Sleeping well is tough with the volatility of our economy
The stock market is volatile. CEOs’ salaries are out of control. The hedge funds are losing money. What options does that leave for the safety investors? Where can we invest our money to ensure it will not lose value? A bigger question is this: Who can you trust?
If safety and security are your goals, I think you have three choices.
• US Treasuries
• FDIC guaranteed bank accounts
• Insurance company annuities (not variable or fraternal)
US Treasuries are the safest possible place on the planet to keep your money safe. The drawback is the yield can be lower than desired. What about banks, credit unions, and insurance companies?
Our banking institutions have a safety net. It is called the FDIC, and it is proudly displayed on fixtures, the front doors, desks, tables, stationery, and websites. Anyone who does business with a bank knows what the FDIC stands for…it stands for security and guarantees and insurance protection. It creates peace of mind and allows for depositors in the banking industry to be free of fear. The underlying guarantee is backed by the full faith and credit of the United States Government. Your funds are guaranteed and will always be safe. The limits are $100,000 per depositor and combinations can be allowed plus higher limits for your IRA.
How about Credit Unions, are they safe? The funds in your credit union are insured by the National Credit Union Share Insurance Fund. (NCUSIF). This protection was established by Congress in 1970 to protect member share accounts at federally insured credit unions. All federally insured credit unions proudly proclaim this insurance and make sure you know that your funds are safe. Guarantees, safety, and security are their mantra, and they want you to be aware of it.
How about insurance companies? Life insurance and annuity products? These products are also guaranteed, and the guarantee is based on your state of residence. Each state participates in these guarantees, and it is known as “The State Guarantee.” This guarantee is in place to help and assist policy owners in the event of the insolvency of an insurance company to provide funding and liquidity. Coverage and protection are generally for individual policies, and the limits of protection will vary from state to state, and many states have limits as high as $500,000. There are two exceptions to this guarantee: Fraternal organizations (such as Knights of Columbus etc.) are omitted, and variable annuities are not under this guarantee.
