Recent bank failures have prompted many people to ask, “Are my bank deposits safe?”
This hasn’t come up much since 2009, so last week I shared my insights with Dinah Brin from ThinkAdvisor on the topic.
Thankfully, the answer is often an unqualified “YES” (i.e. below FDIC deposit insurance limits), or it can be easily resolved by spreading money across a sufficient number of banks and accounts.
That’s because FDIC insurance limits are $250,000 per depositor, per insured bank, for each ownership category (see this FDIC guide on what’s covered).
So for people with over $250,000 in bank deposits you might have a lot more accounts and bank relationships than you might like, but the purpose of bank deposits is to keep your money safe until it needs to be used, or invested in something with a more attractive potential return.
If your cash exceeds FDIC insurance limits this prompts two important questions:
Where will you move excess deposits so they can be fully insured?
Why do you have so much uninvested cash? Or is it earmarked for a specific purpose (i.e., emergency fund, buying a home, large purchase, etc.)
In many cases, people with large amounts of cash on hand don’t have a specific reason, but simply haven’t gotten around to investing it or can’t decide “What is the best use of my money?”
If you’d like to make more of your money work for you, or just have a question, contact Paceline.
Read the full article on ThinkAdvisor.
This article was written by Jeremy Bohne, CFP®, CEPA, Principal & Founder of Paceline Wealth Management, a fee-only registered investment adviser (RIA) in Boston. Paceline specializes in equity compensation (RSUs, stock options, M&A, IPOs and concentrated stock) for tech and biotech executives and professionals, and in exit planning for business owners, working with clients in Massachusetts and remotely nationwide.