[gyardley]

Right. I should be ashamed of myself for putting my money with a bank large enough to have a chance of getting its own way vs. the federal government when push comes to shove.

Instead, I should put my money with a small credit union with no money managers capable of getting me a decent return and so little clout when the proverbial shit hits the fan it'll be left to be roadkill.

What could possibly go wrong?

[msandford]

What return? The interest rates available these days are appalling. At this URL (after being prompted for a zip code) I was able to see a 120 month CD that yields 0.9% with anything less than 42 months being 0.15% yield.

During the last meltdown we saw that the FDIC made everyone whole. Did you even hear about the NCUA bailing people out? I didn't. I tend to think that's because credit unions did OK during the crisis as most of them tend to keep their loans on their books and as a result, didn't get swept up in the diciest loans in the bubble.

As a result I would suggest that perhaps the parent is correct and that credit unions are the way to go.

Or is there some other kind of proverbial shit hitting the fan that you're referring to? In my mind if TSHTF, any money you have in the bank is gone; worthless or irretrievable. What's the scenario where it's bad enough you want/need the clout of a mega-bank but where the banking system and our government aren't both totally effed but a credit union is?

[gyardley]

What return? The interest rates available these days are appalling.

Cripes, tell me you don't keep money in a savings account or CDs. Keep it with your investment manager. The large banks cater to the mass affluent - which includes any software developer who's worked at market for a few years and has saved their money. You put your money with them, you make sure they understand your appetite for risk, and they go to work.

I'm sure there's investment managers out there that are better than the ones at large banks, if you have that much to invest. But for the rest of us, a large organization is the way to go. They have the resources to attract good quality talent and access to the information they need to make good investment decisions. You will do so much better than 0.9% over 120 months, it's not even funny.

FDIC doesn't cover much money, I might add, and it only covers money in those might-as-well-be-zero-interest accounts where you shouldn't be keeping money in the first place.

[csense]

> money managers capable of getting me a decent return

Why not just invest in an S&P 500 ETF?

[gyardley]

Psychologically, I couldn't hold an ETF and forget about it. I'd be ecstatic with its performance right now, but say I was holding an S&P 500 index fund between 2007 and 2009, and it lost half it's value along with the S&P... I would be far too irritated with myself. But if I tried to time the market, I could totally see myself selling near the bottom of a bear market and then only getting up the courage to buy far, far into the next bull - also a disaster.

By letting experts handle it, I get someone who understands my risk profile and helps allocate my money across a range of investments, some risky, some quite conservative. When market conditions change, they react, not me. While I don't capture all the gains I could when the stock market shoots up 50%, I don't lose that (and sometimes still make gains) when the stock market goes south. I'm hedged somewhat against rare events, which knocks a bit off the performance of my portfolio in the good times but pays off well should there be bad times.

I looked into setting something up like this myself, but I couldn't do it with a single ETF - I would pretty much have to make it a full-time job. Far better to pay an expert to do it for me - I don't do my own amateur lawyering, so why would I do my own money management?

[csense]

Have you considered just keeping some fraction of your assets in cash (CD, money market account, treasury bonds)?

If you have 50% of your money in a Treasury and 50% in S&P, then when the market loses half its value, you only lose 25% of your money. But when the market goes up, you get a smaller gain.

> I don't do my own amateur lawyering, so why would I do my own money management?

An actual lawyer will generally be much better at lawyering than someone without training. Financial professionals probably aren't going to do much better than someone without training.

And then there are rampant perverse incentives in this industry, i.e. financial professionals are too often paid when they sell you financial products you don't need, and aren't paid based on your portfolio's performance.