Many cash investments offer the added security of government insurance. Bank money market accounts and time deposits, such as certificates of deposit, are both insured by the Federal Deposit Insurance Corporation (FDIC) to a limit of $100,000 per depositor per bank. (Self-directed retirement accounts, such as IRAs, are insured up to $250,000.)
Most money market mutual funds, on the other hand, are not insured by the FDIC — although a few fund companies provide private insurance. U.S. Treasury bills aren’t insured either, but they are backed by the federal government, which can raise taxes to repay what it owes. In general, insured investments pay slightly less interest than uninsured investments.
FDIC coverage limits are $100,000 per depositor per bank for individual, joint, and trust accounts, and $250,000 for self-directed retirement accounts, such as IRAs, SEP IRAs, and Keogh plans. Business accounts are also insured up to $100,000.
You qualify for more than $100,000 coverage at a single bank, provided your assets are in different types of accounts. For example, you are insured for up to a total of $100,000 in all accounts registered in your own name and for another $100,000 representing your share of jointly held accounts — so if you and your spouse share a joint account but also have separate accounts in your own names at the same bank, together you're insured for $400,000.
Many cash investments offer the added security of government insurance. Bank money market accounts and time deposits, such as certificates of deposit, are both insured by the Federal Deposit Insurance Corporation (FDIC) to a limit of $100,000 per depositor per bank. (Self-directed retirement accounts, such as IRAs, are insured up to $250,000.)
