Safe bank for large sum of money
- Thread starter neocon
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If you won a million pounds, you would easily find out where to put it so its safe. Ask a millionaire.
Soldato
Is that not their problem? If you put £100k in and they get robbed, they lose out on £15k, not you?
If you lent me your car and I crashed it, I wouldn't be saying "wow, that's unlucky for you, I wasn't insured...", I would be trying to figure out how I now pay for this car I just borrowed and wrecked.
Caporegime
The insurance is for when they "collapse" lol not robbed.
The government guarantees that amount is returned to you.
The government guarantees that amount is returned to you.
They can go bankrupt and then you can't withdraw anything. The government covers £85k for certain institutions, but the remaining would be gone. Obviously this is pretty unlikely, but it happened in 2008.
I suppose you would either have to spread it around yourself or pay money manger to do it.
Even Coutts don't cover you..
Your eligible deposits with Coutts & Co are protected up to a total of £85,000 (or £85,000 for each eligible account holder of a joint account) by the Financial Services Compensation Scheme, the UK's deposit protection scheme. Any deposits you hold above the limit are unlikely to be covered.
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Soldato
Ha ha, makes sense. I was thinking more cyber crime and your account being emptied than your wild west dude though.
Soldato
Rusty biscuit tin under the bed? Swiss bank seems the obvious choice.
Right, I bet lots of richers in the UK put their dosh in Switzerland, out of the prying eyes of HMRC.
Soldato
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It's low risk. How many banks in the UK closed down during and after the financial crisis where the £85k protection had to be called upon? None. The £85k insurance is to help people sleep better at night, mostly.
In theory banks could keep your money 100% safe (ringfenced - client segregated funds) but you'd then be charged a fee due to not being able to profit from using deposits. Few could probably survive if all banks had to adopt that structure.
You can 'be your own bank' and store it in crypto
. But probably a higher probability you'd lose some/all of it than depositing it in a bank.
Soldato
Just to clarify, people didn't lose their savings in 2007-2008.
As covered above, its extremely unlikely / near enough impossible for a crash of that kind to happen again.
Although your money will earn a relatively low rate of interest, it will be safe in most of the big banks and likely most of the small ones also.
If you did have that type of sum to deposit, I'm certain there may be a more appealable rate you can negotiate - likely to come with more risk.
Soldato
Good question, its all about impact vs likelihood.
Due to how ring-fencing works, the retail side now sits in low risk area and completely seperate to how the risky arms of banks, where all the problems started last time.
They are enforced to have X% of reserve capital to ride a storm and this is tested.
Given that, the likelihood of them all going bang is well, extremely low.
Ps. I believe the FSCS which maintains that 85k limit is levied from the banks, so i'm not certain how much the government would actually need to cough up.
Soldato
It could happen, but the Government usually chooses to shore up the failing financial institution instead. See TSB/RBS, Northern Rock, etc.
Soldato
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A protected bank going bust could happen but it's unlikely now and there's still the option of a bailout as an alternative. Sure, if every bank collapsed the government couldn't pay out but again that is very unlikely to happen. Things have changed since the financial crisis as mentioned by tlrBeta above (reserves, simulations to see if banks could cope in event of certain situations).
Quite a few I know have money invested in property and other investments and fairly minimal in banks. Can view a property as a 5 to 10 year+ bond that you cannot touch at all, pays interest(rental income) albeit with plenty of fees and risks, but it's not going to get lost/stolen or gambled away by a bank making mistakes. Downside with property is that it's illiquid, even if you sell after 5 or 10 years it's not exactly a quick or easy process.
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Actually, how much money is even in personal bank accounts, because people tend not to save money? Maybe it's not even that huge. So bailing out personal savings at a single bank wouldn't be excessive.
I mean when RBS was nationalised, it was the entire operation right?
I mean when RBS was nationalised, it was the entire operation right?