Chase and other big banks may soon turn away more retail banking deposits. What should you do with your money instead?
In March 2021 the Fed announced it will continue with its plan to let a temporary break on regulation for banks expire by the end of Q1. According to Bloomberg Businessweek and its transcription of a call by Chase head Jamie Dimon, the bank's response would be to start reducing deposits on its books.
Dimon said that the last time it was in a similar situation the company was able to shed $200B in deposits in about a month.
The perceived issue this time is that deposits are being counted as liabilities by regulators. It is money that they are essentially borrowing from consumers, and owe back to them. In this low rate environment, banks either need to take big risky bets on new assets, or return and turn away deposits.
This isn’t new. Chase was one of the big banks that warned it would have to end retirement account services if it would be held to the proposed fiduciary rule requiring it to operate in the best interest of customers. It warned customers they may have to roll over to self-directed IRA or 401k accounts. Over the past year you may have also heard that other banks have been actively working in the direction of discouraging deposits as well. Such as raising monthly service fees, requiring higher minimum balances, and changing the rules on what qualifies for avoiding their service fees. Wells Fargo is one of them.
Of course, after you get to a certain point of base emergency savings you want to be investing anything over that anyway. Especially once you are breaching any FDIC guaranteed level of protection for your capital.
So, the banks don’t want your money, what do you do with it now?
You must invest your capital to multiply it. At least to stay ahead of inflation, taxes, fees and the devaluation of your money. Otherwise, if it is sitting idle or the returns are too low, you are actually losing money every month and year.
Capital preservation is important. As are risk adjusted returns. For many, cash flow and passive income is a necessity or at least a priority. Tax benefits are a big plus too.
Check out how we are solving this for investors with the NNG hybrid fund, and talk to a financial pro who is interested in helping you, rather than turning your money away.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund