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Friday, September 19, 2008

How To Safeguard Your Cash

Savers get around the new FDIC $250,000 insurance limit on bank accounts by speading their money across mutiple institutions. It's safe but it's also a big hassle. Now people are turning to other means to safeguard their cash. One is use a joint account owned by two or more people. Each account holder listed is insured for $250,000. Another technique that works is to set up a POD or "payable upon death" account at your bank. To set up a POD, a depositor must name a beneficiary or beneficiaries who will receive money if the primary account holder dies. Keep in mind that only certain relatives count as qualified benefciaries and a POD may disrupt a will or an estate plan. For a more formal type of POD, you may want to consult an estate attorney to form a Revocable Trust. Under this strategy, the owner assigns bneficiaries but retains control of the assets during his or her lifetime. The FDIC will insure the interests of each beneficiary for up to $250,000 For each qualified beneficiary, the FDIC will insure each beneficiary for up to $250,000. Another way to insure more than $250,000 per account is to buy multiple CDS through a stock brokerage firm. It's a fast way to spread money across different banks without the hassle of physically going to each bank. If you have $1,000,000 in cash to insure, just tell your broker to buy 4 different CDS from 4 different FDIC insured banks at $250,000 each. With a broker, you get access to numerous high yield CDS with one transaction. If you have even more money to insure, say up to 50 million dolars, you can obtain CDARS which stands for Certificate of Deposit Account Registry Service. CDARS disperse individual CDS up to $50 million dollars. CDARS are available from the Promontory Interfinancial Network. You can contact them at www.promnetwork.com or call them at 1-866-776-6426. With CDARS, you have one account with one interest rate, one bank statement and one 1099 tax form. Also, you should know that money deposited in IRAs,Roth IRAs and certain other types of of retirement plans are insured up to $250,000. If you still feel that you need to do more to safeguard your cash, then see our June 08 blog post on how to open a swiss bank account. You could covert some of your dollars to Swiss francs. The Swiss franc is the safest currency in the world and it is the ONLY currency that's back by 56% gold!