[HN Gopher] How to Insure Your Money When You're Banking over $2...
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How to Insure Your Money When You're Banking over $250K (2022)
Author : O__________O
Score : 187 points
Date : 2023-03-11 16:00 UTC (7 hours ago)
(HTM) web link (www.nerdwallet.com)
(TXT) w3m dump (www.nerdwallet.com)
| jedberg wrote:
| This is all fine and good, but here is a more important question:
| Why should this system exist at all? Why doesn't the government
| provide banking services with unlimited insurance?
|
| They wouldn't need to lend it out or anything to make a profit.
| They could literally just hold the cash for you until you need
| it. Since there would be no risk, it could be free and
| guaranteed. Let you get the money at the post office, which has
| branches everywhere, if you don't want to do it online.
|
| Why do we rely on private banks to hold our cash money with a
| need to make a profit off of it, and therefore have to do risky
| things like loan it out?
|
| Private banks could still exist in this system. They would loan
| out the government's money instead of their depositor's money.
| Their profits would come from the interest, and if they make bad
| loans they would get the collateral and have to sell it and maybe
| lose money. Heck they could even get a fee for bringing in new
| cash to the government holding system and dispensing cash to
| people who need money.
|
| Functionally the system would work exactly the same to the
| consumer, the bank would still make their profits, but people
| wouldn't be at risk of losing their balance if the bank goes
| under. They just move their balance to a new bank.
| ashwagary wrote:
| >Why doesn't the government provide banking services with
| unlimited insurance?
|
| Or atleast increase coverage at regular intervals. Thanks to
| inflation, the amount of real value that is FDIC insured halves
| every so many years.
| jedberg wrote:
| It does change once in a while. It last changed in 2008 (2.5x
| the previous limit set in 1980).
|
| https://americandeposits.com/history-and-timeline-of-
| changes...
| ashwagary wrote:
| Depending on your method of measuring inflation, a US
| dollar may have lost ~50% of its value since 2008. They
| should probably increase the frequency of adjustment or
| atleast tie it to CPI in some way.
| AstixAndBelix wrote:
| Public banks should also be needed for a cashless society. How
| can you expect people to be deprived of cash if they have to
| rely to a private corporation to simply survive? Give a state
| issued and guaranteed bank account to every citizen
| Asparagirl wrote:
| > "Why doesn't the government provide banking services with
| unlimited insurance?"
|
| They do, kind of: it's TreasuryDirect.gov. It's only accessible
| through a horrible web interface straight out of 1999, but it's
| the real thing.
|
| TreasuryDirect lets you buy, hold, and sell Treasury bills,
| Treasury bonds, I Bonds, EE savings bonds, and other
| securities. Yes, you can also buy some of these, but not all,
| through your regular brokerage (Fidelity, Schwab, etc.), but
| here you can buy them all and titled _in your own name_ -- or
| you plus a second person, or you POD to a third person, etc.
| And you can buy in smaller denominations if you want, not just
| big lots.
|
| You can also open up linked accounts for your minor children
| and hold some of those securities and savings bonds in their
| own names. And like UTMA accounts, the property becomes theirs
| to manage when they turn eighteen.
|
| And -- important in the context of the current SVB situation --
| you can open a TreasuryDirect account for your company,
| including S Corps, C Corps, and even single-member LLCs.
|
| And the interest you earn on all of these securities they sell
| is completely state tax free. You usually don't even get a
| 1099-DIV or 1099-INT from them unless you had a sale in the
| year, which you may not if you were holding long-term I Bonds,
| etc. (You might get one if you had an interest payment on a
| _marketable_ security like a T-bill, though.)
|
| Note that securities at TreasuryDirect do not have FDIC
| insurance nor SIPC insurance, because you're buying directly
| from the US government itself. But note that if they ever
| failed to honor their (our) own Treasury bills, repudiating our
| own debt, we would all have much, much bigger problems on our
| hands.
| jedberg wrote:
| Treausurydirect is a great investment vehicle, but it doesn't
| replace a bank account.
|
| I can't deposit my paycheck there, I can't get a debit card
| and pay for groceries with it. I can't write a check to pay
| my rent.
|
| Unfortunately doing those things requires a private bank.
| Asparagirl wrote:
| Actually, you _can_ get some or all of your paycheck auto-
| deposited there! The Payroll Savings Option:
|
| https://www.treasurydirect.gov/research-
| center/communication...
|
| Some or all of your paycheck gets sent to a non-interest-
| earning account that is supposed to be used to buy I Bonds
| or EE Bonds. But you could, hypothetically, leave the funds
| in there without doing that step...
|
| But yeah, I see your point about daily use. Perhaps your
| initial idea and the existing TreasuryDirect could be
| combined and expanded into the Postal Banking idea that
| other countries have had for a long time?
