US Bank Failures

If you haven’t seen this in the news yet, there has been the failure of two banks in the US in the past week.

Whilst this is not positive news for the global economy, the words ‘bank’ and ‘failure’ can incite a level of fear in people that is often disproportionate to the actual failure itself.

In our portfolios these banks’ shares and bonds represent no more than $0.01 per $100 invested for example, so not overly significant. Remembering that SVB is 40 years old, had $200B dollars and was the 16th biggest in the US.

Diversification really is our friend when these things happen. One of the greatest reasons for the fear you may (or may not) be feeling is that banking is complex and still not really taught is schools. We fear things that we don’t understand. Many remember the financial crisis of 2008 and could quite reasonably consider this as being the same thing again. So, fear is reasonable but not entirely rational. Our job at Lifetime, and all participants in the financial system, is to restore confidence at this time as a banking crisis can be a self-fulfilling prophecy.

To that end, we ran a client webinar on Thursday 30th March to cover some of the things that relate to this event, including:

• Banking 101. How has this happened?
• Who is impacted by this failure?
• What does in mean for investments and the economy both abroad and in NZ?
• How worried should we be and what should we do about it?

Missed the webinar? No trouble, you can watch the recording here. 

Article By Sam Walter - Read More

About the Author

Sam Walter is an Auckland based Financial Adviser who has been supporting clients with their insurances and investments for nearly 20 years. Sam has over $90 million worth of private funds under his management and is great at motivating people to improve their financial behaviours.