Have you heard about the ‘Bail In’ Laws?
Prior to Covid19 the state of the Australian economy was not in the best shape. With the arrival of Covid19, the Australian economy went over a cliff into recession with anticipated worsening and a long period of recovery.
Back on the 14th February 2018, with only 8 Senators present in the Senator Chambers and without a recorded vote, the Turnbull Morrison government rushed this legislation through Parliament. This is known as the 'Bail In' Laws.
The chair of the Senate Economics Legislation committee conducted an enquiry into the Legislation. Senator Jane Hume insisted to the continuance, that it was not a bail in law. Apparently, it was not the intention of the law to bail in deposits. However, the government rushed the legislation through the senate knowing that Pauline Hanson’s one nation party senators intended to move an amendment that exclusively excluded deposits from the law.
What is it?
The bail in law basically means in time of economic crisis or in times of a future GFC, if the banks start losing money, the bail in law states banks have the power to take the deposits of anything over $250,000 from everyday customers.
This controversial law puts every Australian deposit holder with more than $250,000 in the bank at risk in times of economic chaos. It gives the banks unprecedented power and naturally this power is for the sake of keeping the nation afloat and what is in the best interest of Australia, as a country and not the individual.
Is your money safe?
With the dramatic economic downturn we are currently experiencing, the question we should be asking most people, with large sums of money in the bank, is – Is your money better in the bank or better in property?
Based on what I've read and heard, it seems that property is the most secure way to have your money invested, with a rising population and already a very strong rental market in Perth and throughout Australia. Most properties not only tend to grow in value over a period of 3-7 years but also for the owner as a great rental return - much more than the bank would give you in this market.
I'm worried that the bail in law gives the banks unprecedented power, therefore putting our hard-earned savings at risk if the economy turned belly-up and the Government needed to rescue the Banks and the economy.
Were you aware of these laws? If not, it may pay to do some research and work out where best to invest your money. The recent flight to bricks and mortar which has seen larger than normal volumes of sales, a reduction in listings and stabilised prices could be a result of certainty that property provides as an investment vehicle.
To discuss the performance of your investment property and how to maximise its returns or to get an update of its value, call me, Claude Iaconi anytime on 0412 427 877.
NOTE: This information is general in nature and any financial advice for your specific circumstances should be referred to your accountant or financial advisor.