| philjohn wrote:
| They do - it's called buying T bills.
| jedberg wrote:
| I can't pay for groceries or rent with a T bill. I still need
| a bank account with a checkbook or debit card to do those
| things.
| t0mas88 wrote:
| That bank account only needs to hold about 1 month of
| expenses. Not a lot of people have over 250k monthly
| expenses...
| jedberg wrote:
| A lot of businesses do though.
|
| Also, what if you're buying a house? You might want to
| keep the down payment around in cash for a quick purchase
| when you finally find the house you want. Or what about
| if you need to pay out some large expense and have to
| liquidate your investments.
|
| You shouldn't have money at risk just because you need to
| hold a large cash position. That's the problem. There
| should be a risk free place to hold unlimited cash.
| jokethrowaway wrote:
| That's crazy how many options you have in the states.
|
| I wonder what are the options in Europe (but there is not that
| much money over here).
|
| Gov protection is 100k per person and all my friends who need it
| just open accounts in different banks. It would be great to have
| a managed solution to automatically shift money around.
| justeleblanc wrote:
| I don't know how seriously to take that comment because of the
| username (which seems to fit, honestly). But in case you're
| serious, let me make a couple of points:
|
| 1. Europe is big. Dozens of countries with different legal
| systems. If we're only talking about the EU, we have the DGS,
| but there are still differences between national
| implementations.
|
| 2. There is a lot of money in Europe. I can't easily find data
| about the whole of Europe, but the EU alone has a GDP
| comparable to that of the USA. "Not that much money" is a
| ridiculous assessment.
| dstala wrote:
| How much does additional insurance cost? Any rough estimate?
| jnwatson wrote:
| Most brokerage accounts are insured for several million dollars
| and most have checking privileges now.
| strus wrote:
| Regarding 1., I don't know how much this applies to US, but make
| sure your other bank is not owned by a first bank in which you
| have account, or if they both are not owned by the same entity.
| O__________O wrote:
| It depends on number factors, including account type; FDIC has
| information here:
|
| https://www.fdic.gov/resources/deposit-insurance/brochures/d...
|
| IntraFi Network Deposits, which is number 5 on the list, has
| 3000+ members, so there for sure number options even if
| directly managing the risks.
| justeleblanc wrote:
| If I had $250k sitting like a duck in my bank account, I don't
| think I would take my financial advice from random websites.
| Sorry, but I just don't understand what the target audience of
| this is.
| pclmulqdq wrote:
| This reads like an ad for MaxSafe.
| mousetree wrote:
| Most likely is. That's pretty much Nerdwallet's business.
| ChancyChance wrote:
| I found it useful. If you don't have any loans, make a lot a
| money, have no kids or expensive hobbies, and you already are
| maxing out your 401K, it just sorta piles up over the years.
| It's nice to read something like this once and a while since I
| don't have anyone to ask. Like should I move it from my credit
| union to my investment account. Is there a difference in
| insurance between the two?
| JohnFen wrote:
| It sounds like it would be worth consulting a professional
| about what to do, honestly.
| myroon5 wrote:
| bank accounts are insured up to 250k/account by the FDIC
|
| investment accounts are insured up to 500k/account by the
| SIPC
| slg wrote:
| You should do some more research than simply reading whatever
| is posted on HN or just get a financial advisor because this
| is a failure in financial planning that is causing you to
| miss a lot of potential growth. No individual who would miss
| $250k should have that much sitting as cash in a bank account
| unless they are planning to buy a house or other large
| purchase in the next couple of months. That money should be
| invested somewhere even if it is just all in short term CDs
| or bonds if you are an extremely risk-averse person.
| massysett wrote:
| It's not exactly "a lot" of potential growth. Yields on
| short-term investments have been so close to zero over the
| past several years that I'd argue it has not been worth the
| trouble to put the money into CDs or bonds. Only lately
| have yields on these investments been ticking significantly
| above zero.
|
| The extra burden - mental, accounting, tax compliance - of
| acquiring additional investments is worth something, and
| taking on that burden for measly returns may not be
| worthwhile.
|
| I'm only talking about short-term investments here. The
| whole point of short-term investments is that the principal
| needs to be relatively safe - but with that, the returns
| are meagre as well. Simply spreading it between multiple
| banks may be worth it.
| slg wrote:
| Spreading your money between multiple banks creates
| similar mental, accounting, and tax burdens as a simple
| investment would.
|
| Plus my "a lot" comment wasn't specifically connected to
| short term CDs. If you are going to let money sit for
| years, short term investments like that are the worst for
| growth second only to keeping everything in cash. That
| approach should only be taken by the most risk-averse
| people or people who need liquidity. Even still, OP is
| probably missing out on 5-figure potential gains by just
| doing nothing with over $250k+ for years. "A lot" is
| relative, but that is decent money that OP is effectively
| losing.
| ChancyChance wrote:
| You're probably right.
| jedberg wrote:
| If you have that much cash lying around, you really should
| talk to a financial advisor because there are some super low
| risk investments you can make that will be better and safer
| than cash, but it depends on your tax and financial
| situation, so no one can really tell you here.
| baq wrote:
| If you're a startup founder working on your tech 120h/week you
| don't want to think about your money if you already have it.
|
| I see this event as a black swan for startups: some will be
| wiped out like dinosaurs 65M years ago with their only fault
| being not aware of the meteor risk. Deal templates will get
| amended and the next batches will go on as before.
|
| Besides I'll be very surprised if SVB isn't called JPM by 9 am
| Monday.
| dgarrett wrote:
| > Besides I'll be very surprised if SVB isn't called JPM by 9
| am Monday.
|
| It will be called the Deposit Insurance National Bank of
| Santa Clara (DINB) on Monday.
| https://www.fdic.gov/resources/resolutions/bank-
| failures/fai...
| baq wrote:
| That happened Friday. SIVB was no more at the time of the
| first announcement. I believe JPM will buy the husk late
| Sunday or very early Monday, but Twitter has different
| opinions. We'll see.
| novalis78 wrote:
| Buy Bitcoin
| WinstonSmith84 wrote:
| ... and short it at 1x which sounds like an ideal solution. But
| in fact, you're dependent on the exchange getting insolvent or
| hacked, etc. Since it's not your keys...
| Scubabear68 wrote:
| I have often wondered how celebrities and other "rich" people
| dealt with cash assets, this is interesting in the unlikely event
| I ever strike it rich.
|
| The flip side of the coin is how do rich people select
| accountants and wealth managers that they can trust? I have heard
| so many horror shows of celebrities getting ripped off by their
| accountants. It seems to happen even more to poor people who
| suddenly become rich - lottery winners seem unable to hang onto
| the cash. And the Murdaugh murder trial revealed networks of
| lawyers and fiduciaries playing fast and lose with client money
| (one example was a trust manager loaning Murdaugh huge amounts of
| cash from a trust for two minors who mom was killed in an
| accident, and the girls got a multi million judgement).
|
| Are there trust networks? Or word of mouth and luck?
| StrangeATractor wrote:
| If you get set up with a good legal firm they'll point you in
| the right direction. A lot of people who get ripped off got
| tied up in some shady dealings but a good attorney will not
| only have connections, they'll keep you with people who pass
| the sniff test.
| jedberg wrote:
| > If you get set up with a good legal firm
|
| Ok but that only kicks the can down the road. How do you get
| set up with a good legal firm? :)
| pfannkuchen wrote:
| This makes sense. What sort of law? And how does one get set
| up with them?
| StrangeATractor wrote:
| Firms will often handle a range of issues, for example
| estate, trust, and real estate law (along with other
| things), which would be the people with the connections
| you're looking for. It also helps if you have a legal
| problem that needs dealing with. Go in for setting up a
| will or a trust and ask for some help finding somebody you
| can trust to help you manage that stuff (CPA, accountant,
| bank, broker, etc).
|
| Be prepared to leave a good impression though. Nobody wants
| to share connections if you make them look bad.
| inconceivable wrote:
| it's called probate law - wills, trusts, estates, special
| tax situations, etc. also if you go with a name brand
| wealth management firm (goldman, morgan stanley, etc.) it's
| less _likely_ to be stolen from you, but not impossible.
| Spooky23 wrote:
| It's pretty easy. You can use brokered CDs, etc.
|
| Finding good people is difficult. Like anything else, you need
| internal controls. Unaffiliated attorneys and accountants who
| have an interest in asking awkward questions.
| m3kw9 wrote:
| Maybe buying some low risk, good liquidity assets so you don't
| keep so much cash in the bank will work better than doing all
| this
| Animats wrote:
| IntraFi, suggested in the article, looks a bit sketchy. Read
| their terms and conditions.[1]:
|
| _" No Liability or Damages. INTRAFI SHALL HAVE NO LIABILITY OF
| ANY KIND RELATING TO, RESULTING FROM, OR IN CONNECTION WITH THE
| WEBSITE (INCLUDING BUT NOT LIMITED TO ANY CONTENT ON IT OR THE
| RESULTS OBTAINED FROM ITS USE), THESE TERMS AND CONDITIONS OF
| USE, OR INTRAFI'S BUSINESS, OR ANY LINKED SITE, FOR ANY CAUSE
| WHATSOEVER, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE. IN
| NO EVENT SHALL ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
| AGAINST INTRAFI BE ALLOWED, EVEN IF INTRAFI HAS BEEN ADVISED OF
| THE POSSIBILITY OF SUCH DAMAGES, AND THE EXCLUSIONS OF DAMAGES IN
| THESE TERMS AND CONDITIONS OF USE ARE INDEPENDENT OF, AND SURVIVE
| THE FAILURE FOR ANY REASON OF, ANY OTHER REMEDY."_
|
| What IntraFi is _supposed_ to do is place your money in a large
| number of different banks. But what if they don 't? Or they screw
| up, and put too much money in some flaky bank.
