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I have $200,000 that I want to put into 2 term deposits. This money is all the savings I have in the world and I want to keep it safe.

I am considering putting $100,000 into one bank's term deposit(ANZ), and the rest with another bank (Kiwibank) - with the idea if one bank falls over, at least I will have money in the other bank. 

Is this daft?!! or not such a bad idea.

 

 

 

 

Edited by KEW

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Personally I would consider investing some with Superlife/Investnow/Simplicity. I don't think you need to worry about the big banks going under enough to split your deposit, but others may not agree.

The main thing would be to split it up into the smallest term deposits that make sense. For example, at BNZ, the minimum deposit you need to get monthly compounding is $20k. So split your cash up into lots of $20k. Or maybe have one $100k, and five lots of $20k to make it easier to manage. That way you get the benefit of compounding returns, with the safety of being able to dip in (in an emergency) without losing all your interest in one go.

Also, whoever you go with, make sure you book an appointment and open these deposits face to face. That way you can ask for a better rate and you'll probably get it. Might only be 0.1% but it's better than nothing!

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Guest

You don't say if you hold debt or not. My suggestion is don't put the cash in the same bank as where your debt is.

After the Earthquakes I got a call from ANZ bank offering me money. Unfortunately I said yes. The contract I signed three months later contained a nasty security clause that gives ANZ bank security over everything I hold with the bank.

If you become insolvent for any reason the bank will close off access to your cash. It doesn't matter how its invested. Or what sort of an account the money is in.

Where ever you invest it, read carefully the terms and conditions, and look for security clauses in the document.

Its often the terms of contract that is signed that shifts the risk level and is how people lose money.

I would divide a small portion ($20k as suggested is a good amount) of it and put it with different banks, then I would by some kiwi-bonds or other fixed term investment, or government bonds.

The more secure the investment the less risk so the least return.

I would keep $10k in a three month term deposit in case of big emergencies, and reinvest it each period. I would hold $5K in a standard bank savings account, for day to day emergencies. Again ensuring its not with a bank I hold debt with.

Put the bulk of the money in the safest place you can for short periods of time until you decide properly what you will do with it. What annoys me about kiwisaver for example is if I decide later on a better investment, I can't get that money back until I retire. Make sure you do your own research as well in terms of the different asset classes.

As Donald Trump says - there are sharks everywhere. He means that once people know you have cash, they will go to tremendous effort to have you part company with it.

Ford

 

 

 

 

 

Edited by Guest

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Hello RichLife and Ford,

thank you both very much for your answers. I am glad you think my idea of a two different banks is an ok one.

RichLife - Yes - I did consider the Index funds idea but I got the impression that money put in those should be in for 5 years or more and I am in a bit of a change phase in my life at the moment and don't want to tie up funds for that long.  Yes - dividing up into $20K bunches sounds good, if a bit administration heavy!  - but I can see your point. I do want/need emergency funds.

Ford -  Luckily I have  no debt. And yes - your comment "Put the bulk of the money in the safest place you can for short periods of time until you decide properly what you will do with it." is exactly what I will do.

 

From Kirsty

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