Is SIPC coverage on cash as strong as FDIC?
For cash, SIPC insurance is similar to FDIC insurance. Your losses are not covered, but you're covered in case of fraud. Since your cash is supposed to be in a trust account and not commingled with brokerage's funds, in case of bankruptcy you would still have your cash unless there was fraud.
"You can store millions of dollars in deposit accounts, you just lose the explicit FDIC guarantee. So you look for rock-solid banks. Bankrate.com has ""Safe and Sound Ratings"" that show the relative strength of various banks. You put your excess deposits in those banks, and you are pretty safe. Note that in addition to the explicit FDIC guarantee, there is now an implicit guarantee that certain institutions have been deemed too ""big to fail"", and will be backed by the full faith and credit of the US Government, without regard to the capitalization of the bank. Bank of America, for example, is not well capitalized and is carrying billions of dollars of ""assets"" that have little or no value. Yet government policy keeps the bank afloat and your deposits secure. Another strategy is to use municipal money market accounts, which provide secure (but not guaranteed) deposit-like accounts as well as a tax benefit. If you have > $1M in liquid assets, you probably need a financial professional and attorney advising you to make sure that you are aware of  and are controlling for risk in a way consistent with your longer-term goals." http://www.fdic.gov/deposit/deposits/index.html  FDIC currently insures up to $250,000.  (I would have put that as a comment to Jeffery but it says it was locked.) You don't want to put all your eggs in one basket.  If you shop around, and keep shopping all the time you can keep your accounts in a single place so long as that single place provides the best deal.  Don't have any loyalty to your banking institutions because they don't have any loyalty to you. Also, having lots of accounts means you are familiar with lots of institutions, so you are likely better at shopping around. Things I consider. For fewer institutions: For more institutions: "Liquid cash (emergency, rainy day fund) should be safe from a loss in value.  Mutual funds don't give you this, especially stock funds.  You can find ""high yield"" savings accounts that are now at around .8% to .9% APY which is much better than .05% and will hopefully go up.  Barclays US and American Express are two big banks that normally have the highest rates. Most/all Savings and Money Market accounts should be FDIC insured.  Mutual funds are not, though the investment IRA, etc. holding them may be." First, what's the reason? Why do you have that much in cash at all - are you concerned about market volatility, are you planning to buy a house, do you have tens of millions of dollars and this is your slush fund?  Are you a house flipper and this is part of business for you? If you need the money for short term use - ie, you're buying a house in cash next month - then as long as you're in a sound bank (one of the big national ones, for example) it seems reasonable.  You can never predict a crash like 2008, but it seems unlikely that Chase or Citibank will go under in the next few weeks. If you like to have a cash position, then split the money among multiple banks.  Buy a CD at one major bank with some of the amount.  My in-laws have a trust which is partially invested in CDs, and they use multiple banks for this purpose to keep their accounts fully insured.  Each separate bank you're covered up to 250k, so if you have $150k at Chase and $150k at a local bank, you're covered.  (You're also covered in a much larger amount - up to 1MM potentially - if you are married, as you can have a separate account each for $250k and a joint account up to $500k.) Otherwise, why do you have that much in cash?  You should invest it in something that will return more than inflation, at a minimum... Edit post-clarifications: $350k is around my level of 'Maybe, maybe not'.  You're risking $100k on a pretty low risk (assuming this isn't a small local bank, and even those are pretty low still).  In order to remove that risk you have to do something active - ie, take 100k somewhere else, open a new bank account, etc. - which isn't exactly the hardest thing in the world, but it does take effort.  Is it worth the 0.001% chance (entirely made up) you lose the 100k?  That's $10, if you agree with that risk chance.  Up to you. It wouldn't be particularly hard, though, to open an account with an online bank, deposit $100k in there in a 6 month CD, then pay the IRS from your other account and when the 6 month CD expires take the cash back into your active account.  Assuming you're not planning on buying a house in the next six months this should be fine, I'd think (and even then you'd still have $150k for the downpayment up front, which is enough to buy a $750k house w/o PMI). Additionally, as several commenters note: if you can reasonably do so, and your money won't be making significant interest, you might choose to pay your taxes now rather than later.  This removes the risk entirely; the likely small interest you earn over 3 months may be similar to the amount you'd spend (mostly of your time, plus possibly actual expenses) moving it to another bank.  If you're making 2% or 3% this may not be true, but if you're in a 0.25% account like my accounts are, $100k * 0.25% * 0.25 is $62.50, after all. Not at all. These CDOs on CMOs are all cash products. But you can have 100% loss in these deals, which would be unheard of in even a subprime CMO.   CDSs are derivatives anf have nothing in common with CDOs or CMOs. There aren't that many mortgage backed derivatives. "FDIC does not insure against robbery.  