Key Post Protecting your savings against a euro breakup

This is my latest research which looks at the history of recent currency devaluations in an attempt to quantify how much better off an Irish investor might be from holding a globally diversified investment portfolio in the event of a currency devaluation in Ireland.


Obviously we don't know exactly what might happen if Ireland were to leave the Euro and I'm not suggesting that I think this would happen, but if it did history suggests that a globally diversified portfolio would be the best place to have your savings.


This analysis does not consider practical or legal questions such as exchange controls and assumes the investor is free to move their capital and keep it outside the State to benefit from this strategy.


An explanation of the graphs:


For each currency that I examine I set the base currency to the country I am considering and calculate the investment returns that an investor in that currency would have achieved from investing in either the MSCI World Index or a Globally diversified Balanced Portfolio of index funds.


The Balanced portfolio is constructed in a base currency of German Marks/euros but invests 50% in global fixed interest and 50% in real assets (equites, Real Estate etc)


As the domestic currency depreciates the return from the global portfolio is enhanced.


I have included the return from one month T bills so that investors can compare the strategy of just holding US$ as a safe haven against Euro collapse.

The results of the analysis can be found here:

[broken link removed]

Given the news that greeted us this morning, it's looking a good deal less likely that the euro will break up.

With this Cyprus thing going on now its time to take all savings out of the bank.

If I buy funds with rabobank for example does this protect my money from a greedy hands, excl the usual risks with funds.

HI Alexmartin,

I think that having your wealth in stocks/funds/assets does not protect it. The government can introduce a tax on assets just as easily as they can on bank deposits. The pension levy and the property tax are evidence of this.

The bottom line is that if you have wealth of any type, the government can introduce a levy/tax on it, in my opinion.

I do not see that moving your wealth to another asset class or even another country avoid this. Short of emigrating, I think there is no way to avoid this.

If history is any guide, having your wealth globally invested in multiple assets has been the very best way to protect it.

The link in my post above was broken

- both Sterling and Swiss Franc will be badly affected by a euro collapse

Could you explain to me how is this is so. Surely if you had your funds in sterling and the euro was to go. how would it affect you funds

It is easier said than done to open another bank account in another country, I even had problems opening an account in the UK to accept my UK pension. which also makes a mockery of the EEC. We are free to travel but not open a bank account.

In my experience, people open brokerage accounts outside the EU, and hold German and US government bonds.