How Much Money Should You Keep in One Bank?

a man holding a small piggy bank

How Much Money Should you have in your Savings Account?

Now that you’re confident your accounts under $100,000 are safe and you don’t need to pull your money out of the bank, you might be wondering how much money you should have in your savings account? Then check out the list below.

Keep Less than the Maximum Insured Amount

Personally, I wouldn’t keep anywhere near $100,000 in cash anywhere, unless it was part of the down payment for a house. Sums that large should be invested in order to earn a larger return than the paltry 1-3% you can earn on a savings account.

However, if you do need to keep a large amount in cash, don’t put more than $90,000 in a non-retirement account at any financial institution. If you earn interest, you could quickly go over $100,000 if you have more than that in an account. By keeping no more than $90,000 in an account, you have some room for growth.

Disperse Large Savings Between Several Banks

One of the victims of the IndyMac failure was a man who’d put his life savings of more than $200,000 in five CDs. He’d been told he could protect it by adding the names of other family members to the account. He lost nearly $30,000 in the collapse.

However, for short-terms needs, I’d put $80,000 in three different banks – note, that means different financial institutions, not different branches of one institution.

Invest Large Amounts You Don’t Need in the Short Term

Equity and most bond investments are not insured, but they offer a better return than you’d receive from CDs or cash savings. Unless you need a large amount of cash in the next three years for a home purchase or college, invest it. If you’re not sure how aggressive you should be in your investments, seek the advice of a certified financial planner who charges by the hour (rather than through commissions.)

Check Yearly to Ensure You’re Not Over the Limit

Mark a date in your calendar every year to review all of your bank balances and shuffle the money around if any one account is at or near the insured limit. That way, if something should happen, you can relax while everyone else rushes to the bank in a panic.

These suggestions are simple on the face, but they can go a long way towards ensuring that your money is fully insured or working hard for you if it’s not insured.

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