Something to Know About FDIC Insurance

I would imagine that every investor is aware that any money he/she has in a bank that carries FDIC insurance, these funds would be protected against loss up to the amount of $100,000. But here is a wrinkle that you may not be aware of:

There is another program that will allow you to have FDIC insurance on amounts up to $50 million! This program is known as the CDARS Depository Program.

The purpose of the CDARS Program is safety, and not to guarantee a high rate of return on any funds on deposit. This CDARS Program is available through banks that are members of the CDARS Program and to date, there are 2,200 member banks.

You can find out more about this by clicking on the "CDARS DEPOSITORY PROGRAM" link in our "Links Section."

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Muni Money

While Treasury yields have been falling due to increased demand, municipal bond yields have been rising. Munis' prices began to fall when hedge funds began selling these tax-exempt bonds to cover short positions. And prices kept falling because of fears about the instability of the big bond issuers.

Now, investors can find munis with higher yields than comparable Treasuries can offer. After-tax, investors might net almost twice as much from munis as from Treasuries. Munis are safe too: no state has defaulted on a general obligation bond since before the Civil War.

And consider this: closed-end municipal bond funds may offer extremely high tax-exempt yields now, especially if they borrow at short-term interest rates to buy long-term bonds.

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