Hacker News Reader

I've always wondered what rich people do when their savings/investments vastly exceed the FDIC/SIPC maximums of 250k per institution, because past a certain point, splitting among multiple banking institutions becomes logistically infeasible.

Do they tend to get some kind of private insurance against institutional failures for their entire balance? Or do they just not worry about it?

View on HN

FDIC protects cash at (fractional reserve) banks. SIPC protects securities at (non-fractional reserve) brokerages. A very rich person isn't going to have enormous quantities in cash; most of it will be invested. But the risk of a brokerage losing your stock is way lower than a bank losing your cash deposits, and even that is very low. If they wanted to buy insurance against it that wouldn't be very expensive.

Plenty of places to put money outside a bank depending on liquidity/risk needs. Money market at the lower risk high liquidity end to high risk non-liquid of investing in private companies (Hello world). Managing these kinds of portfolios can be and is a full time job.

Reply on news.ycombinator.com