From the FDIC website under the heading ""What's not insured?"": Robberies and Other Thefts Stolen funds may be covered by what's called a banker's blanket bond, which is a multi-purpose insurance policy a bank purchases to protect itself from fire, flood, earthquake, robbery, defalcation, embezzlement and other causes of disappearing funds. In any event, an occurrence such as a fire or bank robbery may result in a loss to the bank but should not result in a loss to the bank's customers. If a third party somehow gains access to your account and transacts business that you would not approve of, you must contact the bank and your local law enforcement authorities, who have jurisdiction over this type of wrongdoing. So either the bank is out the funds and takes the loss, in which case no new money enters circulation, or the bank has insurance that repays the bank, in which case the insurance company incurs a cost and no new money enters circulation.  Either way, no new money enters circulation." All transactions involving fraud or theft are void by their nature. Title to your money never changes hands.  You are entitled by law to have assets stolen from you returned to you. In cases of negligence or broker malfeasance, lawsuits or SIPC protection are your primary recourse. The SIPC would protect individual investors up to $500K for securities & cash, with a max of $250K for cash. One would receive all securities that are already in your name or in the process.   In case client money was diverted to company trades, then SIPC will investigate and try to find out how much money belonged to each customer. It would determine this on various inputs including your transaction records like money to transferred to MF Global, internal records, amongst other things. More information in the SIPC bulletin: http://www.sipc.org/Media/NewsReleases/release31Oct2011.aspx Most people who have over $250,000 in liquid cash savings would not want to start putting their money into regular savings accounts in different banks, especially with interest rates as ridiculously low as they are now in 2014-15.  People with money will want to diversify their investments in ways that will potentially earn them more money, and they can also afford to seek the advice of financial planners who can help them do this wisely. Even if you decide to put $250,000 into various accounts at different banks, I wouldn't necessarily trust that the FDIC will be able to help you recover your money in the event that your banks go under.  The amount of money available to the FDIC to cover such losses pales in comparison to the actual amount of money that Americans have in their bank accounts. Brokerages are supposed to keep your money separate from theirs. So, even if they fail as a company, your money and investments are still there, and can be transferred to another brokerage. It doesn't matter if it's an IRA or taxable account.  Of course, as is the case with MF Global, if illegally take their client's money (i.e., steal), it may be a different story. In such cases, SIPC covers up to $500K, of which $250K can be cash, as JoeTaxpayer said.  You may be interested in the following news item from the SEC. It's about some proposed changes, but to frame the proposal they lay out the way it is now: http://www.sec.gov/news/press/2011/2011-128.htm The most relevant quote:   The Customer Protection Rule (Rule 15c3-3).   This SEC rule requires a   broker-dealer to segregate customer securities and cash from the   firm’s proprietary business activities. If the broker-dealer fails,   these customer assets should be readily available to be returned to   customers. There is no such animal. If you are looking to give up FDIC protection, investing in a short-term, high quality bond fund or a tax-free bond fund with short durations is a good way to balance safety vs. return. Make sure you buy funds -- buying individual bonds isn't appropriate for folks without a high net worth. Another option is savings bonds, but the yields on these is awful today. the difference is whose money is being invested. when you deposit money in a bank, it is FDIC insured and capital requirements are set to ensure the preservation of your deposits. if the bank wants to make huge derivative bets, with leverage inherent in the instrument or provided by another bank, deposits are involved in the equation. "But it's also true that the FDIC (or equivalent) insurance account doesn't have enough to cover all deposits.  The FDIC may come in handy if your local FDIC member bank goes belly up and a few hundred depositors need to be made whole.  However, in a national crisis, where the government is ""legally"" stealing funds, that FDIC insurance is a joke.  I do agree though, if you have more than the insured amount in a single account, split it up." It depends on your situation. For families with small amounts over the FDIC limit, there's account structures that let you get multiple coverages. Things like holding 100k in an account in joint with your wife, each of you holding 100k in individual accounts etc. For larger sums and institutions, there's CDARS. This system spreads your money out to multiple institutions with an eye to FDIC insurance limits. Some people feel this system is abusing FDIC, so I suppose it's possible it gets outlawed / shut down some day. Alternatively, you can just invest it yourself. Treasury Direct allows small buyers to buy US govt bonds at finished auction rates, or submit a qualified bid at auction. You won't get great rates, but Treasuries are about as good as dollars. In the US, I would say the risk is exactly the same.  If your accounts are withing the FDIC amount (currently $250,000) your balance is 100% covered in case of a failure. You are giving up a larger network of ATMs in some cases.  You are also perhaps giving up the number of branches you can visit, the hours the bank is open and maybe how well the website works.  The features might be less, but the protection for your deposits is the same.