Is my fear valid or not?

I am a salaried person. Whatever my current savings are it is into Equities, Debt funds, Bank FD and Bank Savings account.

I do not own any property or metals like gold. I have a fear if something like Greece crisis happens in India where people are not able to use their own money in banks or 2007 like financial crisis in US and large banks start defaulting will it mean my whole savings would get wiped out?
I won’t be able to withdraw money from banks so all my FD’s and savings account balance would get lost. (Govt just guarantee 1 lakh of deposit amount)
I don’t know what would happen to equities and debt funds?

I wanted to understand is there any probability of occurrence of such an event. And whether property or gold investment is a must just for security purpose even if they give less or no returns?

I dont see any such event ocuring in near future (At least for next 5 years). But I personally feels that person should have atleast one home to live. I am also salaried person and my all savings are invested in Equity only , however I own a ancestral house. The Basic needs of human are food , cloths and Home. If you have a house to live in , rest expenses are not on higher side and it reduces the risk.

However , real estate prices are not moving much from last 4-5 years and I dont see any revival in next 2-3 years. If you get a good bargain , you can think about buying a home but dont expect price appreciation for few years , Buy it if you want to live into it , not as an investment.

Disc : Above are my personal views , do your own diligence before making any investment decision.


It so looks that real estate price are set to move up again. They have given a time correction for so long, but with easy loans, the trend is going to reverse. This is clear from rapidly growing HFCs.

Interesting question. Your fear is valid, and not as unrealistic as it first sounds. One extreme event once in a person’s lifetime - say 75 years - is very much possible, though it may take different forms, not just the type you have mentioned.

Firstly, I think one should own the house one stays in. Until then, don’t think of anything else.

In an extreme event, Gold will not lose value but is of limited practical use, as you cannot use it to buy groceries or pay for daily commute.

Equities may react adversely at first but if one has purchased with adequate margin of safety, one should be okay assuming earnings power of the company is not harmed.

With money in bank, the risk is of goverment restricting withdrawals or even confiscation in response to an extreme event (say, war), rather than they going bust. I doubt if anything can be done about this. The best antidote is to have a lifestyle with minimum outflows (pay off those loans first and become EMI mukt!) which let’s you survive on low cash in hand till the crisis is over. Black Swan events may persist for some time but are not permanent.

One reason why I like Equity and Real Estate is that they are your assets but no one’s liability. So you have greater control over them.


Just to add: In any Black Swan event, you may lose your real estate or Home too. Just think of the case of all the wars in Middle east (Syria etc.).

So what exactly is your insurance against all these events? I think, its only in the investment in yourself will sail you through tough times. For example any skill learned which is valuable to the society, may come handy in case of any crisis. More than that, i think any asset, which acts as a store of value, can be quickly wiped out in the adverse / Black swan event.


Warren Buffett mentioned in his latest annual letter said -

  • Benefit from market’s fear.
  • And that personal fear is your enemy.
  • Market will crash once every decade or so - but why and how no one knows! Many scaremongers try to get famous with their scaremongering - but god help them if they acted on their own advise.

Guns and Gold is the answer but jokes apart, we should all have our survival plans ready for the eventual doomsday - war, financial meltdown, personal crisis, family crisis…

Have a broad well-diversified, liquid portfolio which can be disposed off in a few days if needed, so real estate as an investment probably does not qualify.

Governments can by a simple order confiscate personal gold, money in banks - so make sure you have physical gold in your possession and control, and not paper gold via ETFs etc. Similarly have foreign currency which you think would hold value. For instance in the current scenario, dollar and euros would count.

Be located or relocate in a neutral country if possible during times of war.

Store enough of food, drinking water, electricity, communication devices etc which will allow your family to survive for few months.

Be paranoid of everything.

I can go on and on but you get the idea. The “system” may shutdown/reboot anytime so have a backup plan or two in place.

India wouldn’t get into a Greek scenario. Historically main economic problems in India has been profligate goverments (mostly congress) printing away the currency value into oblivion. So your stock market investments take care of it, though the debt investment will haemorrage value in case of (near) hyperinflation.

The other big crisis that India is threatened with is a nuclear attack/accident/terrorist incident. That has quite a high chance in India. As such, to mitigate from that risk, keep a portion of your investment in Gold.

Hence sell debt to buy land and gold. Although gun would be great, but if the need arises, there are far too many lathes in India for you to worry about it.