Banking Tips to Protect Your Wealth

Who would have thought we'd see global banking meltdowns and bank runs in 2023?

Fun fact: when the FDIC was established in 1933, they provided $2500 per depositor (or $58,000 in today's dollars) worth of coverage, which wasn't bad considering that the average American household made about $1400 per year at the time.

Even adjusted for inflation, the $250,000 FDIC coverage provided today still wasn't enough to prevent the bank runs we saw with SVB and now First Republic.

Here are some ways to protect your wealth:

• Don't keep all your eggs in one banking "basket" (unless you have done your research on your current bank, and feel confident in their fundamentals and risk allocation strategies).

• Consider diversifying your wealth across multiple banks, to reduce your risk exposure during the fallout from the bank runs. Many other people have the same idea right now, so be prepared for the process of opening new accounts to take longer than usual. If you have a credit freeze in place, you'll need to take that off before proceeding.

• Look for banks that offer high-yield savings accounts (typically 4% or more) to help combat inflation's impact on your wealth.

• Even on good days, have multiple checking and savings accounts at your bank. That way if one account gets hacked, all your money won't get targeted at once. Set these accounts up like an online "envelope system" for your budget with accounts for bill pay, fun money, etc.