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Comment by ChuckMcM | Hacker News Reader

I would be surprised if the bank complained. They are only on the hook for $250K per the FDIC and could cover it with a low interest interbank loan from the FED. Since their mandatory reserve is only a fraction of the cash on deposit they will happily leverage it for greater returns paying you your paltry .7% while collecting much more than that.

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This highlights the problem-- the most "conservative" approach, a savings account, is actually TERRIBLE financial advice. First the money won't keep pace with inflation and second a bank failure will wipe out the fortune. That happened to savers in 2008, most notably the failure of IndyMac.

Of course. But you have to park the money somewhere while you learn about where to invest it.

If you've got more than $250K, I'd split it up into multiple accounts at different banks.

I suspect this is per depositor not per account... but I'm not sure.

FDIC covers $250,000 for all of a persons accounts in one bank. So you just need to have accounts in separate banks to 'increase' your coverage.

https://www.fdic.gov/deposit/covered/categories.html

It's per account and can be doubled with a "payable on death" designee.

> It's per account

I think you're mistaken about the first part of your statement:

The FDIC says, "All single accounts owned by the same person at the same bank are added together and insured up to $250,000." (see https://www.fdic.gov/deposit/covered/categories.html )

But you are correct that it can be doubled, tripled, quadrupled, or even greater by opening different account types such as a Retirement Account, a Joint Account, a Revocable Trust Account, etc., at the same bank since each account type seems to get separate treatment (according to the same FDIC link).

So- Your money not keeping pace with inflation is better than anyone profiled in the article managed. Worst case scenario, bank failure, they might still be better off.

People fall into two broad traps. Either they are loosing money for no good reason (a consumption culture with ever escalating healthcare/edu/housing prices makes this simple), or they are accumulating money for no good reason, thanks to some class they took that says beating inflation is the point of their story. Once your housing/family healthcare/edu expenses are taken care off kiddos, there is no good reason to be beating inflation. Unless you are trying to build the Taj Mahal or something.

Actually there are some very straight forward wealth management schemes that may not get you the most return on your money but are better in nearly every metric than putting your cash in a bank savings account. The canonical example is a treasury ladder.

A savings account without a fixed term requires that the bank balances that with reasonably short instruments. If it's a huge sum they will get nervous since they need a certain amount of liquidity as reserves and that's expensive. Keeping liquidity over the night gives very little interest, or even negative interest in some countries.

The bank wouldn't complain but if your account is significantly above the FDIC's $250k limit, it's usually worth it for them to invest a few days or weeks of a salesperson's time to get you to convert to a more profitable investment account. That kind of human attention is just not profitable with an account that only has 10s or 100s of thousands of dollars.

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