Monday, April 1, 2013

Imagine your bank balance being reduced by 6.75%. And that too, just for depositing money in a bank that has not been very prudent at decision making. Now, despite the bank's fault, the 6.75% tax is levied upon your account to save the bank from shutting down! As ridiculous as it may sound, this is exactly what is happening in Cyprus. The Cyprus government has planned to levy a tax on depositors' bank accounts. The tax rates would be 9.9% for deposits in excess of Euro 100,000 and 6.75% on lower amounts. These taxes are towards raising the necessary bailout funds. This plan has obviously received a lot of flak from people across. So much so that it has even termed as an act of 'corruption'! With this development, legendary inventor Jim Rogers believes that there is nothing else left to do. And that everyone should pretty much 'run for the hills'. He fears the above mentioned development to possibly become a precedent. With bodies such as the European Union and the International Monetary Fund approving such a move, it would not be surprising if other crisis facing nations followed suit. Thankfully, the situation in India is not as bad. Nevertheless, this development can provide us with a basic investment lesson. That of not putting too many eggs in one basket!