Where Is Your Money Safe?

Financial Adviser Ray Martin Answers Questions In The Wake Of Yesterday's Wall Street Meltdown

(CBS)  The Early Show financial adviser Ray Martin answered questions about how the upheaval on Wall Street could effect your personal finances.

"Number one question we got, where is my money safe? Bank? Mutual funds? Stocks? In my mattress? " The Early Show co-anchor Maggie Rodriguez asked Martin.

"You look at your bank accounts. Make sure your deposits are within FDIC insurance coverage limits -- $100,000 per individual account, $200,000 per joint account, $250,000 in IRA and this applies to bank accounts, savings accounts, certificates of deposit that you own in a bank," Martin said. "Money in a brokerage account with the failure now, the emergency bankruptcy of Lehman Brothers, people are saying hey is my money in my brokerage accounts and mutual funds safe? You have the Securities Investors Protection Corporation. A four-decades-old federal law that says brokerage accounts are separate from the financial firm. They have to be segregated that's why you have all this holding company structure. You're protected from a loss of securities in a transfer of 500,000 securities and $100,000 in cash and then there's overlay insurance on top of that. Mutual funds that you had money in a mutual fund is required to be separate from the holding company that owns or runs or manages those mutual funds so companies can't dip in there when they have a bankruptcy and take cash from individual investors. We have these protections in place to ensure that companies that get into financial trouble can't take individual investors money."

"My question is, should I leave my money tied up in a 401(k) or put it somewhere else?" asked viewer Felicia Daniels.

"Well, Felicia's question gets to the heart of the matter. Is my money safe in my employers 401(k) when you hear about the Lehman Brothers bankruptcy here," Martin said. "First, you should know that if you take money out of a 401(k) it will be taxable as income it'll be the worse thing you can do. Don't withdraw the money. Second, your money, as soon as it comes out of your paycheck it is immediately deposited in a trust account that is protected by federal law from the creditors of your employer so your employer gets in financial trouble, they can't take your 401(k) money. If you leave there you can transfer it to an IRA or whatever so it's safe there."

"And if you're not retiring for a while, don't even think about it," Rodriguez said.

"I say monitor your 401(k) at least quarterly," Martin said. "Most 401(k) plans offer 12 to 15 investment options which include stable value, money market, bond funds and stock funds and diversify, include the safer options the guaranteed stable value in bond funds with your diversified stock funds. These have to be diversified and don't get deep into your employers stock fund in your 401(k). Diversify out of your employers stock in your 401(k) account."

[onewmnvotr]

James I think you are wrong on the price of the Silver Eagles. They are about $13 right now. Only the proof and uncirculated coins from the mint are at the higher near $30. Are you a dealer trying to drive up the price?

[kimlee3]

Ray my morgage company is GMAC- how sound is this company, with everthing goning on. Should i stay with them or should i look for a new company.

[ioweign]

Where Is Your Money Safe?


Away from Republicans...

[onewmnvotr]

I am keeping my money right where it is. I have made a habit of checking the holdings on each of my mutual funds and not investing in funds that consist of other funds or other investment firms. I may make some purchases why the prices are low.

[random_radar]

Buy a piece of land in the country and learn to grow vegetables and small livestock. Then no matter how bad it gets, you will have a place to live and means to eat.

You don''t think it will get that bad, but you might be wrong. Look at what happens in big cities when the power goes out or a natural disaster strikes. What if the economy collapsed? How long would it be before their was killing in the streets?

Two days.

[jamesetling]

For anyone considering "stashing their money in a fruit jar and burying it in their backyard", 3 suggestions. First convert cash to Silver Eagles, now worth roughly $30 each. Secondly don''t use a fruit jar. Do a google on sport utility dry box. Those will last longer than we will. Thirdly, bury the silver at least 18 inches deep, and make sure nobody sees you doing it.

[jamesetling]

Sometimes its hard to tell if people are just joking about investing in ammunition. But in the last year the price of ammunition has gone up over 50%. If you are going to hoard ammunition, better get on it soon. Stick with very common calibers. 12 gauge shotgun shells, .22 long rifles rounds, .357, 9mm. And have a very safe place to store it. I pay way too much money for a safety deposit box at my bank. But along with the deed to my house and my will, I keep two .357 revolvers in there.

