be trusted.

                What you say doesnt really prove anything to your point or disprove the site either way.

                • @garetz: No, I addressed the actual point you raised, which is the process for activating the $250k guarantee. It's the same as the process for the insolvency of any other company.

                  • @HighAndDry: Yes, but if they can simply bail in they never become insolvent until all their customers money runs out. So its a moot point.

                    • @garetz: That's… not how that works. To even use the bail in provisions require government approval so they're already notified (as is the public), and insolvency has a fairly black and white definition that neither the bank nor the government agencies will be able to hide from.

                      The key word in banking is trust. A bank failing would be bad, yes. But the government conspiring with a bank to effectively rob depositors would destroy trust in the banking industry and effectively crater the entire economy for a decade.

                      No government would choose that if they can help it. Look at right now for example - the government is pumping far far more than just $20b into the economy to try and prop it up.

                      • @HighAndDry: Then why have the bail in laws/legislation at all ? Basically what you are saying is they did create the legislation but aren't going to use it ?

                        Makes 0 sense, there is no argument here, what you are arguing not only makes no sense, but seems like a childs rationalisation of thinking the government has our best interests at heart, which is not always the case.

                        • @garetz: No, the bail in provisions allow the banks another method to avoid insolvency. If the bank remains solvent, you can withdraw your money without needing the $250k guarantee to be activated (and you also don't potentially lose everything above that $250k).

                          • @HighAndDry: You are missing my entire point, its like going around in circles with you, are you arguing for the sake of arguing ?

                            Reread everything you have said, and what i have said, hopefully you can make sense of what i am saying.
                            if you cant then lets agree to disagree.

            • @garetz: only reason this happened in Cyprus is because there was no guarantee so people got scared and all tried to take their money out at once.

              The Aus Gov brought in this guarantee for exactly that reason, to stop a run on the banks. Like right now I am leaving my money in the bank because I am not worried because if they go under the Gov will back me up

        • I was going to say exactly this. I would be spreading my cash across a few bank accounts to be safe.

          Unlikely but this year isn't exactly 'normal'.

  • IN light of covid-19 I would be keeping your money in the bank, where the Australian government will guarantee the first $250,000. Yes the interest rates will be lousy but the minute they find a cure for the virus, buy a house / put it all in the sharemarket on a solid stock, and watch your money go up from there.

    Stocks have lost ALOT in the last few weeks and there is no end to the bottom unless the virus is gone.

    • You'd think pharma companies would be a pretty safe bet. At least one of them will go through the roof.

      • You would think logically phamarceutical companies would be resilient in these times but you need to actually research and look into what each company does. The 1st and 3rd largest pharma companies, in the last three months have dropped in value, eg. MYX down around 40%, SPL down around 45% respectively. Those companies are exposed to some of the markets they are in or targetting eg. China / Asia. AFT, the 2nd largest pharma companies on the other hand actually went up around 15% n three month.
        So not all pharma companies are pretty safe.
        But logically once the fear and panic of the virus is reduced, generally the whole market will pick up significantly, buy any 'blue chip' stock and you should be very safe and in growth territory.

    • NEVER SPECULATE WITH YOUR LIFE’S SAVINGS.

      Repeat:
      NEVER.

  • same boat. what are the odds of Commonwealth bank going bankrupt??

  • I look for the honeymoon interest rates, just had 4 months in Macquarie for 2.65, currently in ING at 1.95, but can do better. The Govt will guarantee it

  • be quick at macquarie, the others have all dropped, I just checked

  • Haven’t people in this thread noticed all assets being sold off including gold and crypto currency. I’d buy quality US stocks but if not concerned about the AUD Aus shares better because of franking div and offset capital gains . Best of two worlds Aus shares with large % business in US.

    • With regard to franking credits just wait till next election. No way will they continue in same form.

      Honey pot for either side.

  • +2 votes

    write a will.

  • Investing in anything other than a bank account in the current financial climate seems to be counter-intuitive. Maybe after a few more weeks the share market might hit the bottom, but how long it will stay down for, no-one knows. We haven't been in this situation before - except 100 years ago with the Spanish Flu and that was well before technology.

    Financial markets will rebuild, but it will take time.

  • Hold cash, buy a property or shares 3-6 months later.one of few great opportunities in life to invest

  • Hey OP. I'm in the same boat except in not really keen on property. I plan to pump it into shares at the bottom and currently using it as a rainy day fund.

  • I've also got large amounts spread between ADI, I'd be lying if I said I wasn't a bit concerned about the less than transparent bail-in laws. I've been saving for a decade to put a good deposited on a house, would be bleak to forfeit all that hard work.
    More bleak would probably be to die of COVID19, so I guess there's that.
    Which ods are higher?

  • +1 vote

    Stick to your original plan, but hold off on the house purchase. If your job is secure you will be in a great position to buy when prices drop or people are forced to sell off their excess assets. Don’t panic and make dumb decisions.

  • In difficult times like this, it’s good to have cash. Anyone can lose their job, be it you or close family, and it’s better to have your own resources to survive, rather than queueing up at Centrelink in the hope they will help you feed your family. When it looks like we are thru this crisis, the opportunities to buy will be there.

    • I'd have to try pretty hard to turn my life savings into 'needs centerlink support'. My partner is in a public service role which is very unlikely to make redundancies. I own my own business in IT with the skill set to do pretty much any software development, system administration or security role - I think we'll be fine ;).

      • You might see having cash at the onset of a pandemic as a chance to make a quick buck. I see it as a way to help myself and my family through a crisis. And you may have great IT skills, but maybe you haven’t grasped the seriousness of the situation we are confronted with.

