Once upon a time, during the last recession in the 80s, hubby and I were dead broke. We were in our 20s. He spent a lot of savings on his father’s medical bills, funeral expenses and then, some Chinese fengshui thingamajig where my late mom-in-law and her throng of daughters insisted that we have to give the old man a RM25K tombstone so that the future generations will be rich (yeahhh….right).

So, during the last recession, we were living on credit. Car loan to pay and we have no apartment. Even my wedding banquet was one credit! I.e. we signed for the buffet with our credit card, pray hard that we get enough angpows to cover the expenses. Anyway, it was a modest meal and yes, we did manage to cover the expenses ‘cos my ex-boss was a rich man and his angpow alone almost cover half the costs.

Now, another recession is looming at the horizon. Twenty years later, we have a home, two cars all paid for. My son’s college education is on PTPN loan, which is the Government loan. The interest is lower than our FD interest so my accountant by profession, now semi-retired hubby said it is more worth it to take a loan. That way, we can get the young man, future professional chef to pay for his own education (while the two of us go for our second honeymoon traipsing around the world, hopefully) by paying back his loan to the Government. Moreover, we have three more kids so we have to be frugal with the money so that we can see them through colleges and universities.

Twenty years later, if there is a recession in 2008, we have to worry not for ourselves but the banks. Do you know that the banks only cover up to RM60K should they close shop?

Q: What is deposit insurance and how does it benefit me?
A: The deposit insurance system was introduced in September 2005. It’s an initiative of the Financial Sector Master Plan to enhance depositor protection in Malaysia.

It is a form of protection or guarantee for money placed in member institutions, usually banks and financial institutions.

Membership in the deposit insurance system is mandatory under the PIDM Act 2005 for all commercial and Islamic banks, both domestic and foreign.

In the unlikely event of a bank failure, depositors will be promptly reimbursed up to the coverage limit of RM60,000.

Q: Why does it cover up to RM60,000 only?
A: Don’t only look at the RM60,000. Look at the total coverage.

You’re getting RM60,000 per depositor, per member institution. There are 36 banks — 22 conventional and 14 Islamic.

You can put RM60,000 in each of the 36 banks. You can also have a joint account with your family members or friends and that’s insured separately.

(source NST online)

So, do you amassed a lot of wealth and keep them in the bank? You better separate them out now. You don’t want a bank run, leaving you dry. And don’t keep any FD amount that is more than RM30K. The Al-Rajhi bank told us that we will be ‘under the radar’ when the FD amount is less than RM30K.

Gee….it is kind of stupid, isn’t it? No money, no problem. Got money, have to worry about the banks’ health.

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