|
| The whole point of IntraFi is that it has to work when the
| financial system is in serious trouble. Otherwise, it has
| negative value, as an additional point of failure.
|
| [1] https://www.intrafinetworkdeposits.com/terms-conditions/
| gizmo686 wrote:
| No one is giving them hundreds of thousands of dollars based on
| the terms and conditions of their website. There will be actual
| legal contracts to be signed, and those will be the relevant
| contracts in event of a problem occurring.
|
| Annoyingly, I cannot actually find their agreement on their
| website (which is annoying common for financial services), but
| I found what looks like their contract on a random third party
| site through google [0]. If you are actually considering giving
| them hundreds of thousands of dollars to manage, you could
| contact them and ask for a copy of their standard agreement.
|
| [0] https://agendasuite.org/iip/fannin/file/getfile/17288
| Animats wrote:
| That's not much better.
|
| _"... WE, INTRAFI, AND BNY MELLON WILL NOT HAVE ANY
| LIABILITY TO YOU OR ANY OTHER PERSON OR ENTITY FOR: (i) ANY
| LOSS ARISING OUT OF OR RELATING TO A CAUSE OVER WHICH WE DO
| NOT HAVE DIRECT CONTROL, INCLUDING THE FAILURE OF ELECTRONIC
| OR MECHANICAL EQUIPMENT OR COMMUNICATION LINES, TELEPHONE OR
| OTHER INTERCONNECT PROBLEMS, UNAUTHORIZED ACCESS, THEFT,
| OPERATOR ERRORS, GOVERNMENT RESTRICTIONS, OR FORCE MAJEURE.
| "_
|
| Note that "theft" is in that list. If they had a "hack", it's
| not their problem.
|
| There's also the part where they are listed with BNY Mellon
| as the owner of the CDs. The customer is not, apparently, on
| BNY Mellon's records:
|
| _" Each CD will be recorded (i) on the records of the
| Destination Institution in the name of BNY Mellon, as our
| sub-custodian, (ii) on the records of BNY Mellon in our name,
| as your custodian, and (iii) on our records in your name."_
|
| Remember, what IntraFi is doing has to work when the
| financial system is under extreme stress. Otherwise, it's
| pointless.
| gizmo686 wrote:
| I assume it goes without saying, but this is not legal
| advice. Speak with an actual lawyer before signing
| contracts for this magnitude of money.
|
| You also skipped out on:
|
| > SUBJECT TO OUR REIMBURSEMENT OBLIGATION IN SECTION
| 9.3(b), AND EXCEPT AS MAY BE OTHERWISE REQUIRED BY
| APPLICABLE LAW
|
| 9.3(b):
|
| > If all or part of your deposit at a Destination
| Institution is uninsured because of our failure to comply
| with the requirements set forth in Section 9.3(a), and if
| the Destination Institution fails and you do not otherwise
| recover the uninsured portion, we will reimburse you for
| your documented loss of the uninsured portion that you do
| not otherwise recover.
|
| 9.3(a):
|
| > We will maintain, directly or through a Service Provider,
| appropriate records of our placements for you. We will not
| place deposits for you through the CD Option at a
| Destination Institution that is the subject of a
| theneffective exclusion on your Exclusions List, at a
| Destination Institution that is the subject of a
| theneffective rejection by you, or at a Destination
| Institution under one Depositor Identifier in an amount
| that exceeds the SMDIA
|
| IntraFi is there to solve a specific problem: working
| around the size limitations of the FDIC.
|
| > Note that "theft" is in that list. If they had a "hack",
| it's not their problem.
|
| If that "hack" did not effect their records of your
| deposits, then it really isn't your problem. They know what
| money is owed to you and who is holding it. If it does
| effect their records, they are liable because of their
| 9.3(a) obligation for maintaining records.
|
| If a third party bank is hacked, you are correct that they
| are excluding themselves from direct liability. They do,
| however, have evidence that that bank owes you money. If
| the bank is unable to pay its liabilities (of which you are
| one), then they are a failed bank, and FDIC kicks in to
| reimburse you.
|
| It is also worth remembering that financial crises thus far
| have always been economic issues. They have not been the
| result of the underlying infrastructure powering the
| financial sector failing. The financial system being "under
| extreme stress" does not imply that their computer systems
| are having any problems.
| Animats wrote:
| > we will reimburse you
|
| But they probably won't have the money. IntraFi isn't
| that big. You're just an ordinary creditor of a bankrupt
| company at that point.
