A safety net can be important when things go bad
Several noted economists and distinguished investors are indicating a bumpy ride ahead for the stock market, not only in America but worldwide. Billionaire investor Carl Icahn, recently offered caution on national news when he declared, “The public is walking into a trap again as they did in 2007.”
Most alarming of all is the effect of market volatility on smaller investors, those who are dependent on significant funds for retirement. With the market volatility impossible to control, what options does that leave for safety? Where can we invest our money to ensure it will not lose value?
A bigger question is this: Who can you trust?
If safety and security are your goals, I think we have three choices.
- US Treasuries, guaranteed by the full faith and credit of the United States Governmen
- FDIC guaranteed bank accounts
- Insurance company annuities
US Treasuries are the safest possible place on the planet to keep your money safe. The drawback is the yield can be lower than desired.
What about banks, credit unions, and insurance companies?Our banking institutions have a safety net. It is called the FDIC, and it is proudly displayed on fixtures, the front doors, desks, tables, stationery, and websites. Anyone who does business with a bank knows what the FDIC stands for. It stands for security and guarantees and insurance protection. It creates peace of mind and allows for depositors in the banking industry to be free of fear. The underlying guarantee is backed by the full faith and credit of the United States Government. Your funds are guaranteed and will always be safe. The limits are $250,000 per depositor and combinations can be allowed plus higher limits for your IRA. (www.fdic.gov )
How about Credit Unions, are they safe? The funds in your credit union are more than likely insured by the “National Credit Union Share Insurance Fund.” (NCUSIF). This protection was established by Congress in 1970 to ensure member share accounts at federally insured credit unions. All federally insured credit unions proudly proclaim this insurance and make certain you know that your funds are safe. Guarantees, safety, and security is their mantra, and they want you to be aware of it. (www.ncua.gov)
How about insurance companies? Life insurance and annuity products? These products are highly regulated and under the watchdog of each state department of insurance. Besides, an underlying guarantee is also guaranteed, based on your state of residence. Each state participates in these guarantees, and it is known as “The State Guarantee Fund.”
This guarantee is in place to help and assist policy owners in the event of an insolvency of an insurance company to provide funding and liquidity. Coverage and protection are generally for individual policies, and the limits of protection will vary from state to state, and many states have limits as high as $500,000. (http://www.nolhga.com )
If safety and security is your goal you have these choices and regardless of which you choose, your funds will be backed by guarantees.