We have half our money in rental real estate, which I consider to be like a bond proxy. So we have zero money in actual bonds or bond funds (although some of our equity funds might have some bonds).
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Is anyone concerned about the banking crisis? Iām wondering if I should tell my mom to shift her funds around to make sure she doesnāt hit the FDIC max at any one particular bank.
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You have RMDs on your 401k. Your heirs will have to pay taxes on inherited 401K and if their tax brackets are higher than yours, then you should withdraw and give it to them.
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I donāt have that much in regular bank accounts, but I think itās good practice to limit funds in a given bank to the FDIC maximum.
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When I say we hope to not touch it, I mean we arenāt counting on using it to finance retirement. We may well spend it down somewhat. If I EVER get a grandkid 
I could see using some of it to buy a condo where the kids are and spending some time there. Or creating college funds.
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I would not want my parents to have one day of concern about an FDIC max so yes, keep under it. (and/or have mom move some cash into a brokerage firm MMF or ultra short-term born fund such as Vanguard, Fidelity, or Schwab.)
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Iām trying to figure out different ways as far as staying below the FDIC limit. Looks like you canāt just spread it out in different accounts at the same bank. It looks like thereās an option with a trust and beneficiaries (too complicated), add an additional account holder to the account (and then you get twice the coverage), or move some to another bank. Iām going to present these options to my mom, but Iām rather concerned about even mentioning this, because she might get very worried.
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For most people, it is generally good practice to keep personal account deposits in any one bank under the FDIC limit.
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FDIC: Are My Deposit Accounts Insured by the FDIC? describes how FDIC deposit insurance works and how different types of account ownerships are handled.
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That is another good option. I recently had her move a bunch to her investment company (money market pays 4.51%, so thatās amazing), but I can add that to the list of where to move the additional funds to. Just a little leery about having so much in one investment firm, as I donāt think large amounts are FDIC insured at those firms, but youād think the big firms would be pretty safe.
Money market mutual funds are not FDIC insured. They invest in very short term debt from high credit quality issuers. It is possible for something they own to default and result in losses, although such losses that result in negative returns are rare.
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Thank you for the info. At this point, Iām not worried for her if she has a negative return, just a total loss in a bank collapse.
@ cbreeze : Both of us will be fully retired in 2 years. Weāve run the numbers numerous ways, and should have enough for retirement (+/- 30 years? if weāre lucky) assuming 5% average return and 3% AVERAGE inflation. To achieve that, I know weāll need equities. It just seemed too high at our age.
We told our new planner we were āconservativeā investors, AND that we wanted to simplify, so were surprised at the recommendations, and suggestions of yet more funds for each account. Iām hoping this was not simply to justify their fee. (Maybe time for yet another planner. Hourly advisors are hard to find!).
Thatās why Iām curious what ālong termā typically means historically. If the market usually rebounds or stabilizes in 10 year spreads, then I can understand a higher amount in equities (at least for now), since we should not need our full retirement portfolio in the next 10 years, and if anything is inherited by family, they have 10 years to withdraw.
We need to research blended or targeted funds, and was wondering if any CCāers have anything similar, and if you, do you actually just set it and forget it, or are you changing things around quarterly (or more). I know Vanguard has them - but donāt want to change everything from Fidelity at this point.
I think you may get different answers to your question about investing time horizons. 10 years is reasonably long term but you may want to adjust your investments towards the end of that and/or due to unforeseen circumstances especially if you have health issues.
I have invested in Vanguard STAR fund which is a nice balanced fund with a relatively low fee. The retirement age funds (which Fidelity has also) are another way to not have to adjust much and you can invest based on how far away you are from wanting the funds.
Also you might want to do an internet search for an organization that only has few advisors as members. Perhaps somewhat else here knows the name of it?
We are retirees. For us, now is the time more for capital preservation instead of capital appreciation especially if you are have enough for retirement minus inflation. I would tell your FA that you are not comfortable with his equities allocation. Fidelity has some targeted funds as well like the Fidelity Freedom Funds.
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Would she consider purchasing brokered CDs? As long as she does not purchase more than $250K from one institution, she can keep the brokered CDs all in the same account at her brokerage firm. For example, do not buy more than $250K from AmEx Bank or Morgan Stanley.
When purchasing, make sure the CDs are non-callable. They are paying close to 5% out to five years.
Shorter term Treasuries would be another option. Fidelityās auto roll feature works well.
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I donāt know. I suggested a CD, but she didnāt seem interested. But the money market fund is paying over 4.5% and she can get access to her money immediately, it looks very secure (unless the US govt fails, and I guess thatās a remote possibility). I donāt want to press her into anything that seems different to her. When we talked to her advisor before, we discussed CDās, and he said to just go with the money market fund.
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CDs are definitely not as liquid as Treasuries or MM, obviously. I was only trying to offer an option that did not require your mother to move her money and to address your bank failure concern.
Brokered CDs can be sold, but if interest rates move against you, you will realize a larger loss when selling than suggested by the interest rate spread. While the same is true of Treasuries, it seems as though there is more of a āpenaltyā when selling brokered CDs.
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MM funds arenāt as credit risk free as Treasury bonds/bills. They typically own commercial papers, issued by corporates. Itās rare but there were a couple of MM funds that ābroke the buckā.
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