It's important to understand there's no fail-safe way of protecting our money - no matter what protections we put around our savings there will always be some risk it could be stolen, destroyed or lost.
The best thing we can do is understand the protection options available to us and do our best to safeguard our money to the best of our ability.
Option 1 - Depositing your money with a bank
Putting your savings with a stable, well-known bank or credit union is one of the safest options for protecting your money.
Although the Federal Government has taken away the guarantee it put in place during the financial crisis to safeguard deposits held by deposit-taking institutions, the major banks are financially sound and there is little risk they will fail.
But putting your money in a bank will also reduce the return it could potentially generate in riskier investments such as shares or managed funds.
Option 2 - Bonds
Another relatively safe place to put your money is in bonds, especially government bonds. You can go to the Reserve Bank of Australia's website www.rba.gov.au and invest in government bonds through its small investor bond facility.
But this is not a risk-free investment. Although investing in government bonds is relatively risk free, the financial instability countries such as Greece are experiencing demonstrates sovereign risk is something investors in government bonds still need to take into account.
Option 3 - Property
The old expression safe as houses indicates property investments are often considered to be relatively safe investments - although try telling that to the people who invested in the sub prime mortgages whose failure was at the centre of the financial crisis.
Nevertheless, investing in properties in well-established suburbs where there is a shortage of good homes or investing in the worst house in the best street in a good suburb can often be sound ways to protect your money.
But remember to take out house and contents insurance to protect your investment.
Option 4 - Shares
A much riskier option is to invest your money in the stock market. This investment strategy is notoriously risky, given the number of variables that can affect the performance of individual shares and the stock market.
Everything from interest rate movements, to the value of the currency to the performance of overseas stock markets can affect the Australian share market and these risk factors need to be taken into account when making an investment in the stock market.
Whatever mechanisms you decide to put in place to protect your savings it's important to remember to seek advice from a qualified financial adviser to ensure your investment strategies match your appetite for risk.
By the way, the story about the woman whose handbag was stolen has a happy ending - the thieves who took the money were caught and most of the money returned to its rightful owner.
