We know someone who lost access to his money
when NetBank was closed by Federal regulators in
September. The basic Federal Deposit
Insurance Corporation (FDIC) insurance amount
is $100,000 per depositor and our friend had
parked hundreds of thousands of dollars more
in NetBank "temporarily". He may have
permanently
lost a lot of his savings.
Other banks and brokerages are rumored to be
in perilous financial situations. We don't
know if the bankruptcy and closure rumors are
true, but we do know that all of our friends
need to make sure that they know how much of
their investments are protected.
The FDIC insures the deposits of most banks (check
to see that your bank is covered by the
FDIC). That
agency describes its coverage in several
pages on its site.
The Securities
Investor Protection Corporation is the
first line of defense in the event a
brokerage firm fails. That agency's insurance
limits are
often supplemented by private policies
purchased by the brokerage company.
Check out the limits of the insurance
policies on your investments today. Decide
whether you're comfortable with Federal and
private insurance in place. If not,
distribute your investments among different
institutions so that you stay under the
dollar maximums and have the protection
you want.