[cattiej]

Pensions, many of which are not going to be there when you retire. Why, because employeers are not putting the portion in with the money take out to pay into the pension fund. They are using your pension money to put in the general fund or in their pockets, or an offshore bank. The Govenor of the State of Illinois (and this is well documented and has been written about many times) for several years has put the money that State of Illinois employees that pay into the State University Retirement System, into the general fund. The Governor and his buddies have "borrowed this money". How can the law allow them to "borrow out of someone''s pension fund". 401K, don''t even get me started on the people that have 401K and wished they would have instead, buried there money in a fruit jar in their yard.
Why did the CEO of Lehmann receive a 22 million bonus in March?? Tell him to pay the money back or throw his butt in jail. He had to lie to his people about how much money this company really had.

[redviking71]

If you really want your money to be safe, then don''t let anyone else handle it for you. It''s as simple as that. The more hands it goes through and eyes that see it, the more potential there is for things to wrong. Nope, I''ll stick w/ Grandpa''s advise: Show nobody your money, and nobody will want it.

[jamesetling]

I believe the hardest shift that people are trying to make is to go from investments that earn significant interest to investments that just preserve money and allow it to stay even with inflation. But the world has changed too much in the last 10 years. And now our expectations need to change. Managing a plan to earn 7% is going to involve risk that will be stressful. Might as well forget it and earn your 3% in FDIC insured accounts.

[fromthepubli]

Sorry, Ray...incorrect. With regards to company sponsored 401K plans: You state: "your money, as soon as it comes out of your paycheck it is immediately deposited in a trust account". NOT TRUE. Check with the Enforcement Branch of the Employee Benefit Security Administration (EBSA) within the U.S. Department of Labor (DOL). There are many unscrupulous 401k Trustees out there who are delaying the transfer of employee contributions of hard-working Americans everywhere and using the money as short-term loans or slush funds as we say here in Chicago, and this crime is on the rise. Keep close watch on your 401k statements and investigate further if all the info is not included!

[presjfk]

The idea that a 401K plan is a safe place to put your money - that it will grow and allow you to retire some day is a best a fallacy and at worst a con job.

The American people have been sold this *** plan as some kind of replacement for a pension plan, and the government to a degree has even sold it as an alternative to what may be a defunct social security plan. In the SS yearly newsletter sent to all taxpayers on their birthdays, the newsletter clearly states the program may not exsist by the time we get to retirement.

The vast majority of employers do not match 401k contributions. Top that off with a stock market that gyrates in the extremes and the future for retirees is looking dangerous.

My plan has been real estate which has done well to date. But you know how real estate is looking lately. Hopefully, these investments will weather the storm and in 20 years will be there for me in my retirement years.

In summary, 401K''s, social security and pensions may not be there for your retirement. You had better think of a plan that will and the younger you start, the better.

Vote Obama.

[cattiej]

I don''t know about the typical American, but we don''t have 100K in any bank/savings. In saying this we do have some money from selling our home. We are NOT going to invest it in any thing. We are in our 70''s and we can''t afford to loose any money because George Bush and his gas house gang only not care about you and me, they are only out to line their own pockets.
Many issues have led up to this fall of the great houses of commerce and greed. It is payback time,,but the ones who will pay will be low income and middle income families. We here have gone from middle class to the lower finincial class since retiring. We saved our money, paid into pensions and what do we get?? higher prices for everything. It''s a good thing we have our graves paid for, and house in order so our children don''t inherit problems of trying to take care of our finances.
To all who read this, cut up your credit cards, all but one with the lowest interest rate...Pay cash for groceries and going out to eat (if you can afford to eat out). Pay cash for gasoline and only put $20 in at a time(this will drive the gas company''s crazy).
Good Luck to all of you.

[nordeck52]

We college students aren''t exactly rolling in cash. And if this keeps up with the banks, it might be a while before my peers and I get some. Thanks a lot for all this garbage! *rolls eyes*