        • What? I'm literally trying to not /lose/ my life savings because of the pandemic. Stop projecting your insecurities on me.

          • @coldogga: You sought advice and I gave you mine. If you want to gamble your security net during a crisis, that’s your choice. No need for insults.

      • I think the suggested "advice" was to use your cash to momentarily "assist" others.

        Like loaning money to friends and family but establishing you'll want the money back, no kidding.
        Perhaps a minimal interest of 0.01% to show you are not a charity and the money WILL be paid back!!!

        But … do you have friends and family you can trust?
        A lawyer drawing loan documents will cost money.

        • NEVER loan to friends or family if your expectation is for it to be paid back.

          Be prepared to lose it all and your friends and family if they can't or won't pay it back.

  • Maintain liquidity. Most drivers (i.e. USA, Europe, China) of the world economy have come to an effective halt. Other parts of the world are not far behind. Whilst we will survive as a civilisation, there will be alot less of us in a year or so. Whether this will be just due to death from the disease or a massive social unrest is anyone's guess. Until we see a trend of improvement, maintain liquidity. We have yet to see the peak.

  • Get USD invested be it in a USD account (e.g HSBC), Gold or ASX:USD, but remain vigilant. Keep some physical cash too. If you get out of AUD, then on the other side of this you will be able to buy Australian property with cash because it is about to fall off the cliff.

    • Totally disagree. US dollars are over valued right now because they are the currency people go to for safety. The Aussie dollar has already lost more value against the US dollar than is historically normal so exchanging currencies at this time is too late and will most likely incur losses.

      • So if they the USD is currency for safety then what happens when the real SHTF? Enjoy your AUD dead cat bounce and don't cry to me when the AUD collapses…

    • As prev post, moving now to USD is not very smart as the FX is heading south … losing value.
      Stay in AUD.

      Besides my suggestion of an EV, buying land perhaps?

      • Same as above. Get out of AUD while you have the chance!

      • Also buying land? Australian land? I suggest you put your cash into USD, then buy land in AUD out the other side when it is 50% lower than current 'values'. The Australian property market is toast!

  • Not to dismiss others commenting here but why would you want to do anything?? You need only one thing to be assured of right now and that is that the amount you have on deposit is under the government guarantee if the institution you have your money with goes bust. If not then simply spread around several to keep the amount at each under the government guarantees.

    During the GFC this was done by a lot of people afraid of their bank going bust. I hear you are not concerned about speculation plans and THAT is exactly how you should be thinking right now. If you move it to shares you need to KNOW you will not be calling on that money for at least 7 years which is the recommended window for safe investing.

    If you are going to buy a property you may be well positioned to do so in the next year or so with this common sense approach. You are the envy of many. Don’t let it go to your head ;)

    • To be clear, I'm not looking at making a few dollars. I'm scared of the economy collapsing, hyper inflation etc. I'm not an economist, but it to me it seems crazy to keep a large quantity of money in a single currency without diversifying to some degree to reduce risk.

    • You do know about the clause for government guarantee being limited to $20B per institution? Last I looked there was just shy of $1T tied up in bank deposits.

      Quite unnerving as a long term, fiscally responsible saver.

  • If you're in no hurry to get the money back soon I would say go buy some stocks while they are low. It could take a year or more for them to recover though.

    • The ASX 200 was about to hit 7000 just before the GFC. Well ironically it finally broke through 7000 just before the Coronavirus crash so NO I wouldn’t expect a recovery that Quick

  • more just focusing on reducing the risk of AUD crashing entirely or something

    Too late for currency fears!!, the AUD is touching bottom … as it did in 2001 so no need to mass suicide please!
    Or buying gold is also out (it is priced in USD after all).

    Government (AU) bonds might be interesting.
    Overseas bonds are out because of current FX.

    How about buying items that might appreciate later?
    I know cars are generally a very very bad idea but an EV, an electric vehicle, could be bought in AUD at a fixed price. Thinking Tesla not smaller ones.
    White goods is another option but need storage space and a good "nose" on what to buy (fridges? dryers?).

    For sure stay alert on what is happening. And very much remember the old saying: Cash is King and that is what you have Your Majesty ;-)

  • Since you are thinking to buy your own house, stick to it. Your home is your kingdom.As financial fiasco is still rampant, I suggest you leave your money with the bank now till you got your ideal house and buy it. After buying your house all the load of your money has gone then you will be relieved . Housing loan is cheap and therefore an extremely good idea to have your own house.

  • Honestly, just keep the money in the bank. The world economy has gone to the stinker and I'd keep saving as much as possible. Given Australia's record low interests rates, house prices under normal circumstances will probably keep going up but right now it's not normally times. So there might be distress selling in the near future. However, it would depend upon the job losses during the covid-19 and how quickly the economy rebounds.

    Otherwise if you're interested or want to learn about investing there are some great youtube channels out there.
    Joseph Carlson, he's brilliant. Always look forward to his videos!
    https://www.youtube.com/channel/UCbta0n8i6Rljh0obO7HzG9A/vid...

    Tracey Edwards is an Aussie and she is retired. Her dividends from stocks funds her living expenses.
    https://www.youtube.com/channel/UCwL7GQcddxOZFeC2v8qdWoA

    Ian is another dividend investor based in the US.
    https://www.youtube.com/user/ppcian

    If you're interested in reading books on the subject.
    Peter Thornhill's Motivated Money is for the individuals whom know nothing about investing. His book is basically about investing in shares for the dividend income.

    My favourite investor Peter Lynch's One Up Wall Street is rather easy to follow too.