Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
6 posts • Page 1 of 1
For all practical purposes FDIC and NCUA are the same thing. No reason to be concerned about deposit insurance. Choose a bank or credit union based off which one will give you the products (such has higher yielding accounts) and customer service that you desire.
Short answer not really. The longer answer depends on the risks to be considered (malfeasance by custodian, custodian hacked, you hacked, somebody impersonates you in person, 'technical political shenanigans' vs 'real' default on T-bills vs federal govt reneging on its commitment to FDIC/NCUA, etc) and opinions of each. I've switched back and forth over time between mainly FDIC/NCUA or mainly direct T-bill or federal money market fund based on changes in after tax return, lately bill/MM tends to have the advantage for me after tax; and convenience. I don't spot one or the other any specific number of basis points for being safer. I would always rather have at least some of both though to both diversify cybercrime risk and just simple situation where I get locked out of one account but not the other and I need the money right away.
I have worked for on all sides of the question. All 3 opinions are super safe. For one to be safer than the other requires 1 of 2 things.
One are crazy edge cases where the FDIC, NCUA, or the federal government defaults.
The second one involves highly nuanced questions on liquidity, interest rate risk, and principal risk of the specific instrument and your goals and risk tolerances.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.