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drc
Trad climber
San Francisco, CA
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Topic Author's Original Post - Sep 17, 2008 - 01:53pm PT
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So I have all my money (a few thousand) sitting in a savings account at Wachovia. My understanding of economics/finance is basically nill but with all the news lately I am starting to get worried. Is it time to take my money out and buy a bunch of canned beans and ammunition? Or donate it all to the Obama or McCain campaign? Seriously, what does FDIC insured mean? Will I have to sit there for months without a penny waiting for a check from the government if Wachovia collapses? The interest I get is negligible so am I better off just keeping cash under my bed?
Enlighten me wise ones.
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klinefelter
Boulder climber
Bishop, CA
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Sep 17, 2008 - 01:58pm PT
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beans 'n' ammo.
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bluering
Trad climber
Santa Clara, Ca.
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Sep 17, 2008 - 02:06pm PT
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Fattrad, where are you when you're REALLy needed.
My understanding is that FDIC (the 'trusty' gov't) insures you up to $100,000.
A Certificate of Deposit (CD) may not be a bad idea. Ya gotta let it sit for a year or so though, no touching. Pretty safe though.
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Elcapinyoazz
Social climber
Redlands
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Sep 17, 2008 - 02:35pm PT
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If Wachovia fails, and chances are pretty good that it will, FDIC will protect you up to 100k, BUT, it will take time and hassle to get your money.
If I had money in Wachovia or WaMu right now, I'd close the accounts and put it somewhere more stable. Plenty of banks out there in good shape, unfortunately WB and WaMu are not among them. Keep in mind that the bank failures are typically announced on a Friday...I wouldn't be waiting around this Fri with cash in either of those two.
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drc
Trad climber
San Francisco, CA
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Topic Author's Reply - Sep 17, 2008 - 02:41pm PT
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Elcap, which bank would you recommend? I cringe at the thought of going back to BofA. They screwed me so much with random fees when I was a student. I suspect that Wells Fargo are bastards just like them.
Also, if I go and close my accounts today and everyone else does too, isn't that percisely what would cause the bank to fail? So is it just a race to get the money out before its too late?
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Jeremy Handren
climber
NV
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Sep 17, 2008 - 02:49pm PT
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I can confirm that Wells Fargo will treat you in a dishonest fashion when you are setting up your account.
You just have to be very clear what you want, check your statements carefully, and go straight back to the bank when mystery fees crop up. Its a pain in the ass but thats just what it takes to do business with these types of institutions nowadays.
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kev
climber
CA
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Sep 17, 2008 - 03:17pm PT
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Yo drc,
There are a few credit unions you can use where you live....
Or I'll hold your money for you.
kev
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Gene
climber
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Sep 17, 2008 - 03:18pm PT
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To date, when a bank fails, customers usually are able to get their $$$ almost imediately. The FDIC usually closes the failed bank on a Friday and transfers the dead bank's business to a stronger institution, with accounts available on Monday. However, nothing as big as Wachovia &/or WaMu has gone down in recent years.
Check out U.S. Bank. I've been with them about 12 years. The folks at my branch our superb. The stock of its parent corporation, U. S. Bancorp, is trading a buck or so less than its 52 week high. That should tell you something.
GM
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Elcapinyoazz
Social climber
Redlands
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Sep 17, 2008 - 03:23pm PT
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No recommendations on my part. My personal acct is at Wells and I'm comfortable with that. FDIC doesn't release their bank strength ratings to the public, but there are many private entities that rate banks on a variety of measures. However, as we saw with the ratings on MBS and the like, these ratings could be horribly wrong.
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Zetedog
Trad climber
PGH, PA
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Sep 17, 2008 - 03:33pm PT
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The FDIC guarentees Deposits only (CD's, Savings, checking, up to a total of 100K per person, not per account.
In the event of a failure, you'll have immediate access of up to that 100K - FDIC insured accounts are recording with the FDIC each night. The purpose here is to keep it from being a hassle for you to access your money, and the point is to keep people from executing mass withdrawals from the financial system completely - the gov't wants the money to stay in the system somewhere.