|
| This is a generic problem with non-bank financial
| intermediaries.
|
| _" Who's the counter party?"_
| xwdv wrote:
| I don't get it, couldn't you just put your money in some very low
| risk money market fund instead of keeping the cash in a bank?
| jnwatson wrote:
| Money market funds aren't technically insured.
| crushingk wrote:
| Money Market accounts are deposit accounts. As such, they are
| insured by the FDIC.
| crushingk wrote:
| Money Market accounts are deposit accounts, as are CDs.
| arbuge wrote:
| Brokered CDs are a good way to go and not mentioned in the
| article. They avoid the hassle of opening and managing multiple
| bank accounts with multiple banks. They're offered by many
| brokerages - I use them via Schwab.
| devmunchies wrote:
| Yes, Brokerages have SIPC which is basically the same as FDIC.
|
| Going forward, companies might have their cash balanced across
| 2-3 banks and 2 brokerage accounts. The company I work for
| announced that we had only 5% of our cash in SVB, which is fine
| since it will eventually be paid back but we have other cash to
| use in the meantime.
| eloff wrote:
| Don't put it in a bank. Use a brokerage that gives you extra
| insurance - some insure up to $100M.
|
| Also brokerages that aren't regulated as banks generally can't
| touch your assets. Equities and bonds are yours. You can fill out
| a form to have them transferred somewhere else. If your brokerage
| is regulated as a bank, in the U.S. they seem to be able to "bail
| in" using your assets - which seems sketchy as fuck.
|
| I don't know why people keep more than $250k (or 100k euros or
| 80k pounds, or whatever the insured amount is) in a single bank.
| Nobody understands the risks involved in the financial house of
| cards that banks build. Don't trust them.
| bdcs wrote:
| I'm surprised some low-fee automatic solutions aren't recommended
| here. Robo-advisors can split your cash across multiple banks on
| the backend. Using WealthFront[0] as an example, their cash
| account offers 4.05% APY, and FDIC insurance on balances up to 2M
| using a ton of partner banks[1] (each with 250k insurance, or
| 500k for join accounts). It also can send checks, issues debit
| cards, etc.
|
| [0] No affiliation, other than being a happy customer.
| https://www.wealthfront.com/cash
|
| [1] https://www.wealthfront.com/cash-account-participant-banks
| ianpurton wrote:
| Buy property and rent it out.
| michpoch wrote:
| What property do you buy for 250k?
| jedberg wrote:
| A house anywhere outside the coasts?
| mateo411 wrote:
| That's a good plan, but it's not very liquid. You can put a
| HELOC on each property, so you have access to cash.
| xnx wrote:
| You can easily have up to $1.25 million insured at one bank by
| naming your account "payable on death" and filling out a simple
| one page form naming 4 beneficiaries:
| https://www.fdic.gov/resources/deposit-insurance/brochures/d...
| gamblor956 wrote:
| This is not true.
|
| The $250k applies per _ownership category for each owner,_ and
| a recipient of a trust is not considered an owner for these
| purposes.
| 300bps wrote:
| Yes! Very easy to do. But in 2008 banks that failed were only
| giving out $250,000 initially and people using this and similar
| tricks had to wait much longer.
| sigmar wrote:
| "if the owner of a single account has designated one or more
| beneficiaries who will receive the deposit when the account
| owner dies, the account would be insured as a revocable trust
| account." (page 4)
|
| Doesn't this quote mean your method would only let a single
| person have 500k insured? Since any third account that names a
| second POD beneficiary would be considered a revocable trust
| and there is a limit of 250k for all of one person's revocable
| trusts (page 3)?
| frereubu wrote:
| In the UK, National Savings and Insurance -
| https://www.nsandi.com/ - is run by the government. Unlike most
| UK banks, which under the Financial Services Compensation Scheme
| have to protect up to PS85,000 of savings per person, NS&I has an
| unlimited guarantee (presuming the UK doesn't go bankrupt of
| course...) and their savings interest rates are pretty
| reasonable.
| coding123 wrote:
| I'm slowly starting to realize that the WEF (world economic
| forum) literally has the means to make everyone own nothing. They
| just cause bank runs at all the banks. Everyone's cash is reset
| to 0, and FDIC insures the panic is at a minimum.
| somsak2 wrote:
| Similar to MaxSafe mentioned in the article, Wealthfront offers
| $2m in FDIC insurance by spreading the deposits across banks --
| https://support.wealthfront.com/hc/en-us/articles/3600443020...
| zie wrote:
| Fidelity has a program where they will insure up to 1.2M USD in
| FDIC insured cash: https://www.fidelity.com/why-
| fidelity/safeguarding-your-acco...
