Smart to keep $25,000 in a checking account?

[legion]

You could...some investors (like Harry Browne) suggest keeping cash on hand as part of a portfolio. It protects you from deflation and should stocks and bonds fall in price in the future...you'll be able to snap them up cheap.

As it is now the FDIC insures the deposits, so you're fine.

Harry Browne says the safest place to keep your money is in short term treasuries or a money market fund that invests in short term treasuries that does not have repo agreements. He was very clear on this.

"To be suitable for the Permanent Portfolio’s cash portion, a money market fund should be 100% invested in Treasury securities, without using repurchase
agreements or federal agency securities as investments."

-Fail Safe Investing, 2003 Edition

I think its remarkable he mentioned avoiding repurchase agreements that far ahead of the financial crisis.

[Zippyjuan]

Money markets and short term Treasuries offer very low rates of return. One year Treasuries are only yielding 0.18% and according to BankRate, Money Market funds are about one half of a percent so you won't gain much by moving money into them. There are better returning safe investments available such as dividend paying stocks. http://www.bankrate.com/brm/rate/mmmf_home.asp I note that Harry Brown's advice came in 2003 when you could get 1.2% on short term Treasuries (seven times more than today) http://www.infoplease.com/business/m...ates-2006.html Money markets were only slightly better at 0.64%. Browne advocated an allocation of 25% gold, 25% stocks, 25% bonds, and 25% cash.

[LibForestPaul]

Depends on your interpretations of current events, your current economic picture, your immediate needs, and future wants.

If you believe in an Argentinian default, then no, probably not a good idea.
Do you believe the interest rate you receive is equal or greater than the rate your Federal Reserve Notes are losing value, then no, probably not a good idea.
Do you need this account to write checks, purchase a home, then yes.
Do you have a six month supply of cash to cover food, housing, insurance, transportation? If no, then yes, good idea to get this money into a checking account.
Do you have a one month supply of cash as above on hand? No, probably better to put some money in sock draw.

etc.
P.S. Which bank, credit union, or state bank will you be opening up this checking account is also something to consider. Personally, probably best to avoid BOA.

[heavenlyboy34]

my 2 cents-it's relatively safe, but safer in credit union checking accounts than corporate banks like BoA.

[brandon]

I guess if I was saving up for something I was going to buy soon. Otherwise, why not throw it into some kind of mutual fund?

[Danke]

The money you deposit in a bank is no longer yours. Look up the agreement that accompanies the signature card.

[cornell]

You should consider looking into high-yield checking accounts. With minimal requirements, some let you earn 1.5-2.5% on your money. Not much, but better than nothing...

[scrosnoe]

get out of debt first

then just consider doing good and helping others

also to ponder art, coins, bullion collectibles, improving real estate smartly, insurance plans for family, survival 'stuff'

cover the matter with prayer and see where God leads you -- it might be to start a second business / ministry / something completely different...

blessings/sc

[PaulStandsTall]

We all know the story with banks...do you think its smart/safe to keep $25,000 in one checking account?

No.

What on earth could happen that you would need that much in cash? Your car could blow up, house burn down, children get cancer, and you still wouldn't need to have that much in cash. I would say $10K maximum, but it depends on your individual situation as your mortgage/bills could be an outlier. Also, saving your wealth in dollars isn't the best idea, as the government that issues dollars thinks (incorrectly) it is immune to economic laws.

That said, after you have the basic emergency funds taken care of, it's a good idea to protect your wealth with an inflation-proof asset a la silver/gold. Like another said, in a deflationary environment, it's good to have cash to purchase assets. So, if you are rich enough you can do both.

[Carson]

Twice as smart to keep $50,000.00.


”First you get the sugar, then you get the
power, then you get the women”

~Homer Simpson