Want to do a little test? For anyone who has $50,000 or more in a branch bank, go stop by tomorrow and ask to withdraw your entire balance - in cash, right there on the spot.
See what they say.
You may be surprised.
Now assume EVERY account holder in the area tried to do that tomorrow - perhaps after news that the bank might be one of the ones about to fail.
It wouldn't be pretty.
Here's a posting from an HP'er who did the test today:
Anonymous said...
I went to the bank today to withdraw about $10,000 in cash. The bank was so low on cash they could barely give me my 10k.
At that point I asked if I could withdraw my entire balance (around 50k) in cash. I just wanted to see if they could. Sure enough they could not. Evidently they've had many people all day long pulling their cash out of the bank.
Freaking scary.
74 comments:
Hey Kieth; I have USD 35K in Everbank I keep 5k in my bank of America checking to pay bills. Am I safe or foolish advice?
Chris in Huntington Beach
chris
your money is safer with me at first third anonymous bank, please wire funds asap
seriously though, i just keep my cash in HP Bank and Trust.
Not that I don’t appreciate the sense of humor, but I would love to see a useful post on how to choose a bank, or how to asses the relative health of your bank and determine what should be done. Because having $65K in cash under the bed after I swing by Wachovia after work to empty the checking and savings accounts is hardly risk free. Admittedly I do I live in an edge neighborhood as part of my fiscal responsibility plan to help save money and buy a house. But not all of us have a secure, fireproof vault into which we can dump our stash of Canadian gold coins and Euros.
I already divide the cash I keep on hand between banks (UBS, Wachovia, ING) to assure the maximum coverage... what else can I do?
I don't have your money...it's in Bill's house, and Fred's house!
Under the revised U.S. banking laws, bank branches can limit customer cash withdrawals to "reasonable" amounts, and they define what's reasonable. If you close your account and demand the proceeds in cash, the bank can give you a partial, reasonable, amount in cash, and they have up to 25 days to settle the rest by cash or check.
If things really get sticky and banks won't honor checks drawn on another bank, you may have to march down to one of the Federal Reserve Banks to get cash. There are only 25 FRB branches in the entire country -- do you know where yours is located?
www.federalreserve.gov/branches.htm
It's time for a bank run everybody!!!
LET'S DO THIS!!! WOOOOHOOO!
No bank keeps all of their depositors cash in the vault. It is loaned out or shipped somehwere else. How do you think they make money, by keeping cash in the vault? Even in the best of times, the banks could not make good if there was a bank run.
They keep very little "vault cash" in the branches. It's all part of that fractional reserve thinking. Wouldn't want any of that green paper sitting around getting dusty when it could be making THEM more money!
I got religion about 6 months ago and decided to pull $49,000 from a local branch where the managers pissed me off when I went in to complain about the blood-sucking, non-sufficient fund (NSF) penalties my wife was incurring on her personal checking account.
The assistant manager decided to "educate" me on how transactions clear, and in what order (largest to smallest, regardless of order of receipt, so that the maximum number of $35 penalties can be charged to the depositor).
She patronizingly explained how I should "clear" my transactions each day by making little check marks in my register and how the online current/available/collected balances shown on the website really don't mean a damn thing since even debit and credit card transactions can be "held" back by merchants for "months" sometimes!
Oh my! Really, I said, "how clever you have to be to keep all this straight! Tell you what, how about you CLOSE my wife's checking account, and while you're at it, give me the $49,000 I have in my account ... IN CASH ... NOW!"
The look on her face -- and the branch manager's face when he was called out of his office -- was something I will treasure until my dieing day!
I didn't re-explain the situation to him. I just demanded my money. Both of them got as pale as ghosts. They tallied up everything they had in the vault and the teller drawers. Gee, only $8,000.
Not wanting to be difficult, I said I'd gladly stop by the next day for the remainder -- they had to schedule an armored car to bring that much cash to the branch!
I left my account open though and recently had $60,000 in proceeds from a 401(k) deposited into it.
Guess what I'm going to do in the next couple of days?!?
