With all the recent bank turmoil and bank runs, it's a good ...
With all the recent bank turmoil and bank runs, it's a good reminder to be cautious with our money. It's important to remember that the modern banking system is based on fractional banking, which means banks are heavily leveraged.
For example, let's say you deposit $100 into your bank account. The bank only needs to keep a fraction of that deposit (let's say 10%) in reserve, and can lend out the remaining $90 to other customers.
This is how banks make money, by charging interest on loans. But it also means that if too many depositors all try to pull out their savings at once, the bank may not have enough reserves to meet the demand. ![]()
That's why it's crucial to spread out our risks across different banks and financial institutions. ![]()
This concept doesn't just apply to our bank accounts, but also to our online brokerage accounts. I used to bank with cba and trade using commsec, but I've recently opened up a few more bank accounts and stock trading accounts just to spread out the risk. Commsec was always expensive to trade and now with their level of security in question I'm finding new discount brokers like Moomoo a lot more attractive.
Who knows, maybe I'll even find a new favorite online broker to invest with! ![]()
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whqqq : Bank instability calls for caution. Diversifying across banks and trying new online brokers like Moomoo can offer better security and cost advantages. Time to find new favorites!![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Adelaidee : Adaptability is key in the ever-changing market.
Beeandme : The recent bank instability reminds us to be careful. Diversifying across banks and brokers can help manage risk. I'm excited to discover new investment opportunities.
obsidianstar : You're so right! It's a good wake-up call to be careful with our hard-earned cash.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Kevvinn : Banks rely on fractional banking, which means they lend out most of our deposits. But if everyone rushes to withdraw at once, it can be a problem.
Cocolip : With recent concerns, I've expanded my bank and trading accounts to mitigate risk![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
mrminivee : Yeah,![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
it's a good reminder to be careful with our money, especially with all the bank troubles lately
drfrogsplat : I totally get where you're coming from. With all the uncertainty, it's important to diversify.
The Chaser :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Opening multiple bank and trading accounts is a good strategy to spread out the risk
Gaxsun : Fractional banking is a double-edged sword. Banks lend out most of our deposits, but if everyone freaks out and withdraws at once, they might not have enough to go around. That's why I've started diversifying my accounts. Can't put all my eggs in one basket, you know?