By Leroy Ferrao-Founder of Leroy Ferrao School and an Employability Skills Coach
SMART STRATEGY NO:26 Keep your funds in Government Institutions and Banks
The latest banking crisis is now affecting the entire world economy in addition to the United States. Due to a series of events that started with the fall of two American banks last week, another significant bank is now in danger of failing. None other than Credit Suisse, a leading global investment bank, is this institution. Given that Credit Suisse is one of the top 30 lenders globally, this decline is more important than that of Silicon Valley Bank. The international economy, which is already suffering from the crisis, would be severely impacted by the effects of the failure of such a large bank.
In the past, there have been a number of financial crises that have had an impact on both economies and people. A severe cash shortage, bank failures, and the collapse of financial institutions are frequently characteristics of such a crisis. There are numerous actions you can take as a depositor to lessen the effect of such a catastrophe on your money. From the perspective of a depositor, the following are five suggestions for surviving a worldwide financial crisis:
#1.Diversify your deposits
Increasing your deposit diversification is the first step in surviving a banking catastrophe. Spread your money around several banks and financial institutions as opposed to keeping it all in one. In the event that one bank collapses, this will help to lessen your risk exposure. Moreover, think about investing in various asset types, such as gold, silver, real estate, or online enterprises, as they frequently maintain their worth in difficult times.
#2.Keep track of your deposits
It’s crucial to track your deposits and frequently check your account balances. Make sure your deposits are within the coverage limit and that you are aware of the bank’s deposit insurance coverage. You can file a claim with the deposit insurance plan to get your money back in the event of a bank failure.
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#3. Stay informed
Information is essential during times of crisis. Be abreast with changes in the economy, financial markets, and news affecting your bank or other financial institution. Keep track of your bank’s financial situation, credit rating, and any disciplinary proceedings taken against it. This will enable you to make well-informed choices regarding your investments and savings.
#4. Be prepared for Cash restrictions
There may be limitations on withdrawals or transfers during a banking crisis. Consider such possibilities and have a backup plan in place. Have some cash on hand, and make sure you can pay using several different means, such credit cards or digital wallets. Also, take into account setting up automated payments for necessary costs like rent, a mortgage, or utilities.
#5 Low-risk investments
Compared to other investment options like equities or high-yield bonds, government-backed investments in India often carry a lower risk. These investments are less susceptible to market alterations and economic downturns, despite the potential lower returns. Even during difficult economic times, your money will be safe if you invest in government-backed savings or bonds.
In conclusion, For depositors, a worldwide banking crisis can be a frightening and difficult period. Yet, you may lessen the effect of such a crisis on your money by diversifying your savings, monitoring your accounts, remaining informed, preparing for limits, and getting professional advice.
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Action Points:
Explore Government-backed savings and investment options such as Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY).
Consider investing in low-risk government-backed savings and bonds.
Compare interest rates offered by government-backed investment options and commercial banks.
Take advantage of tax benefits offered by government-backed savings and investment options.
Save money with government banks in India and support the country’s development while enjoying competitive interest rates and convenience.
By following these action points, you can make informed decisions about saving funds with the government and work towards achieving your financial goals.
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