FDIC Insured Bank

FDIC Insured Bank

By Kristine McKinley

Thankfully, there are safety measures in place for various types of accounts and investments.

Banks: the Federal Deposit Insurance Corporation (FDIC) ensures Bank deposits. Basically, the FDIC insures deposits up to $100,000 per owner, per bank. If you have $100,000 or less in your name at any FDIC-insured bank or savings association, you have nothing to fear.

In addition, if you have certain types of retirement accounts, such as an individual retirement account, you're eligible for even more coverage - up to $250,000 per owner, per bank. However, the FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities and municipal securities, even if you bought those investments at an FDIC insured bank.

Mutual Funds and Brokerages: Some investors are wondering what would happen in the event that the mutual fund or brokerage company they hold their investments at would fail. The funds that you own at a mutual fund company or a brokerage account are separate from the company's assets. If the mutual fund or brokerage company failed, your assets would just be transferred to another brokerage company.

The Securities Investor Protection Corporation (SIPC) is a non-profit corporation that protects investors if a broker/dealer defaults. Investors are protected up to $500,000 per account, per Brokerage Company.

Note that the SIPC doesn't cover all investments. Some that aren't covered include annuities, commodity futures contracts, foreign currencies, limited partnerships and precious metals. Also, the SIPC isn't providing protection against market losses or bad investments.

Now that you are aware of the limits, both at banks and brokerage or mutual fund companies, the best way to protect yourself is to make sure that you are not above the insured limit at any of the financial institutions you do business with. If you are, you may need to open different ownership type accounts or open new accounts at different institutions to ensure that your money is safe. In addition, not all CDs and deposit accounts are FDIC insured.