We were going to do a completely different blog post, but since many of our clients reached out about the bank failure, we decided to address that instead.
Whenever a bank fails (and yes, it's happened before), it sends a shockwave through people, so it's completely normal to feel a bit shaken. However, we want to share some information that will hopefully alleviate some of your concerns.
We (Ella Financial Advising) have no affiliation with Silicon Valley Bank (SVB)
Your bank money is protected, up to $250,000, by FDIC insurance in each bank ($250,000 per owner in joint accounts)
According to Schwab, "the basic FDIC insurance amount is $250,000 per account holder per insured bank and $250,000 for certain retirement accounts deposited at an insured bank. These amounts include principal and accrued interest. The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these investments were bought from an insured bank."
If you bank through Schwab Bank, those funds are covered under FDIC
In the unlikely event that something were to happen to Schwab, you should still receive all of your money. Your funds are not owned by Schwab (they're owned by you), and thus are not available to Schwab's creditors
There is also insurance for securities called SIPC
Remember, we plan for market ups and downs, including the downs when banks fail and it’s reflected in stock market (again, this has happened before)
You have your emergency funds, and they are set up at non-SVB banks. Even if they are at SVB, they're protected under FDIC, and as of Monday (3/13), most SBV members had regained access to their funds
Your portfolios are well diversified
I know it feels like things are volatile, but remember, we have planned for these ebbs and flows and are keeping up with the news. We will reach out if any changes are recommended to your plan.
Please don’t hesitate to reach out with any questions or if you are feeling worried. We are here for you.
Ella and her wife are expecting a baby girl in late March 2023. She started maternity leave on March 1, 2023 and will return after the July 4th holiday.
While she's out, Erin--our operations manager--will be holding down the fort. Feel free to reach out to her with questions, concerns, or comments.