How Safe Is My Bank? Wealth Advisers Answer Your Money Questions Now

The global banking industry is rounding out one of its most dramatic weeks since the financial crisis. It’s left consumers across the US concerned about what — if anything — they need to do to keep their money safe. 

Here at Bloomberg Wealth, we’ve been calling financial advisers and experts all week. This newsletter shares the most important things they told us that you should know now.

But first, if you’re wondering whether there are safe places to put your money in the midst of all this uncertainty, we talked to four experts about where to invest right now

Here’s what happened:

• Silicon Valley Bank on Friday became the second-biggest bank failure in US history
• On Sunday, Signature Bank was seized by regulators after a surge of customer withdrawals — making it the third-biggest bank failure in history.
• That same day, the government announced a new backstop that Federal Reserve officials said was big enough to protect the entire nation’s deposits.
• Worries mounted this week over the health of a much bigger, global bank — Credit Suisse, the international financier to the world’s rich.
• Credit Suisse sought to reassure investors by opening a $54 billion credit line with the Swiss central bank. Meanwhile, First Republic, another troubled US regional lender, is exploring options including a sale

And here are answers to some common questions we’ve been getting: 

Is my money safe at the bank? By and large, yes. If you have $250,000 or less in qualified accounts at FDIC-insured banks, you’ll get the money back if your bank fails. The government’s new program covered deposits even larger than that when Silicon Valley Bank failed.

Do I need to open an account at a different bank if I have more than $250,000 saved? There’s a good chance you don’t. That’s because FDIC insurance kicks in not just for individuals’ qualified accounts, but also for up to $250,000 for each co-owner of a joint account at the same bank. So a married couple could get $1 million of FDIC coverage if each spouse has an account with $250,000 and they co-own a joint account with $500,000.

Should I have that much cash saved in the first place? Now you’re thinking like a financial adviser. Many told us that people who are sitting on so much money should consider other investments with higher returns, as long as their emergency funds are kept in place. One option: Certificates of deposit, which my colleague Misy wrote about here

Is my 401(k) in trouble? In the short term, maybe. Markets have been reacting negatively to the banking industry’s wobbles. A shock to the system in the form of the collapse of a bank like Credit Suisse could have wide-ranging ripple effects. (The bank’s CEO has preached patience, and says the bank’s financial position is sound.) But advisers say retirement savers should be thinking long-term, and in the long term, markets tend to rebound. 

The banking industry’s woes have been fast-moving and we will continue to report on what it could mean for your money as the story develops. In the meantime, send us your own financial questions and, as advisers have been telling us all week, don’t panic. At least not yet. ?— Charlie Wells

Send us questions about your own financial dilemmas to [email protected]or fill out this form

Don’t Miss

• Matt Levine explains a major problem for Silicon Valley Bank: Its customers had too much cash… until they didn’t.
• And get this: Days before the bank failed, SVB Chief Executive Officer Greg Becker sold $3.6 million of company stock. He filed the plan that allowed him to sell the shares on Jan. 26.
• SVB’s downfall was quick. Less than 48 hours by some measures. But the bank’s fate was actually sealed years ago, during the height of the financial mania that swept across America when the pandemic hit. 
• In other corners of the banking world: Moody’s Investors Service placed First Republic Bank and five other US lenders on review for downgrade
• And here’s the story of another monumental banking failure within the past week: How “old-school” Signature Bank collapsed after its big leap into crypto.
• Not all countries offer deposit insurance to their savers. This one might surprise you.

Bloomberg Opinion this week, Alexis Leondis writes that depositors should beware of banks bearing high interest rates

The uncertainty in the sector is likely to set off a bidding war for savers in which smaller online or regional banks jack up interest rates in an attempt to persuade savers to stay or come back; and could in turn lead some less-ethical players to dupe customers about what they’re really offering. That means regulators and savers both need to use some extra vigilance.

Read her full article

Financial FAQ

What financial advice would you give someone who feels they need to “unretire

Unretiring after retiring is not an easy decision to make. The emotional toll can be a lot to bear. But don’t beat yourself up over past financial decisions. Past financial “mistakes” are just that — the past. Instead, shift your focus to planning your next move.

To start, categorize your expenses into two buckets: your living expenses (needs) and your discretionary expenses (wants). Needs are usually fixed. However, wants offer flexibility for paring back. Categorizing will also help determine if going back to work will cover more of your needs or wants.

Next, look at your available sources of income and which sources are guaranteed, such as Social Security and employee pensions, and which are unguaranteed, such as IRAs, 401(k)s and savings.

Finally, talk with a financial planner. To a trained professional, your information might yield more insight (and income) before you unretire. — Frank Pare, president, PF Wealth Management Group

Send us questions about your own financial dilemmas to [email protected]or fill out this form