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I am writing this entry as a serious attempt to make my
friends and family aware of the very sobering situations taking place in the
banking industry. As most of you know I am a financial advisor and so am privy
to a lot of information that others might not be aware of. Really, it is not so
secretive. What I am relaying here can all be found on the front page of this
week’s Northwest Arkansas Times. Sometimes it just takes the training to
recognize it.
This week one of the larger banks in Arkansas went under. In
our own terms this would mean bankruptcy but in banker’s terms it is called “failed.”
This would not normally be too big a deal except that most people are unaware
of the limits on the protection on their accounts in this kind of situation.
The FDIC insures only $100,000 per person on their deposits in this bank. If
they have more than $100,000 then technically it is lost. While lawsuits may
eventually get it back it could take years. In this particular bank over 600
such accounts existed. Pretty scary right? And word on the street is that there
are more banks going the same route. That’s not official but just rumors up to
this point.
Well, being in “the biz,” I decided we should take some
precautions. And because I care about my friends and family I thought I would share
our strategy with you. We were not as much concerned with liquid funds such as
checking accounts but more about our savings and emergency funds. That is where
the real bulk adds up. So we have decided to diversify our whole life savings.
Rather than allow it all to be entrusted to one bank we have divided it up
among five to make sure we are covered under FDIC insurance laws. The amounts
and percentages below are by no means a set rule but just the format we
followed and you can feel free to mimic for safety’s sake. Remember, this is
not about a rate of return. This is about SAFETY!
Bank of Fayetteville: $1.37
Arvest: $0.87
Bank of America: $3.87
City State Bank: $1.02
Tri State Bank: $2.02
Again, this is not a set formula. We are just wanting to
make sure our money stays safe. Feel free to copy. I know we breathed a sigh of
relief after spending all of Saturday getting these accounts set up, just to
know that are life savings was adequately protected.
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