Just How Safe is Your Money Right Now?
Even after the government took the opportunity to step in and bail out one of our largest insurance companies, the stock market still managed to find a way to completely tank, because many investors were not persuaded that this intervention was going to protect their investments. This is when you have to find confidence, knowing where your money is and feeling confident that it is safe. Here are some examples of questions that are coming up now that banks are going bankrupt and the stock market is taking a serious downturn, and the answers that indicate whether or not your money is safe.
Question - If I have a $300k annuity with AIG, is my money safe right now?
Answer - Yes, your money is safe. Investments that are wrapped in life insurance, annuities, are held by subsidiaries that are regulated on a state level rather than actually held by AIG. In other words, they are not involved at all in the federal bailout of the AIG holding company. The NAIC or National Association of Annuity Commissioners website can give you more information about insurance companies regulated by the states and their current status.
Question - With the stock market in its current condition, is now a good time to invest in ETFs or index funds?
Answer - Index funds have come highly recommended in the past, especially when linked to a larger portfolio. Make sure that you do not assign too much money to a single fund, like financial services, however. Generally speaking, broader is better when it comes to investing in funds, and diversity is absolutely your friend.
Question - I have put money into an annuity that is backed by Lehman. Now that Lehman is dealing with bankruptcy, what is going to happen to my annuity?
Answer - Companies like Lehman are actually only middle men, or brokers. Your annuity is actually owned by somebody else all together. Fixed annuities are not generally guaranteed by the FDIC or SIPC, but their downside guarantee will protect what you originally put in, even if you lose the earnings on it.
Question - I have two different $250,000 IRA accounts. Because they are two different accounts, is the FDIC going to insure me for the full $500,000 amount?
Answer - Yes, each IRA is insured by the FDIC for up to $250,000 per account and per bank. If you have two separate accounts and each is as a different bank, then this $250,000 limit is going to apply to each one individually. Spreading your IRAs around different banks, primarily those that are FDIC insured, is the right way to invest in these IRA accounts.
Question - Are money market accounts insured?
Answer - If the account is held by a bank, then it will be insured by the FDIC. If it is an account that is held by the brokerage instead, then it will be insured by the SIPC. However, the money market's performance is not insured, so it might be better to move your money into a high yield savings account instead for better safety.
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Originally posted 2008-10-29 05:43:34. Republished by Blog Post Promoter
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Categories: Uncategorized Tags: Annuity, Bailout, Downturn, Etfs, Fdic, Fixed Annuities, Index Funds, Insurance Companies, Sipc, Stock Market