been thinking of joining the many who have started to store their fiat out of the banking system to avoid any bail in but in doing so i'd lose the advantage of reduced interest on the mortgage from the offset account. What to do? Security of the fiat would be better than the bank, for what it's worth.
If you leave it in the offset, you're effectively getting 5%+ untaxable return. I wouldn't bother holding much physical fiat. I don't think a Cyprus style raid on deposits is likely in Aus, as the Government can just print the cash if it needs (and cause some nasty inflation). And if they go that route, your physical fiat offers you no protection (but you've got 5% less of it).
I agree with BB. Not sure on your points Yendor since if the derivatives start tumbling it's world wide. One could always keep a twice daily eye on the financial news and get ready to pay down the mortgage once the patient starts flat lining. (as if they'd let us know!). As for your circumstance Ag bullet, I'd get an off-set redraw facility and store it in the mortgage. This allows you to avoid 'bail-in' and reduces your mortgage, whilst still giving you the option of drawing back the funds (equity maaate!). Leave two months living expenses in cash in the off-set. If you're ultra paranoid and yield is secondary then just withdraw it and make it gold bullion. Many do!
As I understand it, anything you redrawn can't be negative geared later on. So if you ever plan on turning your property into an investment, you're better off just using the offset.
I wouldn't leave anything in an offset account full stop. If you haven't got 5% of your assets in bullion outside the banking system and the proverbial SHTF and there is a run on the banks you can kiss your money bye bye. For good measure your friendly banker will be inquiring how are you going to continue to service your mortgage? Kind Regards non recourse