Have you heard about the collapse of Silicon Valley Bank? It’s a pretty big deal in the financial services industry and for investors. Even if you’re not a customer of the bank, this event highlights inefficiencies within our financial system that we should all be aware of.
So since we’re all about education and making investing accessible, we made this guide for you!
It’s also important to note that we can’t always rely on the government to bail us out. As seen during the last recession with Lehman Brothers, the government didn’t intervene, and the bank collapsed despite being an upstanding bank. So, it’s crucial to protect ourselves and be prepared for any financial eventuality.
For average investors:
This is a reminder to diversify your accounts to protect your money in case of bank failures. Did you know that the FDIC only ensures up to $250,000 of our money? That’s why it’s essential to have multiple accounts, whether it’s multiple brokerage accounts or even banking in checking accounts.
As an Angel Investor:
This is a good time to check if any of the companies you’ve invested in have accounts with SVB. A very high percentage of startups use the bank. For example, Etsy sent a note out to users notifying them of delayed payments.
If they do, they may not be able to make their payroll or run their daily operations.
If you’re an employer or business owner:
Take note of how your business can almost crumble in just 1 night Did you know that entrepreneurs can have a brokerage account with other investments, not with their actual bank?
As an employee: You should be aware that you may not receive your paychecks if your bank collapses. This highlights the need for diversification of income streams and having multiple options for holding and accessing funds. As an employee, you can invest outside of their 401(k) to have other options and streams of income.
At the Happy Investor Method™, we can teach you how to invest and prepare for unexpected financial events. It’s essential to have multiple income streams and be prepared for any financial eventuality.
By the way, did you know that according to a report by the FDIC, there were only 5 bank failures in the US in 2021? That’s the lowest number of bank failures in a year since 2007.
Check out the Signature Strategy Program to create your own passive income and signature strategies here or click the photo below.
However, this doesn’t mean that bank failures can’t happen. The collapse of SVB bank should serve as a wake-up call for all of us to be prepared for such events.
Stay safe, and remember to diversify your accounts!