Need a place to invest some inheritance...

[CindyBlue]

I'm getting ready to retire. I'll have enough to live on with pension starting four months after my last paycheck, and SS starting a year later. I have about $200,000 that I need to find a low-risk place for. Right now it's been sitting in a checking account for two years earning nothing (which means I'm losing money, I know ) I'd like to at least keep up with inflation. I don't think I can leave it in my local bank, which I love, because both my DH and I are worried about the federally insured limits. I'd like it to be available in case we need it to move, if our living situation deteriorates, but it doesn't have to be available for at least a year. I'm in northern California.
I don't trust Wells Fargo, or Bank of America. Is there a bank that anyone trusts for that kind of money (a lot of for us!)? Or another option?

 

[MRG]

We keep a couple years of cash in Ally bank. Think its paying 2.2%. Federally insured.....

 

[REWahoo]

I don't think I can leave it in my local bank, which I love, because both my DH and I are worried about the federally insured limits.

Why are you worried? The FDIC limit is $250,000. If it is a joint account that's $250,000 for each of you.

 

[marko]

I can see not trusting Wells Fargo, but BoA?? IMO you have to trust someone. Any regular bank should be able to offer a CD with decent interest; why not the bank where you have it in your checking account?

Risk averse is fine but, respectfully, IMO this sounds like bordering on paranoia.

 

[CindyBlue]

I had issues with BofA years ago, which is why I moved to my local bank.
The inherited money would put us over the limit at our bank, with checking and savings accounts and CDs. Do CDs count into the $250,000 limit?
As you can tell, we aren't too sophisticated with investing...

 

[Dash man]

I second Ally Bank. Synchrony Bank is another one we use.

 

[CindyBlue]

I have no experience with online banking, which I'm assuming that Ally Bank and Synchronicity Bank are. I'll go look that up, thank you!

 

[Dtail]

We keep a couple years of cash in Ally bank. Think its paying 2.2%. Federally insured.....

+1
No reason to keep it in a brick and mortar bank.
Online banks can be "scary" at first, but trust me they function just like B&M banks, plus you receive 24/7 customer service.

Very happy with Ally Bank.

 

[REWahoo]

The inherited money would put us over the limit at our bank, with checking and savings accounts and CDs. Do CDs count into the $250,000 limit?

FDIC insurance is per account, not per institution. Input your amounts into this FDIC insurance calculator and it will specify how you are covered. https://www5.fdic.gov/edie/

 

[CindyBlue]

Thank you!

 

[SheitlQueen]

I am in a similar position and put the money into 12 and 14 month CDs split between Synchrony and Ally. If you don't want to make a time commitment, put it into one of
their money market accounts.

 

[njhowie]

I am extremely biased towards Fidelity, so take anything I say with a grain of salt.

I would move the entire account to Fidelity - maybe leave behind a checking account if you like the ability to continue banking with your local bank. You can move money between your bank and Fidelity over night. So if you need to transfer money from Fidelity to bring up the balance in the checking account, just get the request in by 4PM and the money will be there in the morning.

Having the money at Fidelity will give you many options for what to do with that money. At a minimum, you'll have many different banks you can purchase CDs from. No matter how large your account, this provides the ability to stay below FDIC limits by spreading the money around - it's just the click of a button. Because Fidelity offers such a wide range of CDs, it's also very easy to set up a CD ladder utilizing the best rates across all the CDs they offer.

Anyhow, consider moving a good chunk of the funds from your local bank to Fidelity (or other brokerage that offers similar) - you'll be earning a decent interest rate very quickly.

 

[Car-Guy]

I had issues with BofA years ago, which is why I moved to my local bank.
The inherited money would put us over the limit at our bank, with checking and savings accounts and CDs. Do CDs count into the $250,000 limit?
As you can tell, we aren't too sophisticated with investing...

To try and answer your question in your case/scenario with regards to FDIC coverage: A checking account is FDIC insured up to $250,000 and a CD is also insured to $250,000. Or a total of $500,000 for the two qualified accounts in the same bank. EDIT: Your bank can help you to ensure these accounts are separate qualified FDIC accounts.

If you want to stay under the FDIC insurance limits, just keep your balance in each qualified account under the 250k limit. My wife and I have had well over a million in one bank spread across multiple account types and have been fully insured.

