1. Win a Broadcaster or one of 3 Teles! The annual Supporting Member Giveaway is on. To enter Click Here. To see all the prizes and full details Click Here. To view the thread about the giveaway Click Here.

IRA not FDIC insured?

Discussion in 'Bad Dog Cafe' started by doghouseman, Mar 4, 2021.

  1. doghouseman

    doghouseman Tele-Meister

    Posts:
    492
    Joined:
    Dec 18, 2014
    Location:
    in your head man....
    Seems strange that FDIC insurance only goes up to 100k. This doesn’t cover all of my IRA? So if Schwab goes out of business I am out of luck?
     
    uriah1 likes this.
  2. TeleBluesMan

    TeleBluesMan Tele-Holic

    Posts:
    674
    Joined:
    Jul 2, 2008
    Location:
    East coast
    Bank deposits and CDs are insured up to $250,000. And if you have another $250,000 in the same bank with a POD to someone other than yourself, that is also covered for $250,000, so you can have more than $250,000 FDIC insured at one bank. I'm not sure about your IRA; it depends on how it is invested.
    FDIC: Deposit Insurance
     
    Last edited: Mar 4, 2021
    Harry Styron and Greggorios like this.
  3. warrent

    warrent Friend of Leo's

    Posts:
    3,844
    Joined:
    Sep 15, 2009
    Location:
    toronto
    Greggorios and SRHmusic like this.
  4. doghouseman

    doghouseman Tele-Meister

    Posts:
    492
    Joined:
    Dec 18, 2014
    Location:
    in your head man....
    looks like brokerage accounts are covered up to 500k. Not sure if an IRA is considered a brokerage account or not but i will use it to buy stocks. Looks like other accounts are covered up to 250k.
     
  5. JamesAM

    JamesAM Tele-Meister

    Age:
    35
    Posts:
    355
    Joined:
    May 13, 2020
    Location:
    Virginia, USA
    Hi, it depends on your investments- Schwab is an investment bank and many of its products aren’t covered by FDIC. If you have cash or foreign currency in your portfolio, those are likely covered by deposit insurance. Stocks, index funds, and other exchange traded assets are likely not.

    This was why 2008 was so bad- when bear stearns went under, a lot of people who had retirement investments with them were left holding the bag and a lot of the other investment banks didn’t have liquid cash on hand to buy their assets- it could have been a huge disaster. The government had to give the remaining banks billions of dollars to purchase bear’s assets- the bailout. If Schwab goes under, likely someone will be on hand to purchase their assets (your account).

    please note this is a very simple and rudimentary description of what happened- I am not in finance, just very paranoid about investing.
     
  6. SRHmusic

    SRHmusic Tele-Holic Silver Supporter

    Posts:
    876
    Joined:
    Oct 19, 2020
    Location:
    North Carolina, USA
    Not an expert here, but here's some info. As far as I understand:
    - FDIC is usually for bank like accounts and some retirement accounts. Some taxable accounts, like money market sweep or cash accounts at brokerages may be FDIC insured.
    - The main taxable brokerage accounts are insured by a different program called SIPC.

    Here's a link for Fidelity that has some explanations.
    https://www.fidelity.com/why-fidelity/safeguarding-your-accounts

    And one from SIPC itself.
    https://www.sipc.org/for-investors/what-sipc-protects

    I recall that SIPC limits were increased in 2008 or 2009 during the downturn, and I think they kept them at the raised limits.
     
    JamesAM likes this.
  7. dkmw

    dkmw Poster Extraordinaire

    Age:
    65
    Posts:
    5,296
    Joined:
    Mar 30, 2016
    Location:
    Florida USA
    Investments aren’t protected by deposit insurance.
     
    Despres and uriah1 like this.
  8. dogmeat

    dogmeat Friend of Leo's

    Age:
    70
    Posts:
    2,607
    Joined:
    Oct 12, 2017
    Location:
    Alaska
    we never learn. remember when the insurance and banking investment activities were deregulated in the 80's giving access to investments and operations that previously disallowed. it resulted in a big crash, and millions lost their retirements. many old people had to leave retirement and go back to work. same thing leading up to the crash of '08... deregulate and remove the watchdogs thats what you get.

    and yeah, check your accounts and spread them out if you've got big money because FDIC doesn't necessarily cover your loss if the holder goes under
     
    buster poser likes this.
  9. dented

    dented Doctor of Teleocity

    Posts:
    12,035
    Joined:
    Apr 17, 2006
    Location:
    Packing up
    ...and another thing...I'm with Fidelity and they advised me to keep my Brokerage Link accounts to my 457 and 403 rather than put them into my IRA.........because if you ever get sued they can't take those holdings away from you.
     
