Author Topic: Multiple Accounts to leverage FDIC Insurance  (Read 996 times)

WSUCoug1994

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Multiple Accounts to leverage FDIC Insurance
« on: September 21, 2017, 10:08:09 AM »
I tried searching the forum for this topic but it kept timing out.  My understanding of FDIC insurance has to do with the type of Account Ownership Category (IRA, Individual, Trust, etc.) and each category can have FDIC insurance up to the max of $250,000.  There are creative ways (multiple account categories, multiple trusts, etc) to increase your coverage beyond the standard $250,000.  Here is a link to an older example http://www.marketwatch.com/story/how-families-can-get-35m-in-fdic-coverage-1329172519053

I am feeling a little exposed that the majority of our stache is between a 401K, 529, Roth IRA and a Taxable account.  All of them are over the $250,000 limit and that exposes us more than I like but I enjoy the simplicity of having fewer accounts (but maybe that is not the best option).  I know other people who spread their investments across multiple institutions to decrease their risk.   

I was curious what other people have done to decrease their exposure to some sort of banking industry meltdown (which I understand is a low probability but a risk none the less.).

Frankies Girl

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Re: Multiple Accounts to leverage FDIC Insurance
« Reply #1 on: September 21, 2017, 10:44:51 AM »
I am not worried in the least and I see no need to create extra accounts or have my portfolio split up between several companies.

FDIC only covers bank institutions (savings/checking situations), not investment accounts. SIPC is the coverage for financial groups. They cover up to $500K (limited to $250k in cash tho). https://www.sipc.org/for-investors/what-sipc-protects

But some financial institutions cover way over the SIPC coverage in the event of fraud, misconduct of their employees or outside influences (short of total industry meltdown IOW). All of my accounts are with Fidelity, and they specifically state that they cover every penny of your investment regardless of the amounts contained and number of accounts. https://www.fidelity.com/security/customer-protection-guarantee


WSUCoug1994

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Re: Multiple Accounts to leverage FDIC Insurance
« Reply #2 on: September 21, 2017, 10:56:51 AM »
I am not worried in the least and I see no need to create extra accounts or have my portfolio split up between several companies.

FDIC only covers bank institutions (savings/checking situations), not investment accounts. SIPC is the coverage for financial groups. They cover up to $500K (limited to $250k in cash tho). https://www.sipc.org/for-investors/what-sipc-protects

But some financial institutions cover way over the SIPC coverage in the event of fraud, misconduct of their employees or outside influences (short of total industry meltdown IOW). All of my accounts are with Fidelity, and they specifically state that they cover every penny of your investment regardless of the amounts contained and number of accounts. https://www.fidelity.com/security/customer-protection-guarantee

Oh fantastic!  Apparently my Brokerage Firm protects me up to $600M.  That is likely not going to be an issue.  Thank you for the insight.