Is Money Safe in the Bank?

I have a question about bank deposit insurance.


I think the government here guarantees deposits of up to HK$500,000 per account http://www.info.gov.hk/hkma/eng/consumer/deposit_protection_index.htm


This is supposed to protect people in case a bank collapses.


I see that the global economy is going very badly with stock markets going down and the price of gold going crazy. It all looks very scary to me


Now I can see how the bank guarantee will protect some of my deposits (I have way over 500k in one of my accounts though) if my bank collapses.


But what if many banks collapse?


Isn't it like fire insurance? I am ok if my house burns but if 90% of policy holders houses burn I am not going to get paid.


Another concern is that bank interest is almost 0%!


So I am asking is it better to take money and put it in a safety deposit box? Or to bring it home and put it in a safe there?

What matters is not the cash amount or nominal amount, its the purchasing power of those dollars that matters, even if the banks doesn't end up being insolvent, you should get some of your cash out and buy physical gold and silver to preserve your wealth.

Two different questions here - one relating to the underlying security of your cash, the other on how to get the best return from it.

On the first point, the safest way to ensure your cash doesn't go down the plughole if banks start collapsing again is to spread it across a number of different banks in HK, each below the $500k limit.

Good luck on the 2nd question. There are no simple answers. With inflation running at well over 5% at present in HK, and next to zero bank deposit rates, the value of those deposits is eroding as surely as if you were to throw some of it down the drain each year. The traditional strategy in an inflationary environment is to invest across a range of asset classes which will benefit from inflating asset prices (eg stocks, real estate, commodities like gold etc.), but given how shakey the financial system is right now, traditional wisdom feels less relevant.

Good luck!