When it seemed like the month of March came with the relief of having overcome the January slump, suddenly one day it appears in the news that an American bank called Silicon Valley Bank is on the verge of bankruptcy. Headlines that have shaken all individuals who have investments, but even more so those who don’t. Those who, by choice or simply out of ignorance, have their savings in their checking account.
The contagion effect occurs more rapidly when bad news pile up compared to when opportunities present themselves. Perhaps due to the innate panic that humans have of being left helpless. All experts agree that there is little likelihood that the bankruptcy of Silicon Valley Bank, as well as the scare caused by the Swiss bank Credit Suisse in recent days, will have an impact on Spanish banks due to their minimal exposure to them.
Furthermore, any well-planned individual in Spain knows very well that they should have just the right amount of money in their checking account to cover their expenses for three months. No more. Having more money in the checking account poses a danger that nobody talks about: your savings being eroded every month by inflation.
If the bankruptcy of Silicon Valley Bank were to occur in a Spanish bank, you, as a customer, would only have the first 100,000 euros insured by the Deposit Guarantee Fund, a tool founded in 1977 in which banks, savings banks, and credit cooperatives contribute to cases of insolvency of a credit institution.
To put it in simple terms with an example, if you inherit a house tomorrow and sell it for 300,000 euros, and the very next day your bank goes bankrupt, out of the 300,000 euros you just deposited into your checking account, only the first 100,000 euros would be insured. The other 200,000 euros may or may not be recoverable. Therefore, if you seek the advice of a good financial consultant, you can explore how your money can be put to work appropriately, and not necessarily in your checking account.
Therefore, don’t let yourself be frightened by news that, although negative for certain banking entities, will hardly affect you. Especially if you live with a proper personal financial plan tailored to your needs.
