As some of the biggest and most respected banks in the world look as though they may be crumbling, consumers are wondering in greater numbers just how safe their finances are. In times of economic uncertainty, there are no real guarantees, but there are a few things that you can do, short of burying your money in the backyard, that will help you keep it safe and protected. We do not advocate suddenly pulling your money out of a bank, since this can lead to a “bank run” mentality and may do more harm than good.
The first step to take is to go through all of your accounts and make a list. Do some research on the banks where you have accounts, and ask a professional financial advisor to help you do some risk assessment. Again, suddenly pulling your money out of a bank or a 401k is not a good idea and you may face extra penalties if you do. Caution is best at this point in time, not all out panic.
One of the best ways to keep your money safe is by diversifying where you put it. Spread your funds around with a few different accounts so that all of your eggs are not in one basket. However, it is best to limit any transfers between these accounts, since this may raise red flags as to what you may be doing. Simply having a few extra accounts doesn’t mean that you’re money laundering, but if you keep passing money through them all, it will look suspicious, even if you have the best intentions.
It is important to keep track of your funds if you will be using multiple accounts. Keep all of your documents in a safe place and religiously balance your accounts. It’s easy to forget one and you don’t want to end up short. If this is too complicated, you may just want to go with one checking account at one bank, and a savings account with another. Try to keep it as simple as possible.
Next, let’s take a look at investments. This is certainly a volatile time for the markets and investors are getting very skittish. If you don’t have a financial advisor or a broker, you may want to consider working with one at this time. They can help you avoid making mistakes and find ways to help your money grow during this difficult time. While no one wants to hold onto a stock that is tanking on Monday, if you do, there is a chance it could recover by Wednesday and make you a tidy profit. A trained broker can help you determine the risk and will help you sort through buy/hold/sell decisions.
The most vital thing to remember is that panic is your enemy at a time like this. If you have your money in a FDIC insured bank, you shouldn’t need to worry too much. However, it never hurts to diversify and it never hurts to get sound financial advice from a broker or financial advisor.
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Originally posted 2008-12-18 05:02:03. Republished by Old Post Promoter
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Banking, Diversification, Financial Security, Investing, Money, Personal Finance, money management techniques
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