$100,000

[DaveJ]

Can anyone explain how people smart enough to have obtained over $100k could be so stupid as to keep it in an uninsured savings account?

I'm sure this has already been brought up many times, but I've been busy lately struggling to survive.

[whistle]

1. Are CDs insured? How about money market accounts? These are the usual places people

...put money because they offer much higher interest rates than any savings account, same with money market accounts and numerous other high yield financial instruments offered by commercial banks. The stupidity comes from trusting an unregulated banking system under a bunch of crooks like BushCo

[DaveJ]

6. They are too trusting? Yeah that must be it.

If an account specifically says insured up to $100k and they put $250k in, for instance, they have nothing to gain and everything to lose. Did they not understand what FDIC insurance means? Did they not understand that those with common sense use multiple savings all under $100k?

Sure I get frustrated with the mega rich, but if this is the clueless way the upper middle class behaves, that is cause for even more concern.

[whistle]

16. The bank's account manager should have suggested three accounts

...that would have covered up to $300k

[CK_John]

27. It's a 100K per bank not per account. n/t

[Renew Deal]

2. I've been wondering the same thing.

Though if you have several million dollars, it can be a nightmare to split up that much money.

[DaveJ]

4. More money than they know what to do with?

If that's a nightmare, I guess most of us are in a living Hell.

[Renew Deal]

5. lol

Exactly :D

[uppityperson]

3. Not that hard to get $100,000+ if you sold a house. Nothing to do with being "smart".

Maybe they inherited, or sold their house and banked most of the money? It isn't that difficult to get that much money if you sold your house and didn't immediately invest it in something else. It doesn't have much to do with intelligence.

Just for fun, http://money.cnn.com/data/markets/dow/
10,827.71 low of the day so far on DOW

[DaveJ]

7. Obviously, they must have inherited it -- not earned it.

Just like most the rich and upper middle class. That explains a lot. Good point.

[uppityperson]

29. Not necessarily. I bought a piece of property 25 yrs ago.

Paid $7,000 for it. I needed money at one point and sold it to a friend for the same amount. They just sold it in 4 pieces (it was subdivided) and ended up with $240,000. There are few things I regret, and selling those couple acres for $7thousand is one of them.

[spin]

11. Exactly how I ended up with more than 100k in my bank...

I sold my house and put the money in the bank while waiting three months to buy another.

Imagine how I would have felt if the bank would have collapsed during that period. If I sell the house I'm in now, I guess I'll have to deposit the funds in multiple banks.

At least I know now to do this.

[slackmaster]

15. A married couple can shelter up to $1.4 million in one institution

By opening 14 accounts at $100K each and vesting them properly:

John Smith
Suzi Smith
John Smith and Suzi Smith
John Smith in trust for Suzi Smith
Suzi Smith in trust for John Smith
John Smith and Suzi Smith joint trust with right of survivorship
Smith family trust

etc.

[whistle]

18. You mean insure, not shelter right? Shelter suggests hiding from fees or taxes

[slackmaster]

21. Right, sorry

More coffee.

[elehhhhna]

23. IIRC that is not so. FDIC insures 100K per depositor per bank, not per account.

[slackmaster]

26. It's by legal ownership, not by person - I think my 1.4 million was a little off

I wish I had enough cash to worry about keeping it all insured.

A couple of examples provided by Zion's Bank:

#1 $1,100,000 FDIC-Insured Deposits for a Married Couple

Husband's Individual Account $100,000
Wife's Individual Account $100,000
Husband and Wife Joint Account $200,000
Husband's IRA $250,000
Wife's IRA $250,000
Husband Payable on Death to Wife* $100,000
Wife Payable on Death to Husband* $100,000

#2 $1,700,000 FDIC Insured Deposits for a Family or Group of Four

Husband's Individual Account $100,000
Wife's Individual Account $100,000
Husband and Wife Joint Account $200,000
1st Child's Aggregate Joint Account Funds $100,000
2nd Child's Aggregate Joint Account Funds $100,000
Husband's IRA $250,000
Wife's IRA $250,000
Husband Payable on Death to Wife* $100,000
Wife Payable on Death to Husband* $100,000
Husband Payable on Death to 1st Child* $100,000
Husband Payable on Death to 2nd Child* $100,000
Wife Payable on Death of 1st Child* $100,000
Wife Payable on Death of 2nd Child* $100,000

http://www.zionsbank.com/member_fdic.jsp

And FDIC's official publication:

http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html

Leveraging of deposit insurance is, for those who have that kind of money, a significant federal benefit for married couples and people with children.

[whistle]

17. Or moving a 401k and putting it in a high yield short term instrument until

...you can decide the best place to roll it into

[MercutioATC]

8. There's at least one person here who was lied to by their banker.

They were told that multiple sub-$100k accounts in the same name would be covered. That's patently untrue.

[whistle]

19. How would it work then

[slackmaster]

22. With one individual you pretty much have to open accounts in separate institutions

At no more than $100K per institution (if you want insured deposits).

[elehhhhna]

24. True.

[TreasonousBastard]

9. Most money is kept in uninsured accounts...

if you've got more than a hundred grand, that is.

CD's, money market accounts, stocks and bonds, real estate, mutual funds... Nothing but FDIC insured accounts is guaranteed, and not all bank accounts are FDIC insured.

FDIC insurance is intended to keep the little people from going flat out penniless in a bank failure, not to protect investments.

[DaveJ]

10. Is this supposed to educate me, or them?

Obviously I already know all this.

If you want to make money you put in in a riskier investment.
If you want your money to be safe you put it in low interest accounts that are insured up to $100k, or stuff it in a mattress.

Putting money in an account that is both low interest and uninsured is stupid.

[sinkingfeeling]

12. FDIC does insure money market and CD's, IRAs, Keogh, and 457's.

http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html

The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs), up to the insurance limit.

[TreasonousBastard]

14. OK, I should keep up with the changes. n/t

[whistle]

20. That's what I thought, so the traditional savings accounts are all that are insured

...so can a person have more than one FDIC savings account open at the same institution?

[slackmaster]

13. Having grown up in the affluent community of La Jolla, California I am qualified to say

Having money is by no means an indicator that a person has a brain; and the guy with the most expensive shoes and fanciest car is probably the biggest crook in town.

[DaveJ]

25. Thank you. My point exactly.

And it worries me.

The mega rich are often evil SOB's but the upper middle can be a bunch of undeserving idiots too. It's just the truth. They probably are the ones voting for McCain.

[TexasObserver]

28. They are not served well by their advisers, which includes their bankers.

Bankers try to get every customer to place every dollar with their bank. They don't tell the little old lady who just got a half million in life insurance that she should put it in five separate banks. No, they sell her on keeping it all with them.

Having money doesn't mean the person is financially astute. Often, they aren't.