Are Financial Investments Insured?
Investors can be overwhelmed with the vast investment options that exist. For those who are concerned with possible loss of their capital investments, understanding how investments and insurance work is imperative to making sure investors are placing their money in avenues that are appropriate to their investment risk tolerance.
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FDIC
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The Federal Deposit Insurance Corporation (FDIC) was established in 1933 during the Roosevelt reforms after the banking and stock market crash. It insures bank accounts with FDIC institutions up to $250,000 per owner.
Annuities
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Annuities are tax-deferred investments offered by insurance companies with fixed accounts and assets being guaranteed by the financial strength of the insurance company. Variable annuities invest in the securities market and fluctuate without any guarantee.
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Equities
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Equities are stocks traded on public exchanges. These fluctuate based on the financial strength, new and public image of a company and are not guaranteed.
Debentures
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Debentures are bonds such as treasury, municipal or corporate bonds. Bonds are rated for their safety and promise a fixed return if the owner holds the bond through the term, but these are not insured.
Commodities, Options and the Rest
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Commodities, options and all other investment opportunities are considered high-risk investments. These investments have no insurance, and guarantees should be considered with great caution.
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