How to keep your money safe? Not such an easy question these days. I’ve had some money piling up in a bank account for my company which runs Lateral Economics and Peach Financial and have just popped down to the bank to pay it from an account heavily in credit to a personal margin lending account. Turned out that the margin lending account is actually run by the same bank as the bank which ran the account from which the money came – though it was ‘rebadged’ in the name of a broker. So I’ve managed to eliminate the counterparty and their margin. Cheaper and safer – but for the extraordinary rigmarole one has to go through for the benefit of the ATO.
But spare a thought for Tania whose name has been changed. She’s just sold her house and her entire life savings are tied up in a bundle of cash until she buys again. Where does she put it? She asked me. I told her a few months ago that she could go to the RBA but in fact the pickings the RBA give you from their oversubscribed bond market are rather thin, with odd maturity times, and you get to fill out forms and pay brokerage every time your money matures.
She asked me if BankWest on a Term Deposit was a good idea. The rate looked particularly good, and it was the right term so I said yes, but agreed with her that if she wanted to diversify further she should – by putting it into several banks. She has. Anyway, now she’s worried. I’ve told her that the chances of anything going seriously wrong are still very very small. But it’s pretty outrageous don’t you think? That a person who’s worked hard all her life, always played by the rules is forced, if she wants to earn any interest, to do what she thinks of as gambling with it in a bank. Makes me pretty annoyed that the Government doesn’t offer a means for its citizens to take safe possession of these exclusive units called dollars created for their scarcity value by the government as a monetary unit – along with some of those dollars’ earning power.
Anyway, I also mentioned to her that the money would probably be safer still in a cash management trust, providing that it really was a trust and not an account and that it invested only in Australian government paper. I also thought that if she was prepared not to earn any interest at all, she could pay the money into her tax account and just leave it there, though it might be a hassle to get hold of it again – anyway it’s a lot better in there than under the bed.
I wanted to extend an invitation to fellow pontificators one and all to assess the quality of this advice and to improve upon it.