Armed Polite Society
Main Forums => The Roundtable => Topic started by: Headless Thompson Gunner on December 10, 2008, 02:22:27 PM
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Short term treasury yields have been floating near 0% for a while, and apparently they ticked negative briefly this week. 30 year yields are around 3%. This is happening in the face of massive projected deficits.
What's up with that?
Are investors really so afraid of the markets that they're willing to lose money to the US Government in exchange for not losing more money elsewhere?
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Very possibly, yes. I heard that assessment on WTOP while I was out grabbing lunch.
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People and institutions who have LARGE amounts of cash are looking for a safe place to put it - banks are only FDIC insured up to $250,000, and unless there's some further action, the FDIC limit drops back to $100,000 on Jan 1, 2010.
So if you're looking for a place to sock away a couple of million dollars, SAFETY is more important right now than return.
I understand 4-week yields are now at zero, and 3-month T-bills are paying 0.005% . . . 6-month bills are at 0.3%. I know people who've kept money in T-bills for years, rolling them over every 6 months. Now as they mature these same people are now putting the money in banks, being sure to keep under the FDIC limit at any one bank.
3% - 4% interest is better than 0.3%.
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People and institutions who have LARGE amounts of cash are looking for a safe place to put it - banks are only FDIC insured up to $250,000, and unless there's some further action, the FDIC limit drops back to $100,000 on Jan 1, 2010.
So if you're looking for a place to sock away a couple of million dollars, SAFETY is more important right now than return.
I understand 4-week yields are now at zero, and 3-month T-bills are paying 0.005% . . . 6-month bills are at 0.3%. I know people who've kept money in T-bills for years, rolling them over every 6 months. Now as they mature these same people are now putting the money in banks, being sure to keep under the FDIC limit at any one bank.
3% - 4% interest is better than 0.3%.
That whole "under the limit at any ONE bank" doesn't fly anymore. They adjusted that regulation as a result of the S&L Crisis.
They have, however, raised the amount covered by the FDIC.
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That whole "under the limit at any ONE bank" doesn't fly anymore. They adjusted that regulation as a result of the S&L Crisis.
They have, however, raised the amount covered by the FDIC.
Say WHAT!??
So if I have 100K in bank A and a 100K in bank B and they both fail you're saying I'll only get 100K from the FDIC????
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That whole "under the limit at any ONE bank" doesn't fly anymore. They adjusted that regulation as a result of the S&L Crisis.
Explain, please?
Some banks (usually those associated with brokerage houses) have been advertising "full FDIC insurance up to $500,000" . . . they've done it by depositing your money at up to five separate FDIC institutions. Usually there are caveats to this - they warn that if you already were at the limit at one of these institutions, you could end up exceeding the FDIC limit there when you add in what the brokerage's bank deposited on your behalf, and some of your funds would be at risk.
From the FDIC.gov website:
To ensure funds are fully protected, depositors should understand their coverage limits. The FDIC provides separate coverage for deposits held in different account ownership categories. The coverage limits shown in the chart below refer to the total of all deposits that an accountholder has in the same ownership categories at each FDIC-insured bank. The chart shows only the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met.
Basic FDIC Deposit Insurance Coverage Limits*
Single Accounts (owned by one person) $250,000 per owner
Joint Accounts (two or more persons) $250,000 per co-owner
IRAs and certain other retirement accounts $250,000 per owner
. . .
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Explain, please?
Some banks (usually those associated with brokerage houses) have been advertising "full FDIC insurance up to $500,000" . . . they've done it by depositing your money at up to five separate FDIC institutions. Usually there are caveats to this - they warn that if you already were at the limit at one of these institutions, you could end up exceeding the FDIC limit there when you add in what the brokerage's bank deposited on your behalf, and some of your funds would be at risk.
From the FDIC.gov website:
Hmm... learn something new everyday. I guess this is the new loophole. Previously, it was just split them into any seperate accounts.