A Special Note From The Steward Advisors Team
How to Protect Your Money
With all the negative headlines about bank failures, we’ve had a lot of questions about “how to protect my money.” This is a natural question to ask in times like these, and there are some smart things to do to make sure you are protected. Here are some things to consider about banking risk:
• The FDIC insurance limit is $250,000 for each legal owner (not each account). You, your spouse, you and your spouse jointly, your IRA and your business each qualify as an owner for FDIC insurance coverage.
• Money market mutual funds are not FDIC insured, although they may invest in FDIC insured accounts such as certificates of deposit. Money market mutual funds are different from bank money market funds which are covered by FDIC insurance.
• Brokerage firms are covered by SIPC insurance, not FDIC insurance. While the market value of brokerage account investments is not insured, SIPC does protect you against the loss of cash or investments at the brokerage firm.
• If you are concerned about your banking institution, we recommend establishing a banking relationship at a second institution as a backup so that you have access to liquidity in a crisis.
When there are negative headlines in the news, we all want to know what we can do to protect ourselves. We all feel better when we can make a decision or take action. It’s natural to look at risks and get scared. However, one of the best things we can do in any crisis is to contemplate opportunities. Focusing on opportunities gives us a sense of agency and hope.
One area of opportunity we encourage you to consider is how you can use your family resources to further your family values. Often when we consider our resources we focus on financial resources. While financial resources are helpful in pursuing family values, they are not the only resource. Other resources to consider are relationships, talent, knowledge and security.
Most families with some means have a multitude of relationships. You may recall the movie Six Degrees of Separation which hypothesized that we are only six relationships away from anyone on the planet. If one of your family values is to help your children find employment, you probably know someone who knows someone at your child’s future employer.
Talent and knowledge are resources your family can leverage to provide value to those in your realm of influence. Someone in your family may have a home repair talent that could be used to help other family members or to build a home for Habitat for Humanity.
Finally, we may not think of security as a resource, but the ability to provide a safe haven to other family members and friends in their time of need can allow them to take risks they may not take otherwise. Many entrepreneurs wouldn’t have started their business if they didn’t know they could always come back to their parent’s home if things didn’t go well.
We hope you can think more about the resources and opportunities you have than to worry about the many mini-crises that happen all around us. There are so many things that we can’t control. If instead we think about how we can use our family resources to create opportunities for those near and dear to us, we may find hope, joy and a sense of peace