Barefoot Investor Scott Pape: How to protect yourself from bank collapse
The savings hack every Aussie should know: Barefoot Investor reveals its simple trick to protect yourself from a bank collapse
- Scott Pape shared a tip for keeping money safe
Barefoot Investor Scott Pape has revealed his one simple trick that Australians can use every day to keep their money safe during a recession.
The financial investment guru insisted there was a surefire way residents could protect their savings in the event the big banks collapsed.
It comes after concerned resident Jenny wrote to Mr Pape asking how safe her money really was.
Barefoot Investor Scott Pape has revealed his one simple trick Australians can use every day to keep their money safe during a recession
It comes after concerned resident Jenny wrote to Mr Pape asking how safe her money really was (stock image)
Her fears for bank stability stem from the collapse of Silicon Valley Bank and Signature Bank in the US over the past two weeks.
A new report from leading economists indicated that as many as 190 additional banks in the country could follow suit.
The domino-like effect has raised fears that it could create major economic ripples around the world and plunge the world into a recession similar to 2008.
“Now that another bank is going bankrupt in the US, it’s starting to feel like 2008/2009 again. How safe are our banks and our money in the banks?’ Jenny wrote.
Mr. Pape assured Jenny that her money would be safe in the bank thanks to the financial protection that was in place.
He revealed that the Australian government created the Financial Claims Scheme after the global financial crisis in 2008.
The scheme is designed to provide economic security in the unlikely event of the bankruptcy of a bank, credit union, building society or general insurer.
Mr. Pape pointed out that as much as $250,000 will be protected in one account.
He revealed that residents could protect the rest of their savings by following his very simple trick.
“So if you have more than $250,000, you should think about splitting it between different institutions so that you are covered by the scheme,” he wrote.
“Don’t worry, the money in our banks is safe,” explained Mr. Pape.
SVB, a California bank founded in 1983, was forced to close this week after its ill-timed investments in longer-term government bonds left it with heavy losses.
Robert Kiyosaki, author of the bestseller Rich Dad Poor Dad, who predicted the collapse of Lehman Brothers in 2008, which helped exacerbate the GFC, warned that Credit Suisse was about to collapse.
The US bond market is in “serious trouble” after SVB filed for bankruptcy on Friday, followed by Signature Bank on Sunday.
In 2008, similar collapses of oversized US banks and subsequent massive taxpayer-funded bailouts sparked the GFC, which had profound repercussions globally, including Australia.
The collapse of the SVB – and the vulnerability of other small US banks after days of stock panic selling – has raised fears of a repeat of 2008.
“The problem is the bond market, and my prediction, I called Lehman Brothers years ago, is that Credit Suisse will be the next bank to leave because the bond market crashes,” Kiyosaki told Fox News.
The collapse of the SVB – and the vulnerability of other small US banks after days of stock panic selling – has raised fears of a repeat of 2008.