|
| Otherwise I'd recommend reading from the source:
| https://www.fdic.gov/resources/deposit-insurance/ as there are
| lots of weirdness as one should expect from old complicated
| insurance systems ;)
|
| But really, if you have more than $250k in cash, perhaps you
| should consider lowering your cash amounts. Certainly there are
| valid reasons to hold that much cash, but in general, most people
| probably shouldn't. If you put that cash in treasuries(even very
| short term treasuries so it's very cash like), you get paid
| interest for holding the bills, where most banks won't pay you
| much of anything for holding cash and treasuries are backed 100%
| by the US govt, unlike FDIC's 250k limit.
| A4ET8a8uTh0 wrote:
| I think this is one of those rare opportunities that I can add
| something useful to the discussion based on knowledge rather
| than just my opinion. Some banks are structured in a rather
| specific way, which allow them to have some rather unique
| products ( compared to the regular banking that is ).
|
| For example, certain IL bank has a fair amount of charters,
| which effectively allows them to offer deposit product that
| goes way over 250k ( at its core, it is basically CDARS though
| ). 2.5m if I remember right based on the amount of charters.
|
| << But really, if you have more than $250k in cash, perhaps you
| should consider lowering your cash amounts. Certainly there are
| valid reasons to hold that much cash, but in general, most
| people probably shouldn't. I
|
| This argument has been going on forever and will likely
| continue for as long as human race exists. There are reasons
| one should and shouldn't do this, but the reality is that it
| will heavily depend on individual situation and, I assume, such
| a person will be sensible enough to ask someone/s that can
| appropriately advise whether it makes sense for that individual
| case.
| rtp4me wrote:
| Slightly tangental, Fidelity also has the option to put your
| accounts in "lock down" mode to prevent funding *outflows*
| (even transfers between accounts). This can help secure your
| account in addition to 2FA. I learned about this recently after
| +10yrs at Fidelity. Sadly, I don't think it is enabled by
| default.
|
| I wish my bank had the same sort of option to prevent someone
| from just randomly guessing my account number for an ACH
| transfer.
| fbdab103 wrote:
| This is _exactly_ what I have wanted for a long time! I need
| to keep some amount of cash reasonably liquid (3-10 day
| retrieval process would be fine), but hate it sitting around,
| seemingly with no way to require the bank to mandate that it
| is really me making the withdrawal request.
|
| Edit: Random internet poster did some testing
| (https://www.bogleheads.org/forum/viewtopic.php?t=382555) and
| found that the Fidelity Lockdown Mode will block ACATS pulls,
| but not ACH. Better than nothing, though still not what I
| want: money goes in, money does not come out until I sign
| something in blood.
| sorokod wrote:
| "lock down" is like Tesla's "autopilot" - the name implies
| more then what it is.
|
| In particular, certain transaction can not and will not be
| blocked.
| heartbreak wrote:
| I think most banks have this if you talk to an appropriate
| rep. I have "insert only" accounts at multiple banks.
| fbdab103 wrote:
| Could you give some examples which are available to a
| consumer accounts with modest balances (ie not exclusive
| for million dollar clients)?
| synergy20 wrote:
| this will not work if someone broke into your account
| already, or stole your identity and disguised as you, the
| first thing they do is to unlock it. Fidelity should have
| some push-to-apps login approach, I'm not sure if it has one
| yet.
| fbdab103 wrote:
| Hijacked account is different than what GP is describing.
| neilv wrote:
| Fidelity also offers an alternative, to its automated FDIC-
| insured deposit sweep, of keeping a brokerage/retirement
| account's cash in SPAXX, which is currently yielding 4.22%.
| (Both options are mostly transparent to the UX, and happen
| automatically -- you normally only see the dollar total, and a
| monthly interest/dividend transactions.)
|
| SPAXX is riskier than FDIC-insured sweep, but I don't know how
| much riskier.
|
| Rates for the FDIC-insured and SPAXX:
| https://accountopening.fidelity.com/ftgw/aong/aongapp/intere...
| ochoseis wrote:
| Thanks for the tip. I'm at Schwab and it appears they have a
| rough equivalent called SWVXX. I've been considering going
| more into CD/bond ladders for the rates lately, but it sure
| would be nice to have the flexibility to pull money out
| whenever.
| ghaff wrote:
| I looked into this sort of thing a while back. And, while I
| have bonds including tax exempt ones, I came to the
| conclusion that it made sense to keep a 10% or so holding
| in my brokerage's sweep fund. The difference between that
| and messing with CDs and high grade bonds just wasn't that
| much. I series bonds from TreasuryDirect probably do make
| sense at the moment but you can only invest relatively
| modest amounts.
| ochoseis wrote:
| Every month I put enough to buy groceries into Series I
| bonds, with the thought that no matter what they should
| still be worth that much when they mature. Probably
| better ways to achieve that, but it is simple.
