Insured Deposits

What this video covers

• The FDIC coverage formula: $250,000 per depositor, per insured bank, per ownership category, and why principal plus accrued interest must stay within that combined limit
• Why cash equivalents prioritize principal preservation over growth or income maximization
• The critical distinction between money market deposit accounts (MMDAs), which are FDIC-insured bank products, and money market mutual funds, which are Securities and Exchange Commission (SEC)-regulated securities with no FDIC coverage
• How demand deposits (checking, savings, MMDAs) provide instant access with minimal return, and how time deposits (certificates of deposit, or CDs) lock up funds for higher yield with early withdrawal penalties
• Why traditional bank CDs are not negotiable and must be redeemed at the issuing bank, while negotiable or jumbo CDs and brokered CDs trade in secondary markets
• The market risk of selling negotiable or brokered CDs before maturity: rising interest rates drive prices below par, and FDIC insurance does not cover that market loss
• How brokered CDs from multiple banks let investors stay within FDIC limits across issuing institutions