SVB and the FDIC: How to Safely Deposit More Than $250k

A Stern Reminder If You’re Depositing More Than $250k

SVB and the FDIC: How to Safely Deposit More Than $250k.

The 48-hour collapse of Silicon Valley Bank (SVB) has dominated headlines over the weekend.

And I don’t think we’ve seen the last of it. In fact, I think it’s only the beginning of banking woes, and many more unfortunate failures to come.

The Fed and Treasury are trying to reassure everyone that everything’s fine — but I think it’s rather obvious that while most depositors will regain access to their funds, they were lucky this time… and that luck could run out. To that end, here’s a timely reminder of what to do if you have a large amount of cash you’re sitting on.

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If you’re single:
Don’t put more than $250,000 in a single qualifying bank (multiple accounts in the same bank won’t help you if they’re in the same “ownership category.” Check with your banker to make sure you haven’t accidentally over-extended an ownership category). Diversify your holdings in different banks, especially if you’re using a smaller, local bank.

If you’re married:
The FDIC covers $250,000 for individual qualified accounts, but also up to $250,000 for each co-owner of a joint account. So you can get $1 million of FDIC coverage by having a personal bank account in your name, a personal bank account in your spouse’s name, and a joint account. You’ll still want to be careful to clarify which “ownership categories” they fall under, especially if you have large trusts that exceed these amounts.

Also, there’s nothing wrong with using local, small banks (I for one often prefer them to the soulless conglomerates out there) but you DO want to be smart about not leaving all your eggs in one local basket.

And don’t forget that the FDIC doesn’t cover stocks, bonds, mutual funds, cryptos, annuities, life insurance policies, municipal bonds (munis), or treasury bills. There’s SIPC that covers the value of your brokerage accounts in the event of brokerage failure.  SIPC goes up to $500,000 per institution, but a warning: only $250,000 of that can be cash. So if you just cashed out a large position, you won’t want to leave it sitting there exposed for too long.

And for goodness sakes, don’t leave huge sums of money sitting around anyway! Especially in this high-inflation environment, you’re wasting your money’s earning power.

Our co-founder Nick Hodge has used this banking crisis as a reminder to put some of your money into the one asset that doesn’t disappear when the bankers make mistakes: gold. 

If you haven’t already watched Nick’s presentation on what he believes could soon be the world’s largest gold mine (and the fat profits to be had in the months ahead, especially if we see gold start to hit highs again, as it’s likely to do) then there’s no better time than now!

This is one you won’t want to wait on… today’s high-risk environment is no time to leave money lying around.

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John Carl

John Carl
Editor, Daily Profit Cycle