 

[pb4uski]

If you want ultra-safe then your best bet is an online savings account... FDIC insured and paying about 2%+ these days (I've been happy with Discover Bank) or better yet, Vanguard Prime Money Market Fund (VMMXX) is liquid, has negligible credit risk and and no interest rate risk and is paying 2.49% last time I looked.

 

[CindyBlue]

To try and answer your question in your case/scenario: Your checking account is FDIC insured up to $250,000 and your CD is also insured to $250,000. Or a total of $500,000 for the two accounts in the same bank.

If you want to stay under the FDIC insurance limits, just keep your balance in each qualified account under the 250k limit. I've had well over a million in one bank spread across multiple account types and have been fully insured.

This website says that all the accounts are added up to make the total of $250,000...is it wrong?
https://www.bankrate.com/finance/savings/fdic-insures-bank-deposits-to-250-000-1.aspx

 

[Car-Guy]

A "singe account type" is combined in the example of the article but that's not the way to structure your accounts for best coverage. Your bank can help you ensure your "account types" (or ownership categories as they call it) are separated for FDIC purposes. If you are still worried about that, or can't qualify for enough categories of ownership (I'm not in my case) just don't let the total of your accounts exceed 250k at any one bank. Use multiple banks.

 

[gwraigty]

What njhowie said. I have accounts with both Fidelity and Schwab. A current glance at one year CD offerings at Schwab gives rates from 2.3% to 2.45%. Their money market fund shows a 7 day yield of 2.33%

 

[big8pointer]

I have several CD's with TIAA Bank and Synchrohy Bank, all done online. Excellant support and very good CD rates. Check them out.

 

[swakyaby]

My brick and mortar checking account is also at Wells Fargo for day-to-day transactions and services. But I keep my larger $200,000 emergency cash holdings at Vanguard Prime Money Market. I have it linked to my Wells Fargo account so that funds can be easily transferred to or from the account by phone or computer. The yield is currently 2.49%, and while it is not FDIC-insured, the risk of default by Vanguard is very very low. You’re doing the right thing by moving that much away from a low-earning bank account.

 

[CindyBlue]

My brick and mortar checking account is also at Wells Fargo for day-to-day transactions and services. But I keep my larger $200,000 emergency cash holdings at Vanguard Prime Money Market. I have it linked to my Wells Fargo account so that funds can be easily transferred to or from the account by phone or computer. The yield is currently 2.49%, and while it is not FDIC-insured, the risk of default by Vanguard is very very low. You’re doing the right thing by moving that much away from a low-earning bank account.

That sounds like a good idea...I have my 403b at Vanguard, so that might be an easy second relationship to start. Thank you!

 

[CindyBlue]

I have several CD's with TIAA Bank and Synchrohy Bank, all done online. Excellant support and very good CD rates. Check them out.

Thank you. I will look up TIAA and Synchronicity Banks. I looked up Ally and was not impressed with the ratings/reviews regarding customer service (or lack of same (smile!))

 

[Dash man]

Thank you. I will look up TIAA and Synchronicity Banks. I looked up Ally and was not impressed with the ratings/reviews regarding customer service (or lack of same (smile!))

I wouldn’t take negative customer service reviews too seriously for Ally or most other banks. I’ve had nothing but great service from them. The few who have a negative experience are more likely to post comments than are the many satisfied people. Even if you don’t like them, it’s easy enough to move your money again.

 

[CindyBlue]

I wouldn’t take negative customer service reviews too seriously for Ally or most other banks. I’ve had nothing but great service from them. The few who have a negative experience are more likely to post comments than are the many satisfied people. Even if you don’t like them, it’s easy enough to move your money again.

Fair enough! I will look them up again!

 

[calmloki]

I have online accounts with Discover & Ally & CIT as well as Chase & BofA and Barclay. Did have a happy account with TIAA-CREF but did too much business with them and had to leave (over 6 debits/month). Barclay isn't fun to deal with; slow and limited transactions. Discover has been great and Ally even better as far as ACH transactions and wires go. Ally has a bit higher interest - 2.2% vs2.1. I like BofA's account statement clarity and their free first weekend museum program. Chase has ubiquitous brick and mortar locations when we need a notary, but they have crummy interest and long hold times on funds. We are new to CIT, but they have 2.45% interest and we need to spread some cash around. Best for us for holding and disbursing money while paying a decent interest amount is currently Ally.

(My BIL got a $100k chunks from a property sale - he's had it at a local credit union earning under 1% for the last 3 years - he likes the people. I like people too, but for $1000 or so/year....)