Which Safe Asset Classes do you really need in your Portfolio?
When it comes to building wealth, most people focus on the exciting part — chasing returns with stocks or ETFs. But the foundation of any strong portfolio is the safe portion: the money you can count on no matter what happens in the markets. In this chapter of my investing…
When it comes to building wealth, most people focus on the exciting part — chasing returns with stocks or ETFs. But the foundation of any strong portfolio is the safe portion: the money you can count on no matter what happens in the markets. In this chapter of my investing guide, we’ll explore the most reliable asset classes for protecting your savings while keeping them liquid and accessible.
This is Part 3 of my investing guide. You can also read it as a standalone article.
- In Part 1, I explained why most investors should use ETFs as the backbone of their portfolios.
- In Part 2, we looked at Level 1 Asset Allocation (L1AA): how much of your portfolio should be in risky vs. safe investments.
If you haven’t read those chapters yet, I recommend checking them out. If we imagine our portfolio in two buckets, one for save investments and the other riskier ones, in this Chapter 3 I will talk about which Asset classes we should use to fill them up, besides globally, diversified ETFs on the world economy. In this part 1, we will cover safe investments, the backbone of your portfolio.
The Safe Portion of Your Portfolio
Safe assets should be secure and liquid. For many people, this means keeping money in a bank account.
Bank Accounts and Deposit Insurance
In the EU, the European Deposit Insurance Scheme protects deposits up to €100,000 per person, per bank. If your bank were to fail, other European banks and governments would (at least in theory) step in to safeguard your funds.
Choosing a trustworthy bank makes it unlikely you’ll ever face this scenario, but the risk is never zero — even for large, established institutions. Keep in mind:
- Only balances up to €100,000[GJ1] per bank are covered.
- If you hold more than that in a single bank, it’s wise to spread your money across multiple banks.
- While the scheme has never been tested in a major crisis yet, the risk of failure seems very low for most private investors.
ChatGPT was very helpful in providing an overview of deposit insurance schemes worldwide. I reviewed many of the sources, and the information appears to be accurate. If you’re particularly interested in a specific country or region, let me know — I’d be happy to double-check and verify the details for you.
| Country / jurisdiction | Coverage limit (amount) | Currency | Notes & source |
| United States | 250,000 | USD | FDIC: $250,000 per depositor, per insured bank, per ownership category. (FDIC) |
| United Kingdom | Current: 85,000 → Proposed: 110,000 (consultation) | GBP | FSCS current limit £85,000; PRA proposed raising to £110,000 (proposal/consultation). (fscs.org.uk) |
| European Union (harmonised) | 100,000 | EUR | DGSD / EBA: harmonised at €100,000 (or equivalent) per depositor per bank. (European Banking Authority) |
| Germany | 100,000 (statutory) — additional private schemes may offer more | EUR | Statutory coverage generally €100,000; Germany also has additional schemes for extra protection (see BaFin/Bundesbank pages). (BaFin) |
| France | 100,000 | EUR | FGDR: €100,000 per depositor per bank. (garantiedesdepots.fr) |
| Canada | 100,000 | CAD | CDIC coverage limit $100,000 CAD per eligible deposit category (government consultation noted potential changes). (Government of Canada) |
| Australia | 250,000 | AUD | Financial Claims Scheme: up to A$250,000 per account holder per ADI when activated. (apra.gov.au) |
| Japan | 10,000,000 | JPY | Deposit Insurance Corporation / FSA: up to ¥10 million (principal + interest) per depositor. (Financial Services Agency) |
| China | 500,000 | CNY | Central bank / official materials: deposit insurance up to RMB 500,000 per account. (Caixin Global) |
| India | 500,000 | INR | DICGC: ₹5,00,000 (₹500,000) per depositor for principal + interest. (Reserve Bank of India) |
| Singapore | 100,000 | SGD | MAS raised coverage to S$100,000 (from S$75,000). (The Straits Times) |
| Hong Kong | 800,000 | HKD | Hong Kong Deposit Protection Scheme increased limit (first phase) to HK$800,000 per depositor per bank (enhancement measures). (Hong Kong Monetary Authority) |
| Switzerland | 100,000 | CHF | esisuisse / FINMA: CHF 100,000 per customer, per bank. (esi Suisse) |
| New Zealand | 100,000 | NZD | Depositor Compensation Scheme (DCS) covers up to NZ$100,000 per depositor (scheme details / scope apply). (Reserve Bank of New Zealand) |
| South Korea | Current: 50,000,000 → Planned: 100,000,000 (from Sep 1, 2025, proposal) | KRW | KDIC coverage historically KRW50m; FSC proposed raising to KRW100m (public consultations / regulatory steps). Check exact effective date in source. (kdic.or.kr) |
| Brazil | 250,000 | BRL | FGC (credit guarantee fund): insures certain bank instruments up to R$250,000 (applies to certificates, etc. — see FGC rules). (Reuters) |
| Mexico | 400,000 (indexed) | UDIs (inflation-indexed units) | IPAB: coverage up to 400,000 UDIs (investment units; value in MXN/USD varies with UDI). (Gobierno de México) |
| Russia | 1,400,000 | RUB | Deposit Insurance Agency: statutory limit 1.4 million rubles (there have been proposals/legislation around raising certain product limits—see sources). (Wikipedia) |
| South Africa | 100,000 | ZAR | New deposit insurance scheme (Corporation for Deposit Insurance) — protects individual deposits up to ZAR100,000 (central bank announcement / Reuters coverage). (Reuters) |
| Turkey | 400,000 | TRY | TMSF / official: the insurance limit is expressed in TRY and adjusted periodically (TMSF site lists the limit; local rules and recent changes apply). (tmsf.org.tr) |
Call Money Accounts (Tagesgeld)
If you’re holding larger sums for a while, consider a call money account (sometimes called a savings or demand deposit account).