There have been 11 bank failure YTD - more than all of last year (Lehman was NOT a bank). What happens i n most of these cases is that you account is sold to another institution. I believe only one of the banks had customers experiencing losses above the 100K as a result of the failure - all the rest had their accounts transferred in total - meaning they were made whole on all of their amounts, even that above the 100K insurance.
ToddE. - Trades derivatives and bonds for a large bank.
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JLP
Social climber
The internet
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Sep 17, 2008 - 03:34pm PT
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Invest it.
Takes 15-20 mins to open a Fidelity account. The min deposit is 1k or some such. You'll earn 3-5% or so while you make up your mind about what to invest in. Worst case you are getting money market rates if for some reason you chose to stay out of the stock market - however, the adage is buy low, sell high. Anyone with more than maybe 4 weeks of cash sitting in a bank account uninvested is a moron.
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jstan
climber
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Sep 17, 2008 - 03:41pm PT
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I would amend Zetedog's post only by saying that above 100K to get FDIC coverage you need to name/hold accounts carefully within FDIC rules. Also the rules for credit unions under NCUA are entirely unlike the FDIC rules.
Entirely.
And yes I am a moron. Right now we morons are sleeping pretty well. I consider it a part of diversification. I do worry about how SIPC will work relative to my Fidelity accounts. Do they actually separate monies???? Or are my securities in a big hopper with everyone else's? Because of Freddie Fidelity's money market has been hit about 2%. At $123 Billion the fund seems fairly well diversified, I have to say.
Oh, it's not 3-5%. Been running around 2.5% as I remember.
If you have cash and can tolerate low returns for awhile you can buy Federal debt directly online from Treasury Direct. As the Feds get deeper and deeper into trouble those returns ought to start improving - a tiny bit.
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happiegrrrl
Trad climber
New York, NY
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Sep 17, 2008 - 04:31pm PT
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....insert Ouch! cartoon of Fattrad standing behind a cardboard false-front, old west, style bank getting handed sacks full of cash, and tossing them back behind himself. Seemingly into 'The Vault' (another false front sign that says "The Vault". But in reaility behind that Vault front is a mule-powered Getaway rig!.... hahahah
Sorry fat. Really just kidding. Hope you aren't offended.
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JLP
Social climber
The internet
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Sep 17, 2008 - 04:51pm PT
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2.5% - whatever. I have so little sitting there a few percent doesn't matter much to me. All I know is that my checking account pays 0.1% or something like that. Having to add 3 cents somewhere for interest to balance my check book really just pisses me off more than anything. I don't even have a savings acct at a bank - what are they paying these days - 0.5%? What do you net after all the fees typically charged? How about after entering all those penny transactions into whatever you use to keep track of your finances?
What most people do is buy high when things feel great and secure and everything is going up, then sell low after a panic. Average investor return is about 10% below market average return as a result.
I'm pretty happy with my portfolio. This year indeed looks like crap, but 3-4 year is still looking pretty good. Fidelity - I like them. I've been there for awhile so I get the special help when I call. A few phone calls for advice over the years have been worth a lot of money for me.
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kev
climber
CA
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Sep 17, 2008 - 05:03pm PT
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Hahahaha "Invest it"!!!! You guys obviously don't know drc.
Drc, what about just buying a boat load of beer? Wait maybe that isn't safer than a bank account. You could store it in my garage.
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drc
Trad climber
San Francisco, CA
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Topic Author's Reply - Sep 17, 2008 - 05:10pm PT
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Kev, I think I have arrived at the solution.
In addition to the canned beans, I'll purchase Whole Foods' supply of Lobotomy Bock from all over the Bay Area.
Then we'll sit in your garage and wait for the end of days. We'll probably gas ourselves to death first.
Cheers
V.
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yosguns
climber
San Francisco, CA
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Sep 17, 2008 - 05:27pm PT
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I don't know how keen I am about this solution...
;-) Cheers
Edit: Don't know how I feel about beer for the rest of your days, is what I meant, of course. More of a 20%+ kind of girl myself.
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paganmonkeyboy
climber
mars...it's near nevada...
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Sep 17, 2008 - 05:34pm PT
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another vote for beans and ammo...seeds, books on agriculture and medicine...we aren't as used to the system just not working here in america as they were in the soviet union when they collapsed, so anything you can do to help you and your neighbors be self sufficient will be good...
optimist i am ;-)
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