Cdars Network Banks

Market-Wary Investors Seek Ways to Insure Millions in Cash

(Updates with brokerage cash accounts in third-to-last paragraph.)

Aug. 12 (Bloomberg) -- U.S. investors seeking safety in cash amid the market turmoil can take advantage of several methods to insure millions above the Federal Deposit Insurance Corp.’s $250,000 limit.

A husband and wife could each have $250,000 in individual bank accounts, the maximum covered by FDIC insurance, and $250,000 each in retirement accounts such as IRAs invested in bank products rather than mutual funds or annuities. They also each can set up $250,000 trust accounts naming each other as beneficiaries and deposit another $500,000 in a joint account, where each co-owner is insured up to $250,000.

“That total comes to $2 million fully insured,” said FDIC spokesman David Barr.

Investors are holding onto cash amid concern the U.S. economy may lapse into another recession. Cash held by U.S. banks surged 8.4 percent to a record $981 billion during the week ending July 27, the Federal Reserve said in an Aug. 5 report.

“The key is to try and maximize the productivity of that cash,” as yields are approaching zero on some money-market funds and bank products, said Tom Dunn, who specializes in cash management for clients with at least $1 million to invest in federally insured programs. Dunn is senior vice president of investments for First Financial Equity Corp. in Dallas.

For those seeking insurance above the FDIC limits at one bank, the Promontory Interfinancial Network LLC will split up a large amount of cash among several banks to stay under the cap. The Arlington, Virginia-based company has been offering this service, known as a certificate of deposit account registry service, or CDARS, since 2003.

CD Network

A customer with $1 million who uses one of the participating banks may have the cash placed in CDs at five different banks, said company spokesman Phil Battey. Each CD is worth less than $250,000 to make sure any interest earnings are also insured, he said.

Market-wary Investors Insure Millions In Cash

U.S. investors looking safety in money among the market disturbance can take value of a few methods to protection millions on top of the Federal Deposit Insurance Corp.’s $250,000 limit.

A spouse and wife could any have $250,000 in particular bank accounts, the limit covered by FDIC insurance, and $250,000 any in early retirement accounts, such as IRAs, invested in bank products rsther than than mutual supports or annuities. They moreover any can set up $250,000 certitude accounts fixing any other as beneficiaries and deposition other $500,000 in a joint account, where any co-owner is insured up to $250,000.

That comes to $2 million entirely insured, FDIC orator David Barr said.

Investors are keeping on to money among regard the U.S. manage to buy might relapse in to other recession. Cash at U.S. banks surged 8.4 percent to a record $981 billion during the week finale July 27, the Federal Reserve mentioned in an Aug. 5 report.

“The key is to try and show off the capability of that cash, as yields are coming 0 on some money-market supports and bank products,” mentioned Tom Dunn, who specializes in money administration for customers with at least $1 million to invest in federally insured programs. Dunn is comparison clamp boss of investments for First Financial Equity Corp. in Dallas.

For those looking insurance on top of the FDIC boundary at one bank, the Promontory Interfinancial Network LLC will broken up up a considerable amount of money among a few banks to stay beneath the cap.

The Arlington, Va.-based firm has been gift this service, well known as a certificate-of-deposit-account registry service, or CDARS, given 2003.

“A patron with $1 million who uses one of the participating banks might have the money placed in CDs at 5 not similar banks,” firm orator Phil Battey said. “Each CD is worth reduction than $250,000 to ensure any fascination gain are moreover insured.

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