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I am a risk-averse person and I usually keep most of my money in my bank account because I don't care for riskier options which might get me a little extra. During recent events and instabilities in the stock markets I heard from several sides that a massive currency devaluation (I am in the Euro-zone) might happen this year.

How do I secure my financial resources before such a devaluation happens? Investing into real estate seems to be a good option. Not for increasing my resources, but to safe them in case a big crash renders money "worthless". A house or a parcel of land will always be worth something. Or are there any better options? I am thinking long term here, because I am aware, that I cannot sell a house or a parcel of land as fast as I can sell gold.

If you think I am too afraid and such a scenario is very unlikely, I would also be interested in the reasoning behind that.

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Do also take a lesson from the US housing collapse. And real estate isn't only an asset, it is a liability too i.e. keeping up repairs and stuff. Real estate investments aren't guaranteed also. Conditions in Europe maybe different but still reality holds. –  DumbCoder Aug 9 '11 at 8:15
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A parcel of land will always be worth something, but it could just as easily be worth less than you paid for it as a Euro. BTW: Keeping cash in a bank account is also risky. You have an extremely high potential for losing money to inflation, even when things aren't as crazy as they are now. –  JohnFx Aug 9 '11 at 15:17

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Real estate is never a low-risk investment. I'd keep your money in the bank, and make sure that you don't have more in any one bank than is guaranteed in the event of bank failure. If your bank account is in Greece, Italy, Spain, Portugal or Ireland, I'd consider moving it to Eurozone country that's in better shape, as there's just a slight possibility of one or more of those countries exiting the Eurozone in a disorderly fashion and forcibly converting bank accounts to a new and weak currency.

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+1: But one more question. What are your reasons not to believe in a massive currency devaluation? At least in Europe there are many respected economists claiming that this is a very likely scenario in the near future. Or are the too dramatic? –  Demento Aug 11 '11 at 9:41
    
The Eurozone is big enough that it doesn't really matter to most people if the euro is devalued -- most of what people buy comes from within the Eurozone and so its price won't change. –  Mike Scott Aug 11 '11 at 11:54
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"Real estate is never a low-risk investment. I'd keep your money in the bank." Well, what do they invest in exactly? –  jldugger Sep 5 '11 at 17:53
    
It really is flavour of risk. Historically, by keeping money in a bank, you are guaranteeing that your money will not keep up with inflation. –  S. Albano Oct 17 '12 at 3:10

I'll add this to what the other answers said: if you are a renter now, and the real estate you want to buy is a house to live in, then it may be worth it - in a currency devaluation, rent may increase faster than your income.

If you pay cash for the home, you also have the added benefit of considerably reducing your monthly housing costs. This makes you more resilient to whatever the future may throw at you - a lower paying job, for instance, or high inflation that eats away at the value of your income.

If you get a mortgage, then make sure to get a fixed interest rate. In this case, it protects you somewhat from high inflation because your mortgage payment stays the same, while what you would have had to pay in rent keeps going up an up.

In both cases there is also taxes and insurance, of course. And those would go up with inflation.

Finally, do make sure to purchase sensibly. A good rule of thumb on how much you can afford to pay for a home is 2.5x - 3.5x your annual income. I do realize that there are some areas where it's common for people to buy homes at a far greater multiple, but that doesn't mean it's a sensible thing to do.

Also: I'll second what @sheegaon said; if you're really worried about the euro collapsing, it might give you some peace of mind to move some money into UK Gilts or US Treasuries. Just keep in mind that currencies do move against each other, so you'd see the euro value of those investments fluctuate all the time.

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A house can decrease resilience in some situations. For instance, if you lose your job, but could get another job if you moved to a different area, having a house you need to sell can make that move difficult or impossible. Note that paying cash mitigates this risk to a large extent (assuming you're willing, psychologically, to walk away from the house - accepting the sunk cost.) –  stannius Oct 16 '12 at 19:09

If you live and work in the euro-zone, then even after a "crash" all of your income and most of your expenses will still be in euros. The only portion of your worth you need to worry about protecting is the portion you intend to spend on goods from outside the euro-zone (i.e. imports). In that case, you may want to consider parking some of your money in short-term government bonds issued by other countries, such as the UK, Switzerland, and USA (or wherever else your favorite goods tend to come from). If the euro actually "massively devalues" (an extremely unlikely scenario), then you can expect foreign goods to cost a lot more than they do now. Inflation might also pick up, so you might also want to purchase some OATis.

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It's always a good move for risk-averse person, expecially in Europe.

  1. Because houses are not represented by number in an index. Therefor if you are risk-adverse, you will suffer less pain when house prices go down because you won't have a number to look at everyday like the S&P500 index.

  2. Because houses in Europe (Germany, Italy, Spain) are almost all made by concrete and really well done (string real marble cover, hard ceramic covers, copper pipes, ...) compared to the ones in US. The house will still be almost new after 30 years, it will just need a repaint and really few/cheap fixings.

  3. Because on the long run (20/30 years) hosues are guaranteed to rise in price, expecially in dense places like big city, NY, San Francisco, etc. The reason is simple: the number of people is ever growing in this world, but the quantity of land is always the same. Moreover there is inflation, do you really think that 30 years from now building a concrete house will be less expensive than today??? Do you think the concrete will cost less? Do you think the gasoline that moves the trucks that bring the concrete will be less expensive than now? Do you think the labour cost will be less expensice than now? So, 30 years from now building an house will be much more expensive than today, and therefor your house wil be more expensive too.

On the lomng run stock market do not guarantee you to always increase. The US stock market have always been growing in the long run, but Japan stock market today is at the same level of 30 years ago. Guess what happened to you if you invested your money in the Japan stock market, 30 years ago, whilest your friend bought an hosue in Japan 30 years ago. He would now be rich, and you would now be poor.

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Why -1, some explanation would be appreciated thanks! In Italy house prices rised of the 4000% in 40 years. Even if now they go down, they won't loose a 4000%. –  Marco Demaio Oct 16 '12 at 20:03

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