  10. doghouseman

    doghouseman Tele-Meister

    Posts:
    492
    Joined:
    Dec 18, 2014
    Location:
    in your head man....
    Yes, but I made a deposit to get the investment.
     
  11. doghouseman

    doghouseman Tele-Meister

    Posts:
    492
    Joined:
    Dec 18, 2014
    Location:
    in your head man....
    Yes, the SIPC is what I was looking at. Looks like cash in an investment account, and perhaps some companies. Probably bigger companies would be covered. That is only up to 500K if I remember right.
     
  12. telemnemonics

    telemnemonics Telefied Ad Free Member

    Age:
    61
    Posts:
    26,372
    Joined:
    Mar 2, 2010
    Location:
    Maine
    Wow, so if I gamble on the stock market and lose, an insurance policy gives me my money back???
     
    Despres and Nightclub Dwight like this.
  13. telemnemonics

    telemnemonics Telefied Ad Free Member

    Age:
    61
    Posts:
    26,372
    Joined:
    Mar 2, 2010
    Location:
    Maine
    Or is the idea that "I" didn't gamble, only my bookie AKA investment broker gambled?

    How about the companies my money was invested in that failed to grow or even went under?
    Do they get an insurance check too?

    How about all the company retirement plans that were gambled away or misappropriated?
    And the retirees who lost most of their 401k in the last few years?

    Sounds great that they all get an insurance check to cover their devastating losses!
     
  14. doghouseman

    doghouseman Tele-Meister

    Posts:
    492
    Joined:
    Dec 18, 2014
    Location:
    in your head man....
    I don't consider an IRA a gamble. There are lots of regulations around IRAs, so they are not really like buying some penny stock. They are more like CDs, which should be insured, but only up to 100K.

    Yes, companies have insurance for all sorts of things. It is just dependent on how much money a company will spend on insurance.
     
  15. Blrfl

    Blrfl Tele-Afflicted

    Posts:
    1,214
    Joined:
    May 3, 2018
    Location:
    Northern Virginia
    That's not a deposit. You purchased securities.

    A deposit is money placed for safekeeping (such as into an account where it will be kept until withdrawn) or as initial payment for goods or services to be delivered later.
     
    SRHmusic likes this.
  16. doghouseman

    doghouseman Tele-Meister

    Posts:
    492
    Joined:
    Dec 18, 2014
    Location:
    in your head man....
    Most IRAs have penalties for early withdraws, so it is very much like putting money away for safekeeping.
     
  17. warrent

    warrent Friend of Leo's

    Posts:
    3,844
    Joined:
    Sep 15, 2009
    Location:
    toronto
    Only the cash and cash equivalents are covered by insurance, once you buy something like apple stock you are at the mercy of the market. If for some reason you have large amounts of cash splitting the amounts between different banks will increase your insurance.
    But seriously these sort of questions are best answered by a Registered investment advisor who is fiduciarily responsible to you and not a brokerage sales person or random people on the internet
     
  18. SRHmusic

    SRHmusic Tele-Holic Silver Supporter

    Posts:
    876
    Joined:
    Oct 19, 2020
    Location:
    North Carolina, USA
    FDIC and SPIC are supposed to be for if the bank/brokerage fails, not that you made a bad investment choice. For example, there were a lot of Savings & Loan failures at one point in the 1980s - that kind of thing.
     
    doghouseman and JamesAM like this.
  19. schmee

    schmee Doctor of Teleocity

    Posts:
    14,705
    Joined:
    Jun 2, 2003
    Location:
    northwest
    It's WHAT YOUR IRA IS INVESTED IN that matters for FDIC. In other words you might have 200k in an IRA. From that IRA You invest 40k in a bank CD (CD covered up to 250k I think) and invest another in a 50k CD from a different bank. (Also covered). Then you invest 50k in a stock like Ford (not insured) etc....
     
  20. Despres

    Despres Tele-Afflicted

    Posts:
    1,029
    Joined:
    Aug 14, 2012
    Location:
    Northeast again
    Nah, I'm gonna stick with random people on the internet...
     
IMPORTANT: Treat everyone here with respect, no matter how difficult!
No sex, drug, political, religion or hate discussion permitted here.