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Is Your Safe Money Really Safe?

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Security

Is your safe money really safe? Or, will you have to make your own bank run in the future?

safe money

Lots of people worry about this, especially if they’re already savvy about financial planning. After all, every time people assume they’re set with their nest egg, something unexpected happens to take all of those accumulated funds.

The ‘safe’ nest egg

If you have any substantial amount of money, it’s safer to keep it in some kind of financial account. But, with the prospect of institutions closing by the year, how do you know if it’s safe to store your money in ‘whatever’ account?

To start, it’s always important to learn more about the financial accounts you might want to use. So, let’s take a look at some of the ‘safe’ accounts, like a Manitoba Public Insurance broker might say, to use to build that nest egg of yours.

Certificates of deposit (CDs)

Certificates of deposit issued by banks are generally protected under the Federal Deposit Insurance Corporation, otherwise known as the FDIC. They insure CDs up to $250,000 per financial account.

So, if your bank or financial institution were to become insolvent, they would be able to cover your funds and pay you back (more or less), should that happen.

Thanks to the FDIC’s promise, you can count on your CD to be pretty safe.

Fixed income annuities

A fixed income annuity gives prospective retirees and retirees the ability to create a personal pension without some of the risks associated with the market.

These annuities provide a fixed lifetime payouts or payments over a certain payment term. Unless inflation is counted, these payments generally remain fixed throughout the lifetime of the annuity.

Fixed income annuities are considered safe because they’re ‘as safe as the financial ability of an insurance company to deliver on providing them to their customers.’ In other words, they’re safe as long as the insurance company has a great reputation for fulfilling them. Of course, that means you should research insurance companies before selecting one.

U.S. Treasures

Owning United States government Treasury bills, bonds or notes practically guarantees safety. These securities are considered incredibly safe because they’re backed by the federal government, ensuring they have to pay you the security’s interest and principle upon its maturity.

These securities more or less depict you buying debt from the U.S. government for a certain period of time, that they’ll repay later after the investment matures.

They’re also safe because they have lower interest rates than other investments with fixed incomes, such as floating rate bonds and corporate bonds.

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