- These accounts usually offer higher interest rates than regular checking accounts
- Transfers to your main account are often quick sometimes even instant if both accounts are at the same bank
- If you have your main account and a call money account at the same bank, they will both count towards the maximum insurance scheme amount
Be cautious of offers that seem too good to be true:
- Some high rates are temporary promotions
- Some banks offering unusually high rates may be located outside your jurisdiction (check if they’re covered by deposit insurance)
- In extreme cases, high rates could signal a bank in financial distress — something you’ll want to avoid
Call money accounts typically won’t make you rich — especially with a modest portfolio, the extra interest might only amount to a few euros per year. But they’re still a simple way to earn a bit more on your safe money.
Bonds and Bond ETFs
Another option for the safe portion of your portfolio is high-quality bonds. To meet our safety and liquidity criteria, only consider:
- Bonds with at least a BBB (or Baa3) rating
- Bonds denominated in your home currency.
- Short-term maturities
I take these recommendations from Kommer, 2025. For maturities, he gives example ETFs and fonds up to 3 years as examples. Since diversification is key, it makes sense to invest in an ETFs or money market funds, which spread risk across multiple bond issuers. If a bond within the ETF is downgraded, you don’t need to worry about adjusting your portfolio yourself.
And here is an overview of the bond ratings from Moody´s and Standard & Poor´s from Investopedia.
| Moody’s | Standard & Poor’s | Grade | Risk |
| Aaa | AAA | Investment | Lowest Risk |
| Aa | AA | Investment | Low Risk |
| A | A | Investment | Low Risk |
| Baa | BBB | Investment | Medium Risk |
| Ba, B | BB, B | Junk | High Risk |
| Caa/Ca/C | CCC/CC/C | Junk | Highest Risk |
| C | D | Junk | In Default |
Source: Investopedia table
What does “maturity” mean?
In the context of bonds, maturity refers to the date on which the bond issuer is obligated to repay the investor the principal (the amount originally invested). Until that date, the bond typically pays interest (the “coupon”). A short-term maturity simply means that the repayment is due relatively soon—often within one to three years. Shorter maturities generally reduce interest rate risk, because your money is tied up for less time and the bond’s price is less sensitive to changes in market interest rates.
Bond ETFs are also practical if you have large cash reserves. For example, if your safe portfolio allocation is €1 million, holding everything in insured bank accounts would mean opening 10 accounts (with €100,000 insured per account). With a bond ETF, you can manage that allocation in a single position.
Holding Cash at Home
Why not just keep cash at home? While it offers instant liquidity, it comes with risks:
- Burglary and theft
- Fire or natural disasters
- Other unforseen events
For most investors, these risks outweigh the convenience. That said, keeping a small amount of emergency cash at home can be useful. During a financial crisis, banks and brokers may temporarily restrict withdrawals. A few days’ worth of expenses in cash can provide peace of mind.
But storing large amounts of cash at home is rarely wise.
Summary: Safe Asset Classes
For the safe part of your portfolio, you can consider:
- Bank accounts – your default option, but keep balances under the insured threshold.
- Call money accounts – to earn modest interest while maintaining safety and liquidity. Keep in mind that they add to the insured treshold.
- Bond ETFs or money market funds – especially useful for large reserves.
- Small amounts of cash at home – as an emergency backup.
For most private investors, call money accounts strike the best balance of safety and return. Bank accounts are fine, but don’t exceed the insured limit. Bonds or bond ETFs make sense for wealthier investors managing large sums.