I currently hold 110k in a money market account. How likely is it that something bad can happen?

Question

I know FDIC insures up to 100k.. is it really neccesary for me to move 10k of it to another bank just so that it's covered as well?
I'm with citibank right now.. it's not likely anything can happen with a big bank like that right? When was the last time something bad happend where a big bank went down and people lost thier shirts?

Answer 1

Here is what I suggest you consider. Inflation is eating away at that money continuously at 4% annually. Now you might be making 5% on that money market but I doubt it. If your tax rate is 28%--federal plus state and local, you are actually maybe loosing a little each year. Is that what you had in mind? You can mitigate the taxes a little bit by moving your money to t-bills. They are not taxed by state and local governments.

As for the bank going belly up, it has been know to happen in the past. Remember the 1000s of S&Ls that croked during the 80s thanks to the government deregulation of them. If this bank issued a lot of mortgages in the last 6 years, there is every possibilty that it might not make it if there are massive mortgage defaults, a not remote possibility.

Answer 2

There is no such thing as a risk free investment and there is no way to tell if a Big, reputation bank will collaspe overnight. All it takes for a BIG bank to completely capsize is for anyone of their many many many remeisers or traders to trade legally and lose it all. See what happened to Barrings Bank? All it takes is a couple of months and just 1 tradr for a big bank to go from 100% healthy to close down in this kind of scenario.

Remember, there is always risk in all kinds of investment or savings. Keeping your money at home opens it up to the possbility of fire and theft, keeping your money in the stock markets open it up to market risks....etc etc...

Every successful, wealthy person must have a back up plan in case of any uneventuality and in this case, you may have to look into diversifying the way you keep money intelligently if you think keeping your money in one bank puts you out of sleep.

In my humble opinion, a good portion of your money should be kept in government bonds and / or silver if you wish to hold your money for the long term.

Answer 3

Money market account is one of the safest investment you can get into. Just make sure it's a plain money market and not one of their money market derivative products.
As for your questions with Citibank....
The most recent ones with them happened in Japan and in the Phillipines..
Citibank was even casted out by the Japanese Government after the incident.

Answer 4

No it's not neccessary, but in your other post you said you wanted to invest your money "WITHOUT risk". By leaving it all in one bank there is some risk. True, it's small, especially since it's in Citibank, but there is still a risk.

Answer 5

Depends on the bank. You should be getting around 4.9% APY or more with a well established FDIC insured bank;

www.GMACBank.com
www.HSBCDirect.com
www.Everbank.com
www.INGDirect.com