Is My Bank Secure? Wealth Advisors Provide Financial Advice

One of the most dramatic weeks for the global banking sector since the financial crisis is coming to an end. Consumers in the US are now unsure of what, if anything, they should do to protect their money.

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We've been calling financial advisors and specialists all week here at Bloomberg Wealth. The most crucial information they advised us you should know right away is shared in this message.

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But first, we spoke to experts regarding where to invest right now if you're asking if there are safe areas to put your money in the face of all this turmoil.

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This is what transpired:

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• The second-largest bank failure in US history, Silicon Valley Bank, occurred on Friday.
• Following a spike in customer withdrawals, regulators seized Signature Bank on Sunday, making it the third-largest bank collapse in history.
• On the same day, the government unveiled a new safeguard that Federal Reserve officials claimed was sizable enough to safeguard all savings in the country.
• Last week, concerns about the health of Credit Suisse, the worldwide bank that provides international financing to the wealthy around the world, increased.
• By establishing a $54 billion line of credit with the Swiss central bank, Credit Suisse aimed to reassure investors. First Republic, a second distressed regional lender in the US, is also considering its alternatives, including a sale.

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And below are responses to some frequently asked questions we've been receiving:

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My money is safe at the bank, right? In general, yes. If your bank collapses, you'll get your money back if you have eligible accounts worth no more than $250,000 at institutions that are FDIC-insured. When Silicon Valley Bank failed, the new government scheme protected deposits much larger than those.

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If I have and over $250,000 saved, do I need to set up an account with a separate bank? The likelihood is that you don't. This is due to the fact that the FDIC insurance covers qualifying accounts owned by individuals as well as up to $250,000 for each joint account owner at the same bank. Hence, if a married couple owns a joint account worth $500,000 and each spouse maintains an account with a balance of $250,000, they will both be covered by the FDIC up to $1 million.

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Should I even have so much money saved up? Your current way of thinking is financial advisor-like. Many people informed us that, as long as the emergency reserves are maintained, persons who are resting with a lot money should think about other assets with higher returns. Certificates of deposit are one choice; my colleague Misy talked about them here.

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My 401(k): is it in trouble? In the near future, perhaps. As a result of the banking sector's trembling, markets have been responding unfavorably. A systemic shock like the failure of a bank like Credit Suisse might have far-reaching reverberations. Yet, advisors advise retirement savers to look long-term because markets have a tendency to recover over the long term (the bank's CEO has preached patience and claims the bank's financial position is sound).

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The problems facing the financial sector have moved quickly, and we will keep you updated as to what they might mean for your money. Send us your own financial queries in the interim, and, as our advisors have been warning us all week, don't freak out. not yet, at least. 

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Fiscal Questions

What sound financial counsel would you offer to someone who wants to "unretire"?

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Making the decision to stop working after retirement is not simple. It can be difficult to withstand the emotional cost. But, don't criticize your past financial choices. Previous financial "blunders" are simply that: mistakes from the past. Change your attention to preparing your next move.

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To start, categorize your expenses into two buckets: your living expenses (needs) and your discretionary expenses (wants). Needs are usually fixed. However, wants offer flexibility for paring back. Categorizing will also help determine if going back to work will cover more of your needs or wants.

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Next, look at your available sources of income and which sources are guaranteed, such as Social Security and employee pensions, and which are unguaranteed, such as IRAs, 401(k)s and savings.

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Initially, divide your spending into two categories: living expenses (necessities) and discretionary expenses (wants). Usually, needs are fixed. Yet, desires give room for cutting back. Organizing will also enable you to decide whether returning to work will better meet your needs or desires.

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Next, consider the several income streams you have, noting which are guaranteed (such as Social Security and employee pensions) and which are not (such as savings, IRAs, and 401(k)s).

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And lastly, consult a financial planner. Before you unretire, your knowledge could provide additional insight (and cash) to a qualified specialist. President of PF Wealth Management Group Frank Paré