Yup, I'm gonna go see my favorite branch manager and assistant manager about withdrawing some of that good ol' folding paper kind of money.
Maybe they should schedule a little meeting about how to treat customers with money who aren't afraid to bury it in the back yard rather than let them earn a frigging nickel in interest on it !!!
Peace, out.
For a Russian bank, the critical amount would be around $25200. There's no acute shortage of cash but if you deposit/withdraw more, you are reported to "Rosfinmonitoring" (the "financial intelligence" agency) as a money-laundering suspect. This, of course, does not prevent banks from offering a million-rouble ($42k) cash-out consume-it-away loans - but if that's your own money, both you and the bank end up on a watchlist.
Oh man weird...I just did this exact thing today........
I went to the bank today to withdrawl about $10,000 in cash. The bank was so low on cash they could barely give me my 10k. They ran out of large bills. At that point I asked if I could withdrawl my entire balance (around 50k) in cash. I just wanted to see if they could. Sure enough they could not. Evidently they've had many people all day long pulling their cash out of the bank. Freaking scary.
They had a teller at the door asking people if they needed cash as if it was happening all day long.
One better... I once went in asking for 190k from my account. They looked at me like I was Pablo Escobar and said they would arrange it for me in 3 days and for a $250 fee. Lovely, they rape me on float and then charge me $250 to get back what is mine in the first place.
I did a fairly large withdrawal soon after the BSC debacle in Aug, and the comment the teller whispered to another where she thought she was out of earshot was something along the lines of "we have another one here..."
Ha...50k? I tried to get 5K out. I had to go to 3 Wash Mutual banks in Salt Lake to collect.
I have accounts in 3 different countries, and in 3 different currencies that are now inversely correlated to the American dollar. Add to that gold and properties overseas in a country rich in natural resources. I couldn't care less.
I believe I read that there is only 2% of actual currency for all the "money" in circulation.
Good timing on this post. I withdrew $9800.00 last week from my bank. I had to give them a 2 day notice for them to get the cash together. I got it in twenties. I asked how long it would have taken in hundred dollar bills and he said he needed 3-4 working days to get money delivered to the branch.
I'm not sure whether it is a security issue of not wanting to put big money into the cheaply constructed/low security branch banks or if it is a supply issue.
I walked into BofA a few weeks ago and got a cashier's check for $51,200 no problem. Granted it isn't real paper cash but it's honored by banks just the same. Having said that, I do not keep more than $100k per business in any one bank.
I'd agree that keeping cash in your house is just crazy. If anything, you want it in gold, and you better have spent twenty grand or more for an advanced, safe, security system and crack-proof concealed safe to keep it all in.
I've been reading up on that and saw a story of a safe full of gold that the IRS and DEA couldn't find after 15 hours of scanning and re-scanning the house with metal detectors and other instruments. I want the guy who built THAT installation!
Hey Keith,
If we get said cash out of the bank, where do we put it?
In a freaking mattress?
In a safe next to the guns?
Please advise.
Also, what if you bank happens to be a credit union? Are you any more likely to see a run on a CU vs. a Bank?
HELLOOOOOOO????
Is anybody HOOOOOOOME?
Has this idiot ever heard the often quoted remark that the banks need to have less than 1% reserve cash on hand by law?
Does he know what that means?
It means, that for every $100 put into the bank on a personal bank account, the bank needs to only have $1 in the till. The other $99 they can invest in stocks, gold, etc.
What does he think earns the <2% interest for crying out loud?
And the fact is - THIS HAS BEEN THE CASE FOR OVER 20 YEARS!!!! AND HE'S WONDERING ABOUT IT NOW????
NO bank has enough cash on hand to pay back all of the account holders at the same time. Given time, they can sell the gold and stocks in order to get the liquid cash to slowly pay people back.
(Maybe he should go watch "It's a Wonderful Life" a few more times.)
The idea is - you have to have confidence in the currency and the banking institution for this system to work. If you don't, you should pull all your cash out of the bank and stuff it in your mattress.
