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Old 07-18-2008, 10:06 PM
 
8,313 posts, read 13,901,807 times
Reputation: 10777

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My husband is worried that all our investments are not safe at Schwab.
Everyday he watches the news and wants to put our money in a
box and bury it in the backyard.
I tend to not worry and think if we stay diverse the market will
drop and then recover.
I don't really understand about banks failing though.
Should our investmments be spread around or is Schwab just a
manager???
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Old 07-18-2008, 10:15 PM
 
Location: Apple Valley Calif
7,474 posts, read 20,665,983 times
Reputation: 5629
Depends on how much money you have. If you and hub have joint accounts, you're covered up to $200k. If you have more than that, you might want to move the overage to another bank. As long as you stay at 200 or less per bank, you're home free.....
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Old 07-19-2008, 12:51 AM
 
8,313 posts, read 13,901,807 times
Reputation: 10777
but if schwab has our money in mutual funds then
isn't that safe??
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Old 07-19-2008, 04:50 AM
 
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,248 posts, read 21,872,168 times
Reputation: 3587
Quote:
Originally Posted by kelly237 View Post
My husband is worried that all our investments are not safe at Schwab.
Everyday he watches the news and wants to put our money in a
box and bury it in the backyard.
I tend to not worry and think if we stay diverse the market will
drop and then recover.
I don't really understand about banks failing though.
Should our investmments be spread around or is Schwab just a
manager???
It can't fail and even if it did the government would step in and prop it up just as they did Bear Stearns. Don't worry.
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Old 07-19-2008, 05:20 AM
 
3,283 posts, read 4,752,091 times
Reputation: 753
Quote:
Originally Posted by kelly237 View Post
My husband is worried that all our investments are not safe at Schwab.
Everyday he watches the news and wants to put our money in a
box and bury it in the backyard.
I tend to not worry and think if we stay diverse the market will
drop and then recover.
I don't really understand about banks failing though.
Should our investmments be spread around or is Schwab just a
manager???
What don't you understand about banks failing?

it's really not that difficult. they borrow money from depositors like you along with several other sources. then they loan out this money to every tom, dick and sally. often they don't bother to check peoples incomes to satisfy themselves that these people can make the payments. they also often only take the asset which they are financing as security. if that asset depreciates in value it affects their balance sheet. if enough people default and depositors get nervous and start pulling out their money, the bank will soon find itself in the problem territory where they don't have enough cash to satisfy withdrawals and the value of the assets that they have as collateral becomes less than what they owe.

the above scenario fits just about every single bank at the moment! i'd venture to say that if they had to settle everything today, every one of them is in fact bankrupt
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Old 07-19-2008, 07:02 AM
 
939 posts, read 3,129,710 times
Reputation: 619
Quote:
Originally Posted by kelly237 View Post
My husband is worried that all our investments are not safe at Schwab.
Everyday he watches the news and wants to put our money in a
box and bury it in the backyard.
I tend to not worry and think if we stay diverse the market will
drop and then recover.
I don't really understand about banks failing though.
Should our investmments be spread around or is Schwab just a
manager???
Schwab is in no danger of failing. As a matter of fact Schwab has continued to report an increase in profits while other financial firms are reporting loses.

However, in the unlikely event that they do fail Schwab checking, savings accounts, and CD's are FDIC insured up to $100,000. Brokerage accounts (where your mutual funds are held) are SIPC insured up to $500,000 and Schwab has purchased additional insurance coverage from Lloyds of London.
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Old 07-19-2008, 12:03 PM
 
Location: Raleigh, NC
9,043 posts, read 11,809,020 times
Reputation: 1394
Quote:
Originally Posted by KevK View Post
It can't fail and even if it did the government would step in and prop it up just as they did Bear Stearns. Don't worry.
Wrong.

The government doesn't have enough money to bail out more than a couple of big houses. After the 5th one goes under, the gravy train will end.

Govt can bail them out with a printing press, at least until the hyperinflation kicks in and initiates riots, eventually leading to mob scenes followed by show trials/public executions of US executive, legislative and military leaders. Yes, it can happen here and it happens nearly every time the currency is destroyed among even previously rich and powerful countries.
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Old 07-19-2008, 01:18 PM
 
8,879 posts, read 7,863,740 times
Reputation: 7269
Your main risk at schwab is the investment risk in the mutual funds and money market funds. People have lost as much as 30% of their money in their YieldPlus short-term bond fund which is supposed to have been relatively stable. If fannie and freddie had gone under, it would've hit a lot of money market funds. If you're worried about banks and commercial paper, move your money markets to treasury funds which are completely safe.
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Old 07-19-2008, 04:54 PM
 
Location: Houston, TX
17,031 posts, read 27,534,620 times
Reputation: 16212
Ive got my money in Schwab...and am increasing my investments. Schwab is not a big bank (making loans) like Citi, although it has recently started banking services. Your funds (like mine) have been pinched by the rough economy. Everyone forgets the market goes down too. Leave your money in the funds, things will turn around. I bought Citibank at 15, and GE in the mid 20s this week for the long term.
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Old 07-19-2008, 09:18 PM
 
Location: Great State of Texas
86,068 posts, read 74,618,533 times
Reputation: 27602
Schwab is not a bank and is not insured under FDIC. It states this on their home page:

Charles Schwab: Investment Services Including Online Investing

"Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value"
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