Bypass bank risk with ETFs

With governments are under enormous pressure to guarantee savers' deposits, short-term bonds have gained in appeal. Paul Amery tips the best exchange-traded funds to profit.

As Douglas Carswell MP said last week, "the modern banking system means there are more people who think they are owed money than there is money in the banks". When you deposit money in a bank, you are lending money to the bank. But banks in turn write loans that are many multiples of their deposit bases.

If every depositor wants their money back at once, you can get a run on the bank. The reason we're not a lot more sensitive to the risks banks take with our cash is that we've been conditioned by a long period of relative stability to expect that our money will be returned when we want it.

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Paul Amery

Paul is a multi-award-winning journalist, currently an editor at New Money Review. He has contributed an array of money titles such as MoneyWeek, Financial Times, Financial News, The Times, Investment and Thomson Reuters. Paul is certified in investment management by CFA UK and he can speak more than five languages including English, French, Russian and Ukrainian. On MoneyWeek, Paul writes about funds such as ETFs and the stock market.