So when you think about it, if you want to pull $50K in one day, you are expecting that all of the banks customers have $5 million invested in that bank alone. It's possible if you think that the bank has 5000 customers with an average of $1000 dollars each in their accounts.
But you have to remember, the real savings rate for Americans is -2% today. This means that the average person with $1000 in their bank account still owe $1020 to the same bank because of credit card or other types of debt.
Now THATS scary.
Oh... and btw - I beleive that the US government changed the law so that the banks no longer need to have any reserve currency. ie they might have 0.001% of their customers cash in the till.
So... for the guy who pulled the $10K out - be glad... it's rare for a bank to have so much spare cash handy. You probably pissed them off too because now they'll be tight for the rest of the month with their other customers.
anon: buy canned food, a shutgun and ammo. lol!
Try Rabobank. Only AAA rated bank.
http://www.rabobank.com/content/
Just made a withdrawl from the bank of get drunk and don't look.
This is a silly test. For a variety of reasons including security concerns it would be foolish for any bank to keep more cash on hand that the amount needed on a typical day for it's customer's minor cash transactions. Any bank that keept enough liquid assets available to cope with a hypothetical "run on the bank" wouldn't remain in business for long. If you don't trust FDIC you had better not have any of your assets in dollar denominated investments.
Want to check out a bank? Just get on the FDIC's web page, punch in your bank's CORRECT CORPORATE NAME (not as easy as you might think!) and let the good times roll.
I did for mine, big eye-opener. Corner bank has been bought out twice in two years. The new corporate entity has 1.4 billion in total worth, BUT only 152 million in actual assets, with 68 million of that in the "owed money" column. As HP'ers already know, banks count unpaid interest/principal as an income/asset whether or not it even exists or has any chance of being paid back.
The original cust svc rep assured me three years ago that their exposure to toxic loans was minimal to non-existent. Our small corner bank was very conservative and I had no reason to doubt him. He went bye-byes with the last merger so I have no idea how much of that 68mil is toxic. I am assuming the worst.
I keep under 50k in local bank for funny money, and a few thousand in mason jars in the back yard.
When/if your bank fails, you will probably get your (under 100K) money back, but when you do will you even care.
$72,500 Big Macs anybody?
My bank is ING Direct. I received the following email from them on March 10.
"Dear X,
Customer Number: XXXXXXXXXX
I am happy to report that ING DIRECT's 2007 financial results are complete. Your confidence in us helped us deliver a record number of new savers, deposits and home mortgage loans. Further, we acquired ShareBuilder so we could offer you a low cost way to invest in stocks and ETFs. I'm proud of our first 7 years, but there's work to be done.
Global financial markets ended 2007 with many challenges ahead. While ING DIRECT avoided the sub-prime mortgage problem, we understand that this housing crisis threatens the well-being of countless families and, in the end, it will be seen as a major failing of the mortgage industry and its regulators.
The fact that ING DIRECT was not adversely affected is a testament to our operating philosophy that, as Americans, we should only buy houses we can afford. That way we can keep them for years to come. We believe a mortgage is a contract that both parties should execute in good faith and expect to see through to its conclusion. We will not waver from our sworn promise to provide you with great value, service and convenience.
Thank you for your continued trust in us. Stay tuned in 2008 for new ideas we'll offer to help you save your money.
Arkadi Kuhlmann
The CEO of Saving"
Their record backs this up. According to the latest issue of Fortune Magazine, they have only had 15 foreclosures since 2000!
I trust them fully to hold my dollars.
The government needs to honor FDIC insurance ,but they aren't going to let certain Banks fail ,in my opinion .
which banks have the least exposure?
Now Greg Swann is lamenting the fate of the poor children and their families being hurt by the bust.
If I were in Phoenix, I think I'd slug him.
The bank couldn't process your transaction for the full $50,000 on the spot, but that does not mean the bank does not have the ability to get more cash. Remember, paper money is just paper; if they run low on cash, they make a phone call, and a truck load of fresh paper gets delivered a few hours later.
