Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

How to Protect Your Cash in Times of Crisis

Stock-Markets / Credit Crisis 2013 Jun 08, 2013 - 07:34 PM GMT

By: Don_Miller

Stock-Markets

The large depositors at Cypriot banks are shouldering a heavy burden. You’ll recall what happened back in March when the Eurozone financial wizards forced average citizens to participate in what was called a “bail-in.” It seems downright unfair for depositors with more than 100,000 euros to suffer a levy on up to 60% of their deposits. That’s about $140,000, give or take, at current exchange rates. And if you’re a retiree, having the government swipe $84,000 from your $140,000 account just to bail out feckless bankers is a pretty big deal


The dangers inherent in the Cypriot crisis may seem foreign to us, but US bank and brokerage accounts are not as safe as we might think. The federal government may imply that we are preferred customers of the FDIC and the SIPC, but that does not mean we will get the royal treatment should our bank or brokerage firm go belly-up.

Years ago Braniff International Airways, which had a large hub in Dallas, was on the verge of bankruptcy. In an effort to support one of their own, many local businesses booked flights and paid for airfares in advance. But ultimately, the airline did file for bankruptcy, and they shut down operations. One of my clients at the time complained that everyone who had paid for their airfare in advance was considered a general creditor in the bankruptcy proceeding. After the IRS and preferred creditors received their due, the general creditors got pennies on the dollar.

Whether it’s an airline, bank, or brokerage firm, when a company goes under, its customers quickly morph into creditors. It is one thing to lose a couple hundred dollars on a flight when an airline bellies-up. But it’s a much more frightening story when our life savings is in jeopardy. The Madoff and MF Global debacles certainly made that point clear.

While we may think of ourselves as customers of our bank and brokerage firms, our money is at risk if they fail. Although the FDIC steps in quickly when a bank fails, there are limits to its coverage for individual depositors. Meanwhile, when a brokerage fails, the SIPC operates at a snail’s pace. MF Global filed for bankruptcy in late 2011, and some of those claims have still not been settled.

Most of us know the FDIC limit by heart, but how many of us stop to think about the limits of SIPC insurance on our brokerage accounts?

According to the results of an Employee Benefit Research Institute study published in the Wall Street Journal, only 3% of workers retiring from the private sector have a defined benefit program. Unless you work for the government, there is a good chance you will retire with a 401(k), IRA, lump-sum payout, or some combination thereof. When I found myself in that very situation many years ago, the first thing I did was consolidate my retirement portfolio with a single brokerage firm. I had finally mastered its online trading platform, and it just seemed easier to have everything in one place. But at the time, I sure didn’t stop to think about the SIPC insurance limits and the potentially disastrous effect on my nest egg should my brokerage firm have failed.

Do we really want the bulk of our life savings sitting with one company? What if they go belly-up? Can we afford to have a major portion of our nest egg tied up for months while the SIPC tries to sort things out? We may take comfort in knowing that our government insures our accounts, but it is foolhardy to take unnecessary risks. There are ways to protect our money, like diversifying across banks and brokerage houses, and wise investors do just that.

Diversification means protection. What if the government decides to change the rules in the blink of an eye and confiscate some of our money? It could happen, although I’m sure they’d use a more euphemistic word than “confiscate” – like “tax” or “fair share.” Some politicians grumble that folks who invest offshore are not patriotic. Whether that’s true or not, it may just be simple, prudent self-protection. Investors in Cypriot banks received little warning. We still have time.

Not long after starting Money Forever we decided that part of our mission was not only to help my peers with their retirement investing, but also to share new ideas for protecting our money. Many of us got clobbered in 2008 and watching events unfold over the past couple of years in places like Iceland, Greece, and Cyprus should give any saver pause about putting all of his or her money with one bank.

I have to admit that before I started this journey, having any of my money overseas was the last thing on my mind, Now, I’ll be the first to tell you that I’m not some jet-setting world traveler dipping my toes in this and that country. I don’t have accounts spread all over the place, but I can tell that I sleep more soundly at night knowing that not all of my portfolio is tied up in US “too big to fail” banks.

With that in mind I worked with the team at Casey Research on The Cash Book, a comprehensive guide that reveals how to protect your wealth with global diversification and more. It’s a handy guide filled with ideas you won’t hear about from your financial advisor, like how to legally get around the FDIC’s $250,000 cap on insurance, the 10 safest states to do your banking, and how the average person can open an account in Switzerland without attracting extra scrutiny from the IRS.

Normally The Cash Book is only available to Money Forever subscribers, but because it’s now more important than ever that we globally diversify our retirement nest egg, we’ve made it available on its own. Get the easy-to-use strategies for protecting your wealth from the many threats facing us today: click here for your copy.

© 2013 Copyright Casey Research - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Casey Research Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules