Insuring against Bank Collapse

getzegold

bendix wrote: »

Really? The banks almost all collapsed in 2008, did they?

I must have missed that.

I suppose you missed the £1trill in emergency bailouts and loan guarantees and the nationlisation of northern rock rbs etc, that was required to keep them from collapsing. Abroad that year were you?

Loughton_Monkey

Post Script:

I suggest another discussion thread: "Assume we have a second major meltdown in banks, to the degree where HSBC/NatWest [You name it] are allowed to go fully bust and fail obligations, then can anyone please recommend an Insurance company who would remain.... er... fully solvent."

tony1947

bendix wrote: »

Putting £350k into a bank account is like displaying a Faberge Egg in an egg cup.

Too obtuse for me but I sense in it a criticism, so where would you put it? Under the mattress?

I have reached a point in my life where I don't need to accumulate any more wealth but simply to protect what I have against inflation. I experienced (along with many others on here) the folly of my decision to hold £100k in ICESAVE. I have seen my wifes fairly substantial pension pot produce an ever dwindling annuity return when she expects to take it in June next year. I have also experienced the problems with needing/wanting to extract money from equities if the timing of the market means you just have to wait for the rebound.

There must be thousands of people in the same boat and my original post as well as asking for info on insurance raised the question of getting the best investment return with minimum risk.

tony1947

Loughton_Monkey wrote: »

OK. If we 'stick a pin' into any of the major's. Let's say HSBC who might happen to have a unique 3% deal. You want to stick your £350K into that, but need to insure the £300K (excess over FSCS limit) against loss due to bank failure.

Although I have never heard of such insurance, it would be capable of hawking around Lloyds if you can find the right broker.

But I know what would happen (best case). The lead Underwriter would sit back, cautiously, and come to a conclusion as to the chances of a major bank going belly-up. Surely once every 200 years? No. Silly. Need to be more realistic and cautious. Let's say once every 100 years. Right, so that gives risk premium of 1%. I need 10% expense margin, 5% profit margin, 25% Broker commission, and a little bit for luck and IPT. Bingo! 1.5%

Even if you were lucky to find a Kama-Kazi underwriter to do it at, say, 0.4%, then your 3% would be net 2.6%, hardly more than the 2.5% you can get by splitting. And wouldn't you spit one month into the deal, when Barclays came along at 3.25%

I take your point(s) I think I was hoping that the very low risk ( I hope) of banks defaulting would mean relatively low premium costs that could be paid out of the increased interest earned and make admin of the portfolio much easier. Continually watching out for introductory bonus periods ending on numerous accounts is a pain.

tony1947

Loughton_Monkey wrote: »

Post Script:

I suggest another discussion thread: "Assume we have a second major meltdown in banks, to the degree where HSBC/NatWest [You name it] are allowed to go fully bust and fail obligations, then can anyone please recommend an Insurance company who would remain.... er... fully solvent."

Good point. I never thought of that and of course a highly likely outcome.

Sceptic001

tony1947 wrote: »

Too obtuse for me...

I normally enjoy bendix's caustic interventions, but I didn't get this one either.

I have reached a point in my life where I don't need to accumulate any more wealth but simply to protect what I have against inflation.

The only product currently available that protects basic rate taxpayers against inflation (as measured by RPI) is discussed in this thread
https://forums.moneysavingexpert.com/discussion/2780388

tony1947

Sceptic001 wrote: »

Incidentally, you don't need to open a NatWest current account in order to open their eSaver.

Correct. Pity the guy at the NatWest call centre didn't know that when I spoke to him this morning. Moneysupermarkets summary of the product said existing customers would get a speedier response and as I had a current account with NatWest in order to open last years Cash ISA I contacted them to see if that was still useable now I had transferred the ISA out. Response: No, you must open a new one.

Sorry for the misleading comment.

tony1947

Sceptic001 wrote: »

I normally enjoy bendix's caustic interventions, but I didn't get this one either.


The only product currently available that protects basic rate taxpayers against inflation (as measured by RPI) is discussed in this thread
https://forums.moneysavingexpert.com/discussion/2780388

Should have added an additional requirement to have reasonable access maybe not instant but I want to be able to get at the money on a whim. Most inflation protecting accounts lock your money away and you can only stare at it through your monitor.

As my wife often tells me "this is our time to enjoy". This usually before she goes shopping!

Aegis

Sceptic001 wrote: »

I normally enjoy bendix's caustic interventions, but I didn't get this one either.

I'm pretty sure he's saying that sticking something worth a lot into something which is designed for something worth a lot less is ill-advised. I.e. that bank accounts should be for emergency funds and short term liquidity, with the rest of the money used to provide a return above inflation.

I could, of course, be totally wrong.