It is impractical for a bank to hold several million in paper in its vault every day, when it may only transact $25,000 in paper money per day. Go to McDonald's and ask for 5000 hamburgers...they probably don't have that many on hand at your local store, but will gladly get a few more cases delivered if that is what you really want.
I had a CD come due with a out of state bank for >50k. It took two weeks and about 10 calls to finally get it. They claim it was lost in the mail. Something was going on???? It always took 3 days to get it before...
There is little you can do, even if you are on the edge of paranoia. You can keep a few thousand dollars worth of silver coins in your safe, and another few thousand in cash. You can diversify your accounts among multiple banks.
But in the end, if they come to your home and confiscate your gold or silver, if there are bank runs or if God forbid the US government defaults, your screwed. That's it.
My personal strategy has been diversification, to include bank accounts internationally.
Banks generally won't give you cash for large amounts (>>$10K), partially for the inconvenience of lugging around that much paper and partially for the security risk. They will gladly give you a cashier’s check, which is generally accepted by anyone you wish to give the money to (forign or domestic). Try asking for $5 grand in pennies and see what they say; does that mean they won't give you your $5K???
Most of my money isn't in a bank, it's in Fidelity (which doesn't keep any cash at all) in treasury market funds and foreign stocks. I switched from money market funds last August when I read through the prospectus and saw that they had big exposure to MBS. I don't know what to do with my money either. I just sit by and watch the value shrink day after day. Nothing looks very safe to me right now.
Well, this is the price we
pay for being so greedy.
Eventually, everything collapses.
That is just plain stupid.
No bank carries hundreds of thousands in cash, expecting a retarded account holder to come in and withdraw it all at one time.
They would be foolish idiots to carry more currency than was needed for normal business.
Now if you called a day or two ahead of time wanting $1million in cash, they would certainly get it for you. They may ask a lot of questions but they could get it.
I guess all you retards think all the money you deposit is in $100 bills kept in a vault on premises...
jeesh you are so f*cking retarded.....
If the Fed can bail out banks with 200 Billion, I am sure they can insure my bank accts no problem.
Avoid bank of america. Bank of america has trained managers for an eventual bank run. Guess what? during a bank run, they plan to shut its doors and bring in security.
Put your money in any bank that didn't make subprime or alt-a loans. Union Bank of Calif?
Not sure if you muffin heads were aware that suggesting bank xyz is insolvent without evidence to back it up is illegal. It is a federal crime. It is akin to yelling fire in a crowded theater, so no it is not protected speech.
Bank branches are only required to hold 3% of their average daily balance in cash. Cash money only equals 4% of all liquid accounts in the country anyway. If you are worried you can have it wired to another bank.
Although FDIC insures up to $100,000, no depositors lost money in the S&L debacle of the 1980s even though the FSLIC was broke. Uncle Sam paid off amounts that were over $100,000 as they probably would in a serious bank failure. Not legally required, but is good policy to avert panic.
This IS a silly test folks, on purpose. Street theatre. But it should make you think.
You work hard for your money (I assume). So think about where you put it. And if/when the sh*t hits the fan, how will you pay for things? Can you get access to all of your money? And what happens if the US defaults on its debt, or devalues its currency in a moment? Game it out.
Banks will fail. We're just getting started. So start thinking it through. and make sure you're being smart yourselves.
http://tinyurl.com/rongv
5-10K and your on the watch list. Thats how they busted the NY GOV seems he withdrew too much money for hookers.
No More Freedom to withdraw YOUR Money (I Repeat Your Money).. Withdraw 5K twice in a month and a black sedan shows up and your off to cuba for an extended vacation.
Called two of my banks(&credit union) and asked what their cash withdrawal requirements were. Both said give a 24hr notice and you can get what ever you want. The credit union said they needed 48 hours for more than $10k.
This is going to happen when we go after Iran, which is very very soon.
Keith:
When you even suggest that the US will default on it's debt you are just "talking silly", and you lose credibility.
The US will NEVER EVER default on it's debt.
HOWEVER, there might be 100% inflation per year, and it might cost $300 to fill you gas tank, or it might be $1000 for a cart of groceries....
How can the government default on debt when they can simply print as much as they want?
Yeah, you're right, countries never default on their debt. Hmmm... Maybe Russia, Argentina and Mexico ring a bell?
Technically we're defaulting right now by destroying the currency. If you were stupid enough to own a US bond paying say 5%, while the dollar has dropped 20% this year alone, you just got screwed by Uncle Sam.
Small town broker says:
A US Nickel is 25% nickel and 75% copper.
$100.00 in nickels = 22 lbs.
Spot nickel = $14.30 today
Spot copper = $3.84 today
$100.00 face in nickels = $142.01 today in spot nickel and copper.
If you want to take your money out of the bank you might want to take it in nickels before they debase them.
This anecdotal evidence isn't important because the bank didn't have the cash. We all know banks don't keep all of their paper money lying around. It's important because it claims, anecdotally, that apparently many people are making large withdrawals that are causing the banks to run out of cash when the normally wouldn't.
I don't think physical cash in the branch is significant. Nobody uses cash anymore. Who, other than Elliot Spitzer, needs thousands of dollars in cash at a time?
I'm not so sure it's street theatre. We can agree that our fiat currency is backed only by the confidence of the people using it, yes?
From the comments, it would seem that confidence is dwindling.
Re: the "crazy or foolish" idea of having base currency, gold or "folding money" on hand outside of a financial institution, well, I can see the rationale in that.
If you compare the amount of total bank insured deposits to the capital the FDIC has on hand to make depositors whole, you might conclude that the capacity of the FDIC to honor all its guarantees is limited in the short term in the event of simultaneous municipal/corporate defaults and bank failures.
And if de-leveraging -- the destruction of capital that is NOT in the form of paper or coins or beads or whatever -- continues, then there may come a time that those with "cash money" might have an easier time buying goods than those who have electrons in an account somewhere, or who have derivatives or equity instruments they *could* sell if the market would just turn around.
I think it is possible that scarcity of dollar bills themselves combined with loss of confidence in banks and their electronic ledgers could favor those with back yard mason jars and lumpy mattresses.
I'm not implying you should (or could) keep enough base money close at hand to mount a hostile takeover of Yahoo! I'm just saying that Farmer Brown might prefer $20 bills over a cashier's check drawn on the local bank ... the bank where all his neighbors are gathered with pitchforks and torches.
Just sayin'
Stay safe ... study up on the money supply, especially M3 versus M1.
Hey Bill, what are ya doin' with my money?!!!
I can't believe you guys actually own any significant quantity of dollars, let alone mere bank promises to pay you dollars. You are aware we are in the middle of a currency crisis and Bendover Ben is printing dollars up by the billion right? Christ even the Mexican peso is a better store of value than the dollar. Coffee was up 25% in a few months. Dollars are about the riskiest asset to own at this point.
The SAME issue applies to brokerages - stockbrokers have something called the SIPC to do something like the FDIC. I think its assets are microscopic compared to the accounts it covers and I don't even know what its limits are. AFAIK, it has always been able to merge failing brokers and has never actually had to pay out money. I'd like to hear more about THIS.
Also, many/most stockbrokers are owned by banking holding companies and I have NO IDEA how a failure of the parent bank would affect the broker - would your account be tied up? would you take losses from the parent bank? ANYONE HAVE ANY INFO HERE?
If you need cash, do a bank transfer to a casino and then collect at the casino. Casino's have plenty of cash on hand.
Their record backs this up. According to the latest issue of Fortune Magazine, they have only had 15 foreclosures since 2000!
Because ING did the right thing and required about 35% down on all mortgages.
Hmmm. You guys have money, huh. Hmmmm. Lets take a look at the following equation:
(You have money) + (I need money) = Your bleeding naked ass is gonna gimmie your f**king money
Remember,
You are allowed 13K donations to AS MANY PEOPLE AS YOU WANT.
EACH YEAR.
SO.........?
Who cares how many people you give your money to.
My CU never blinks when I pull out 4000-8000 at a time, but I do it pretty regular. It's just easier to bargain for interesting stuff with cash. Never had the "black sedan" visit, either.
It's easy to sign on to worry, but there's a lot of inertia in all the world's systems. The banking process is the same into antiquity; this is just a method to exchange goods and services.
I do believe this is a good time to keep some cash around, in event of serious power outage that knocks out all the card readers. Keep some spare gasoline, but rotate it or it'll get stale.
Something to think about: Do you have a long range (200 miles+), reliable, dual-purpose motorcycle? Can you ride well on poor surfaces? Do you have a plan for exiting a bad situation or natural disaster, while things get sorted out? In some situations, only the railroad beds or power line cuts may be passable.
Be able to take practical care of yourself. "Someone" won't be handy to do it for you. Put together your "ditch bag" (including some damn good bolt cutters), figure out who you can go stay with, be a little self-sufficient, and stop worrying yourself to death.
In the long run, your money will probably become available to you. If it doesn't, you'll be living a new experience along with everyone else, so ((shrug)) shit happens, I guess.
You guys are all naive douchebags. I used to work for B of A and each teller had between $8,000 - $15,000 in their own friggin' drawers.
The vault had AT LEAST ten dimes ($100 G), and when payroll for the major companies nearby was out, the bank had to keep more cash in the vault, and the tellers would have to "buy" from the vault throughout the day to pay out to the workers.
This does not even include all the contents of the customers' safe deposit boxes, other reserves in the main vault that a lower level employee does not know about, traveler's cheques, etc. Of course, the intelligent robbers knew this, and we, the bank tellers were friggin' nervous whenever a big local account, such as Disneyland or Hilton would have their payday, because all the illegals would come in to cash their paychecks to buy their 18 packs of Budweiser, soccer balls, tortillas, and or course c0ke. So we had to have lots of cash on hand for payroll. So to anonymous who tried to cash out his accounts, they are lying to you when they say they don't have $50,000 to cash out of your account. They are just lazy, but overall, they do not want to public to know the amount of cash on hand because they think you are a criminal doing a "test" to see how much cash this branch has on hand. So, it is probably not a good idea to lash out at these nosy paranoid bank employees and do unusual transactions because we were are trained to rat you folks out. By the way, the salary I received at B of A was embarrassingly pitiful.
I asked my local bank how long would it take to withdraw $500,000 in cash, for the sake of argument. After dealing with 3 layers of mgmt finally the Bank Manager told me they have to contact the Federal reserve to get it. About 7 days after I request it. And I'm sure I'll be on many watch lists.
If you open a foreign bank account you must report this to the IRS including the rough maximum amount held in each bank account where you have signatory authority. If you fail to report this criminal penalties apply.
Gotta love the fascist country of the USA.
-BC
To everyone contemplating having large bundles of cash around your house...
Ever hear of asset forfeiture? If the police come to your house and they find more than $10,000, they will generally seize on the likelihood of it being drug money.
At least that's what they claim....
Google it, HP'ers....
>One better... I once went in asking >for 190k from my account. They >looked at me like I was Pablo >Escobar and said they would arrange >it for me in 3 days and for a $250 >fee. Lovely, they rape me on float >and then charge me $250 to get back >what is mine in the first place.
I would have asked what the largest cash withdrawal I can make without a penalty is. Rinse. Later. Repeat until they get the message.
Frank? What business do you do that you make so much money. I followed your link and see that you are an author. Do these books you write turn that much profit??? Did you cash in on the scottsdale bubble early on???You seem to mention in your posts that you are very wealthy and successful...just wondering.
Having said that, I do not keep more than $100k per business in any one bank.
-Chris in HB
Never say never.
Didn't Britain default on its debt at one time too?
I want mine in brand new $5 bills.
Anonymous said...
To everyone contemplating having large bundles of cash around your house...
Ever hear of asset forfeiture? If the police come to your house and they find more than $10,000, they will generally seize on the likelihood of it being drug money.
At least that's what they claim....
Google it, HP'ers....
===========================
There was a 60 Minutes segment on that very topic.
The Supreme Court, in one of the DAMN few times it has ever had a 9/0 unanimous decision, ruled asset seizure before the fact as unconstitutional.
It seems the government's tactic was to seize your assets, for any reason it wanted, and declare them drug money, or purchased with drug money, ON THE GOVERNMENT'S SAY SO ONLY! You then had to prove that it was not drug money?????
The government’s case was :"Oh, it's drug money all right, we know that for a fact, don't bother to ask us for proof. After all we are the government, you can trust us."
The Supreme Court didn’t buy the “we don’t need proof…… you can trust us” part!
Of course buy now, the "justice" dept has probably re-worded the asset seizure laws to work around that pesky little "it's just a damn peice of paper."
I've witnessed around about 10,000 dollars worth of checks being cashed in a buisness credit union in California. There was no problem. I also closed an account and took about $2700 in cash at another credit union in California. Also no problem.
Granted all of this happened in 2006. But I have reason to believe a bank has more than a few dozen quid.
Coming soon to a bank near you....
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2457009.ece
This is why Banks love digital money and wire transfers.
It hides the fact banks don't have enough reserves against their deposits.
The smaller banks might be safer...World Saving was around forever before Wachovia bought them out two months ago.
A small bank called "Greater Bay Bank here in the bayarea was bought out by Wells Fargo.
These large banks are going after small fries (banks) for their capital...
Maybe WF and Wachovia are one of the safer banks after all?
Good God, The credit crisis is getting more complicated by the day...
Keith:
I agree with someone else's post. Let's continue with a discussion about banks and how safe our money really is. Should I open my own bank with a vault at home?
I prefer ammo to cash, the .223 I bought from Cabelas in December is now priced 50% higher three months later...
I keep my primary accounts in a very strong credit union. Been with them 30 years and never had a problem. For those people who have questions about credit unions, go to:
www.NCUA.gov
This is the insuring organization for credit unions. You can get the FPRs on yours (or one you're interested in) to help determine their financial stability. The reports are easy to read.
As far as banks go, I use USAA. Here is their ratings:
* A. M. Best Company: A++ (Superior)
* Moody's Investor Service: AAA (Exceptional)
* Standard and Poor's: AAA (Extremely Strong)
They hold my cash funds in excess of the 100k limit at my credit union and also my brokerage account. I have never had a bad experience with them yet, and I trust them more than any other bank I have dealt with. The drawback to USAA? Well, to take full advantage of all their services, one must meet some requirements (military affiliation usually).
I used to keep about 5k in cash at home. Since Hurricane Katrina, I doubled that and keep half in small bills. Learned that lesson the hard way.
And one last word on anticipating a short term, cash only environment ...invest in one of those money marking pens that verify authenticity. There was an increase in counterfeit money in our area after the Hurricane. Cheap insurance to keep from getting burned.
By the way, USAA also provides my auto insurance....great rates as long as long as it has 4 or more wheels :)
Hope this helps.
I am fortunate? enough to not have a lot of assets. I just graduated college a few years ago and just last month paid off all my debt except for about $15k in a 4% locked rate student loan.
The only real asset I have worth mentioning is my 401K. I've got about $25K, and in December I moved all my current and future contributions to the two stable growth funds available to us. They have both grown at about 3% APR since I switched them.
Do I need to worry about my 401K? Pulling my money out of there would be pretty bad tax-wise if I understand the laws correctly. What do you all think?
It's pretty common, and always has been, for banks to keep relatively little cash on hand.
If people are expecting a run on the banks in the foreseeable future, though, it would be good for them to take their money out in small amounts from here on out.
"Do I need to worry about my 401K? Pulling my money out of there would be pretty bad tax-wise if I understand the laws correctly. What do you all think?"
You're earning 3% in the 401K, inflation is north of 8%, and the USD has dropped 5% in the past month. You do the math (hint, your ROI may be a bit negative).
Unless your employer is matching 100%, or you can move your money into investments with better returns, I'd say the answer is obvious.
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