Where do millionaires keep their money if banks only insure 250k?

Where the Rich Keep Their Money: Beyond Bank Insurance Limits

While banks provide convenience and security, they come with insurance limitations, leaving individuals with substantial assets vulnerable. Millionaires, with their vast wealth, face the challenge of securing their funds beyond the standard $250,000 FDIC or NCUA insurance coverage. To mitigate this risk, they employ a range of strategies to safeguard their fortunes.

Multiple Insured Accounts:

One common approach is to distribute deposits across multiple FDIC- or NCUA-insured accounts. This effectively increases the insurance coverage, as each account is insured separately. By spreading their funds across several institutions, millionaires can significantly enhance their protection.

IntraFi Network:

The IntraFi Network is a specialized platform that connects banks and credit unions, allowing them to share deposits beyond their individual insurance limits. By leveraging this network, millionaires can place deposits in accounts covered by multiple institutions, effectively amplifying their insurance protection.

Cash Management Accounts:

Cash management accounts, offered by brokerage firms, provide an additional layer of security. These accounts combine the convenience of checking accounts with the earning potential of money market funds. Unlike traditional savings accounts, cash management accounts typically offer FDIC insurance up to the maximum coverage limit.

Low-Risk Investments:

Diversifying their portfolio into low-risk assets, such as Treasury securities or government bonds, is another prudent strategy. These investments provide stability and a steady stream of income while minimizing the risk of losses.

Private Wealth Management:

To manage the complexities of their financial affairs, many millionaires turn to private wealth management firms. These firms offer a comprehensive suite of services, including portfolio management, tax planning, and estate planning. They can tailor strategies specifically to each individual’s unique circumstances and goals.

Offshore Accounts:

While not as common as in the past, some millionaires may choose to establish offshore accounts for additional privacy and asset protection. However, it’s important to consider the legal and tax implications before pursuing this option.

Conclusion:

Millionaires face unique challenges in safeguarding their wealth due to the limited insurance coverage offered by banks. To overcome these limitations, they employ a combination of strategies, including multiple insured accounts, the IntraFi Network, cash management accounts, low-risk investments, private wealth management, and offshore accounts. By diversifying their assets and leveraging various financial instruments, millionaires can effectively protect and grow their fortunes.