Money in more than 1 institution?

[Natalie]

I was wondering if having money in more than one institution would be financially profitable, or at least safer, in case one of them goes under.,,

Natalie

[Ebbie]

Here in Canada there is automatic depositor's insurance...it covers up to $100,000 of funds you have in each institution. So you wouldn't really want $150,000 in one particular institution since you'd only get $100,000 if it went under. On the other hand, I believe we have fewer banks in Canada (only a handful of major national banks) so it's unlikely they will go under, compared to your smaller regionalized entities.

[Greebo]

I was wondering if having money in more than one institution would be financially profitable, or at least safer, in case one of them goes under.,,

Natalie

First off, you don't diversify for profit, you diversify for stability and security.

Now what kind of money, and what kind of institution?

If, for example, you mean savings, in a bank, those are FDIC insured up to what, $300,000 per account, so I don't think you need worry much there.

If, however, you mean investment monies in different brokerages - if you have enough money to diversify across them, then yes, I think it could be safer.

[scottVee]

Hopefully you only used FDIC insured institutions, in which case your money is (theoretically) insured. In this case, it wouldn't matter whether you have money in one bank or 10 different ones. Tiny differences in rates aren't going to matter unless you have huge amounts saved. Getting less than 1% on a savings account is such an insult, either way. You have to stash more money to get the better rates, but check to see what each bank offers.

Being "diversified" means investing in a variety of goods & services. Buying gold, for example. It's hard to recommend stocks & bonds unless you have tens of thousands of dollars to invest -- they're iffy and on most sites that advertise on TV, there are so many charges you don't come out ahead on small amounts. Like $12 a month and $9.95 a trade on ShareBuilder (now part of ING direct) ... forget it. Banks & big institutions make money, not give it away.

Personally, I buy collectibles, because I have a business selling them. I'd rather have $1,000 in real goods than in a bank making someone else rich. Keep researching!

[McD]

Most Banks are FDIC insured, which protects your money in the event that the bank 'goes under'. Google FDIC calculator and you can plug in your amounts and the types of signers, beneficaries you have on the account to see your maximum coverage.

[frugal-fannie]

I think you mean saving your money in a safe bank. Some people will need the money to live if a depression era run on the banks were to occur again.If you would pick a bank that is not going to have a problem. There was a book out a few years ago listing the safety of banks in the Us. If they were making risky overseas loans, etc. If the bank was only doing local business. It was usually safer.If you have your emergency cash in some of the banks that are making the headlines for bad home loans (most of the big ones) Then you might want to look at a credit union. I think they would be pretty safe as they usually only service their members. The FDIC will insure but can you afford to wait till they get you your money.

[missmanny]

I have my money is a few different banks.

I didn't do it for security as such mostly just that each bank gave me a good product forthe type of account that I was looking for.

every day account (lower fees for EFTPOS transactions
savings account with good interest.
Visa debit account (lower fees to pay bills with)

It does make me feel a bit better to have it diversified a bit, one day when I have more then a couple of thousand of dollars in them I might start to think about security.

[Compte de Yoyo]

We split our money between a local credit union, ING and have small stashes at home and in another bank's safe deposit box, mostly for ease of access.

Not so much that the banks will go under, since each of them are FDIC insured but in case one bank's computers/ATMs/whatever and it takes longer than normal to get to our money. We live in earthquake country so it's very possible that businesses can be disrupted!

[Natalie]

Thanks.

And maybe, if the money's in more than one institution, that means you're getting, say, 1% interest and institution A, + 1% interest at institution B, that = 2% interest.

Could be...

[peanut]

There is safety and stability in working with different banks. I'm in Canada, so insurance to the limit of $100,000 is the case here...though last I heard it was $60,000. Must have gone up. Still we split our savings between four different banks in four different types of accounts. Some earn as much as 3.5%. We also keep a significant amount of cash on hand...plus stockpile. We'd be okay in the short run in an emergency.

Jean

[MTS04]

As a person who was victim to RISDIC's failure (thanks Joe Mollicone!), I have money spread out in different institutions. From Credit Unions (NCUA) to normal banks (FDIC) and an online institution.

I fear it could happen again. So, yes, I spread it out. I have a checking account in the institution that I use regularly, but others have cd's and savings etc.

[frugal-fannie]

I was listening to a Christian radio show at 11:30Pm 99.5 FM Pacific time ,on my way home from work, I was a little alarmed. Of course this is a gold investment company but the guy also is a well known author and I like the fact that he will sometimes tell people they shouldn't invest in gold but keep cash or savings on hand. A little over 2 weeks ago he mentioned that the Royal Bank of Scotland was warning of a stock market crash in the next 3 months. Since then Goldman Sachs, Barclays and others are predicting a crash in US and even world markets. I did not realize that WAMU stock had dropped almost 89% at the time. He also mentioned Citibank(which just laid off 1000 people)B of A, etc. A lot of the big banks which are in trouble from excessive losses from bad home loans. I pulled out of the stock market and missed a 20% drop. I also had myBIL get his savings out of WAMU. He is waiting to buy a house. If WAMU goes in to BK your money might be insured but can you wait months to a year to get it. He moved his to a credit union.I owe WAMU and citibank, so I am not worried,

[brainyblonde]

I have money in different institutions. I have the emergency fund $ where it pays a higher interest rate, and I can buy cds and "ladder" them. The savings account $ pays a higher rate and is more difficult to touch.

Regular monthly bills and the freedom account are at the same bank (different accounts) with easy access.

I do it for safety and to keep the money I don't want to touch a little harder to get to.

[forHISglory]

We diversify. One bank is for checking and some savings. Other savings are in a different bank just because they offered a special deal. We always check the various banks when CDs come due to see who is offering the highest rates. We invest our retirement money with a financial advisor, who then diversifies it for us among stocks, bonds, international commodities, etc. I just feel safer having our funds in more than one place.

[scottp999]

Split your savings over at least 2 FDIC insured banks. Indymac failed the other week and even though it was FDIC insured, people could not get to their money immedialtey. People had to wait in lines and then what most of them got was a cashier's check.

To add insult to injury, other banks would not accept the cashier's checks at first, so the check was really a worthless piece of paper for several days.

Splitting the savings would allow you immediate access to funds if one fails and the other does not.

Everyone should research the FDIC. It is a scam, the funds are not there, they create the money needed to on the fly and it just adds to inflation.