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Comment by akerl_ | Hacker News Reader

It doesn’t matter what my bank invests the money in; my money is insured by the FDIC, which isn’t the case here.

They’re both tradeoffs. In my FDIC checking account, I know for certain I will lose the rate of inflation every year on my carried balance (~4 percent historically) but I won’t lose due to the bank’s investment (if I’m under the FDIC balance limit).

In the other account, based on the same history, I’ll stay well ahead of inflation most years, but lose far more in some.

This is a huge departure from the point you made above, where you claimed “the risk is real” for money in FDIC-insured checking accounts due to risky bets by banks with my money.

“There are trade offs for the user” isn’t really in dispute. The major concern being raised throughout the comments here is that advertising FC as a “checking account” is deceptive: it encourages people to think of it like a checking account, despite having a very different set of trade offs.

In engineering, we would similarly talk about violating the principle of least surprise. If my library has a function for saving files that’s very fast but sometimes loses data, I don’t call it super_fast_write, I call it unsafe_write. I think the idea behind this project is super cool, but it’s not high_upside_checking, it’s high_flexibility_brokerage.

The risk is real in banking. I wasn't just referring to customers there, but to the whole system, since the criticism of this idea has been quite broad. But there is some real risk for customers. There are caps on FDIC coverage and there can still be significant disruption even if you are insured and will be made whole.

I think there are two reason why you should care how your bank invests money. 1) For society, because the government has to bailout your bank if they take risky bets. 2) As a customers, because you don't have any choice about how much risk/returns you get (which might be fine, if low risk/low reward is what you are after).

Low risk / low reward is the entire premise of checking accounts.

If this product was billed as “a brokerage with better tools for depositing/withdrawaling money”, the comments here would be radically different.

As a consumer with insured deposits I want my bank to make the highest risk/reward bets they can get away with by law. Let them make their money that way so they don’t need to go after me for nickle and dime fees.

My deposits are always under the FDIC limit per account so outside the inconvenience, there’s no true risk of loss.

That's a good point, but just covers the case where your bank fails. In the event of currency depreciation, your (e.g.) dollar-denominated account can lose a lot of value. Of course this may be accompanied by a crash in the same stocks they're proposing you invest in.

The risk level of my checking account becoming less valuable due to currency inflation/depreciation is minuscule compared to the risk of putting that money into the stock market.

The comment I replied to above suggested that checking accounts hold risk due to the bank making risky investments, which is fundamentally wrong for everybody operating with in the FDIC coverage limits (which is the overwhelming majority of Americans).

Your first sentence is wrong for many scenarios and is meaningless without a time interval. Over a period of 10 years the risk historically is absolutely higher from inflation than a total market mutual fund.

If people were good at sweeping excess balances into their investments I think this idea would be less appealing. But for a variety of reasons, many perfectly rational, people like having a nice cushion in there. It feels safe. Long term, it isn’t. These guys should lean into that in their marketing.

My checking account (and the checking account of the majority of Americans) isn’t measured in intervals anywhere close to 10 years.

The reason perfectly rational people like having a cushion in their checking account is that rent payments don’t care about 10 year historic trends; they’re just due when they’re due.

I’m sure there’s a decent collection of people here with enough disposal income that the idea of just having all their capital invested sounds lovely. But we’re inside a bubble here.

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