So you are sitting at your home, you stacked your fridge, you have your home supplies (toilet paper!), some books, some games and the things to keep you entertained during the quarantine. You can’t really move outside, more so if the situation gets worse. However, your money can. You can actively protect your money from your couch. I think it’s a good idea to understand your options and be prepared in advance. Let’s discuss exactly that.
Why do I need to protect my money
During a quarantine and a limited post office availability, you may have problems if your credit cards expire and you don’t get new ones in time. What it means? For instance, you can’t do shopping online or in your local store (and we want to avoid cash).
Protect money access
During the pandemic things can get worse quickly. For example, people can empty the ATMs or banks disable them, because paper cash helps spread the disease. People can panic and run on the banks, essentially making the banks unable to pay out your money. History shows that the most vulnerable are small local banks.
Additionally, banks can operate at limited capacity due to sick or isolated staff. And above all, your country economy can get stressed or fall into a crisis.
Protect money value
Your money can start losing value due to inflation. It may not be easily transferred from one bank to another due to limitations or congestion. The country infrastructure may experience outages, limiting your options.
Cash is a bad idea
In times of crisis nothing can be taken for granted. For instance, holding and securing physical, paper cash is difficult. Using it during a disease outbreak exposes you and others to extra infection risk. In a worst case scenario cash may be so contaigous that it may be seen by most people as worthless paper — for example, the COVID-19 pandemic comes awfully close to it.
International online banking can help protect your money
Above all, remember that a pandemic is a global event. You never know where it will hit the most. It’s a good idea to spread your accounts not only across banks in your country, but across Europe. Don’t hold all of your eggs in one basket!
Start by registering accounts in several online banks across Europe — it’s simple, quick & free but each bank is a bit different:
- N26 keeps your money in Germany and your deposit is guaranteed by the German Deposit Protection Fund up to €100,000
- Bunq keeps your money in Netherlands and your deposit is protected by the Netherlands Deposit Guarantee Scheme up to €100,000
- FlowBank keeps your money in Switzerland and your deposit is protected by the Swiss Deposit Guarantee Scheme up to CHF100,000.
- Revolut keeps your money in Lithuania and your deposit is guaranteed by the Lithuanian Deposit Guarantee Scheme up to €100,000.
- Coinbase keeps your money in Estonia and cryptocurrencies in offline storage and your deposit is not guaranteed, but several safeguards are in place.
As you can see, N26 and Bunq are the safest places to keep larger amounts of money. Both because of the countries they operate in and the deposit guarantees in place.
Revolut seems best for smaller amounts used on daily basis. Coinbase is an interesting investment towards an unexpected future.
Move money quickly
All of the above banks accept Euro transfers. All support SEPA transfers in & out, meaning your money is moved in less than 24 hours for free or almost free within the EU.
Exchange money into stable currencies
Revolut has quick currency exchanges and transparent exchange during transactions with very good rates, so you don’t have to worry about paying anywhere in the world.
Bunq let’s you open additional accounts in British GBP, Swiss CHF, American USD, Polish PLN and many others. It also supports exchanges on the fly and has competitive exchange rates.
The three traditional core currencies are USD, EUR and GBP. If your local currency weakens, or you want to shield yourself form currency exchange swings, you could split your money three-ways into these core currencies.
Don’t keep all your money on plastic cards
Your physical credit or debit card may expire over the course of the pandemic. You may not be able to access your residential address. Post office may not work reliably. Card production may be delayed.
Bunq and Revolut give you an option to create virtual cards in seconds. You can then add them to your Apple Pay or Google Pay wallets and pay contact-less with your phone. It’s hygienic and reliable.
Prepare your money for the absolute worse
Coinbase is your best gateway to convert your Euro to Bitcoin, Litecoin and other cryptocurrencies. In that form, transferred to an external wallet that keys you control, your money is outside the traditional financial system. It’s in no country at all, only in cyberspace.
However, at the moment, it’s a risky bet, as crypto prices swing a lot. But if the near future brings a total collapse of the traditional economy, Bitcoin will be a very interesting alternative.
Conclusion
Warren Buffet says that you should never lose money. And that your best bet is patience. I would add that nothing is truly random, so don’t think you can leave your future to chance. There’s no such thing.
With that in mind, do think how to protect your money — you earned it fair & square with your hard work. Let that effort not go to waste because you didn’t want to spend a moment and give yourself more options to protect your money. You’re sitting quarantined at home anyway 🙂