| ghaff wrote:
| As a super-safe simple probably don't need to access for
| a few years but could if I had to investment, I series
| bonds make a lot of sense to me as part of a portfolio.
| mzd348 wrote:
| One problem with SPAXX (which I realized when doing my state
| taxes last week) is that the monthly dividends it pays aren't
| exempt from state income tax. I expected that they would be,
| since SPAXX invests in federal-level government bonds, but
| they aren't.
| pwarner wrote:
| You probably need to buy bonds issued by your state,
| although that may increase risk
| qotgalaxy wrote:
| [dead]
| crushingk wrote:
| Right now, there are checking accounts, savings accounts, CDs,
| and money market accounts (all of which are deposit accounts)
| paying 5%.
| zamnos wrote:
| Not that I don't believe you, but you mind linking some? the
| best I could find was wealthfront cash, which is isn't a
| savings account but is giving 4.05% apy. Which is pretty
| good, but inflation's up at like 6.5%, so it's still a bit of
| a net loss
| neilv wrote:
| I see 4.55% APY:
| https://www.bankrate.com/banking/savings/best-high-yield-
| int...
|
| Fidelity SPAXX currently at 4.22% is close enough for me,
| because you get all the other Fidelity features.
| Rebelgecko wrote:
| Some banks do it as a short term loss leader to acquire new
| customers. Eg Primus bank recently offered 5% interest,
| then after a month or two their rate fell back down to
| treasury APRs
| crushingk wrote:
| Some are listed here:
| https://www.marketwatch.com/picks/these-8-financial-
| institut...
|
| I typically check the top rates for savings, checking, and
| CDs each week. Deals can appear then disappear quickly. The
| best rates often have restrictions, but not always.
| O__________O wrote:
| Lots of banks offer services like these; for example, IntraFi
| Network Deposits, which is mentioned in the article has more
| than 3000 members, which is more than 50% of US banks, since
| there are less than 5000 commercial banks in the US.
| crummy wrote:
| How does a company like Apple insure their billions of dollars of
| cash?
| khalilravanna wrote:
| It sounds like they invest somewhat conservatively. By
| spreading across different issuers they'll likely be insured
| more than if they put all their money in one pot. But given the
| amount of money I imagine the actual amount fully insured would
| be low. Maybe someone else has more details.
|
| > The company typically invests in highly rated securities, and
| its investment policy generally limits the amount of credit
| exposure to any one issuer. The policy generally requires
| investments to be investment grade, with the primary objective
| of minimizing the potential risk of principal loss.
|
| https://www.fool.com/investing/general/2016/04/05/by-this-me...
| [deleted]
| bluetwo wrote:
| Use FDIC's Electronic Deposit Insurance Estimator (EDIE) tool to
| find your coverage and figure out how to maximize it:
|
| https://edie.fdic.gov/calculator.html
| t344344 wrote:
| > per institution
|
| Some banks are just brands, and use bank license of their mother.
| In that case both accounts share $250k limit. So be careful that
| insurance does not overlap.
| O__________O wrote:
| True, though there are at least 3000 banking institutions that
| exist that this doesn't apply to:
|
| https://news.ycombinator.com/item?id=35110141
| rcme wrote:
| Number 5 is a pretty good deal. You can buy CDs from other banks
| without opening an account there. The CDs have your typical
| duration, from one month to multiple years. Each CD is FDIC
| insured up to the $250K limit. So not only do you get a decent
| yield on your money, it's FDIC insured as long as you spread the
| CDs across multiple banks.
| remram wrote:
| For everyone else, since it's in this thread multiple times:
|
| CDs = certificates of deposit, from the same site:
| https://www.nerdwallet.com/article/banking/when-why-to-open-...
| fullstop wrote:
| Just to clarify here, each CD is FDIC insured to $250K if it's
| the only account you have at that bank.
|
| see: https://www.fdic.gov/resources/deposit-
| insurance/brochures/d...
|
| specifically this example: https://i.imgur.com/7kKHXEf.png
| fisherjeff wrote:
| Not to mention that it is almost trivially easy to shop
| rates/maturities and transact on, e.g., Vanguard. Much easier
| than opening several accounts.
| xiphias2 wrote:
| One option missing from the list is using Bitcoin multisig in
| multiple countries with physical bank safe vaults.
|
| The Cyprus bail-in in 2013 was a wake-up call for me that I don't
| legally own the money that I have in my bank, and I never looked
| back.
| organsnyder wrote:
| What happens if the value of Bitcoin tanks? How is this
| different than hoarding gold, Pokemon cards, etc.?
| xiphias2 wrote:
| I never understood Pokemon cards, they have a marginal cost
| of 0 to print.
|
| With gold I have to trust 1 bank to hold it (generally the
| place where I buy it anyways, which is not secure), can't do
| multisig, and can't go through airports easily.
