General Question

RedDeerGuy1's avatar

How do millionares/billionaires work around the $250,000 FDIC insurance limit?

Asked by RedDeerGuy1 (23518points) 2 weeks ago
15 responses
“Great Question” (3points)

That insures deposits?

Do they have lots of bank accounts, or do they buy additional insurance?

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RocketGuy's avatar

Normal people with just over the limit will split their $ across several banks.

zenvelo's avatar

Somebody with more than $1million does not have it in cash accounts. So as @RocketGuy described, they have three or four cash accounts at different banks, all insured. The rest they have invested.

A prudent investor has diverse holdings so that the risk from any one asset going to zero is minimized.

LadyMarissa's avatar

The majority of their cash is invested in Wall Street, real estate, or another preferred investment or two that meets their needs earning them a significant return & they liquidate as they need cash. We recently had one of our wealthy socialites die & she was worth several million, but only had a grand total of $58 in her checking account.

Blackwater_Park's avatar

This is different for companies that must operate with more liquid cash than this regularly. They are at more risk than individuals. They don’t really get around this. It’s a risk they must bare.

Forever_Free's avatar

They work with Private Banking Firms. A complete different set of rules and Insurance of their funds. Those organizations don’t even talk to you unless you have over $25,000,000 to start with.
I work for the oldest (205yrs) and one of the largest private investment banks in the United States. It’s a different game managing old money.

gondwanalon's avatar

They spread their money around.

JLeslie's avatar

If I remember correctly, if you have a joint account, you get $250K each for a joint account, so $500K, and then an additional $250K each in individual accounts, per institution. Plus, millionaires usually have brokerage accounts, which are not even insured by the FDIC, unless they are holding a CD in the account that is insured. A lot of millionaires have money in real estate also because the tax laws are so favorable.

Tropical_Willie's avatar


FDIC insurance covers $500k joint per bank (Institution) not bank account.

More than half a million for husband & wife means money needs to go to different bank, not a different branch/account, for FDIC insurance.

JLeslie's avatar

@Tropical_Willie That’s what I always thought, but then recently I read you can have up to a million the way I described. Now, I am not sure what is correct. I wouldn’t keep a million in one bank no matter what. When I was a teenager my bank account was frozen for months during the S&L scandal. I never would keep all of my money in one place nor keep that much in one place.

kritiper's avatar

Primarily, they invest their money to protect it from taxes. Having it the bank doesn’t make them much money.

JLeslie's avatar

@Tropical_Willie Here’s a recent article, but I read a different one a short while back.

Tropical_Willie's avatar

Yup, @JLeslie each account is treated as a separate account for a total of $2 million.

JLeslie's avatar

^^I used bank synonymously with institution. Are you defining bank as a branch?

Tropical_Willie's avatar

IRA, checking/savings, trust . . . different accounts

Branch is just a different address for main company.

Entropy's avatar

Generally, rich people don’t keep large balances in the bank. Banks tend to give low rates of return. You want your money growing faster than it will in a bank. The Signature Bank offered a better rate of return than most, but a solid diversified portfolio still would have outperformed it.

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