|
| About the value tanking: even if it tanks 90% more, it's
| holding its value great compared to when I bought it 10 years
| ago.
|
| These sound like theoritical things, but when storing real
| money all these problems get real.
| swatcoder wrote:
| Suitable advice for people who see Bitcoin value as more stable
| than government-insured bank deposits held in USD, but that
| might not be so many people.
| jmyeet wrote:
| There are several lessons to learn from this SVB collapse that
| affect everyone:
|
| 1. Bonds are not risk-free as many would suggest. Even US
| Treasuries (conssidered the safest of bonds) are subject to this.
| Bond prices move inversey with interest rates. SVB had long-term
| MBS bonds at a low interest rate when interest rates went up.
| Yes, their bond portfolio still paid coupons but if you ever want
| or need to liquidate those bonds, they're subject to the interest
| rate price movements.
|
| 2. There's a principle in finance called the matching principle
| that you match the duration of debt to the life of what it's for.
| So if you're building a plant with a 30 year life, use 30 year
| debt. Many a company has tried to save money by, say, rolling
| over short-term debt because it's "cheaper" and have been made
| insolvent by a spike in interest rates.
|
| SVB had 10 year MBS bonds for a higher return when they made need
| to liquidate those bonds to cover withdrawals.
|
| For individuals, don't park your money in 30 year bonds if you
| need it next year. You're betting on interest rates. If that's
| not what you want, don't do it.
|
| 3. Once again we learn the value of regulation and get even more
| evidence of how deregulation doesn't work. Deregulation increases
| profits by shifting risks to the taxpayer. That's all.
|
| Tricks like splitting amounts between banks shouldn't be
| necessary. It is incredibly difficult to pierce the finances of
| banks and expose the risks of a run on the bank, particularly
| when on paper the bank has a lot of assets. This shouldn't be
| necessary. Custodial assets shouldn't be risked.
|
| SVB's assets need to be stripped and sold to cover depositor
| liabilities, shareholders be damned.
| HWR_14 wrote:
| In the FDIC case it shifts to the other insurance premium
| paying institutions. The taxpayer isn't on the hook.
|
| And SDC's assets are all seized. If there is anything left
| after repaying the depositors, the shareholders will split it.
| But I wouldn't bet on it being positive.
| [deleted]
| jabroni_salad wrote:
| A CMA is by far the most straightforward answer. I'm pretty sure
| it's only meant to be a parking lot between selling securities
| and buying something else, but mine at fidelity does have all the
| functions a normal checking account has in addition to the $1.2m
| of FDIC protection.
| alangibson wrote:
| Maybe a dumb question, but why not buy short term treasuries
| instead of putting it in the bank? Any amount of money in
| treasuries has a strong implicit guarantee from Uncle Sam.
| SkyMarshal wrote:
| That was my thought too, but where do you custody them where
| you're guaranteed to be able to take possession of them if the
| custodian goes under?
| NotYourLawyer wrote:
| There's SIPC if you hold them through a broker, but it also
| has limits.
| alangibson wrote:
| Good question. You can buy direct from the Treasury, so I'd
| imagine that would be the most foolproof method. I've never
| done it so I don't know if there are limits to how much you
| can buy.
| SkyMarshal wrote:
| Treasury Direct might actually be an option for small or
| medium startups. The limit is only $10k for savings bonds,
| but $10million per auction for Treasury Marketable
| Securities (bills, notes, bonds, TIPS, etc).
|
| https://www.treasurydirect.gov/research-center/ (scroll to
| Purchase Limits section)
| ghaff wrote:
| As a bonus you get to use a website that's ridiculously bad
| by 1990s standards :-) There are limits to certain
| instruments but, in general, you should be able to buy what
| you want.
| gerad wrote:
| Short term treasuries are vulnerable to interest rate risk.
| Essentially if the government offers new treasuries at higher
| rates, then the market value of your treasuries drops. It's ok
| if you hold the treasuries to maturity (then you're only out
| the opportunity cost of holding the newer higher rate
| treasuries), but if you need the money at a moment's notice
| then you will have to sell at a loss.
|
| This is essentially what happened to SVB.
| jnwatson wrote:
| Short term treasuries have very very low risk. Even if you
| have to liquidate, you might lose a percent or two.
| kurthr wrote:
| I'd recommend looking at FRNs which are currently ~0.2% over
| FedFunds (eg 4.8-5%). You can buy them through Treasury
| Direct, a brokerage account or more liquid (if you trust
| them) ETFs like USFR, and they are comparable or better than
| short CD ladders with better liquidity.
|
| I'm kinda surprised medium sized companies were keeping more
| than 1 month (or pay period) of money sitting in a bank
| account.
|
| https://www.google.com/search?q=usfr+etf
| alangibson wrote:
| Indeed, but SVB had 10 year maturities. I was thinking 30
| days so there's little interest rate risk.
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