Treasury bonds through online discoutn brokerage

[keret]

Hi all,

Quick question.

I would like to buy some government bonds through my discount brokerage account but (and these days anything happens) I am afraid my bank would go bankrupt.

And here's the question: if I use the bank's online brokerage account to buy government bonds and (at some point down the road) the bank bankrupt?

What happens?
How do I get my money?
I guess, as long as the money is in the bond is protected but at expiration how do I get my cash the they have closed doors?

I little extreme I know but better be safe than sorry......


Ideas?

[MTRIG]

It is a government bond so regardless you would be safe, unless China cashed in all the bonds, then we are all in trouble.

If you are looking for a small return like Govt. Bonds buy a CD. They are FDIC insured and you will not lose one cent. You may make up to 3 cents though. :-)

[keret]

Thanks for your message.

Yes, I thought so. But the question is...how do you get your money when the CD matures if the bank has closed doors and you have purchased the CD with the Bank's discount brokerage?

[MTRIG]

If you are buying the CD at your bank, and your bank goes out of business, this sounds like your concern?

Your bank and CD are FDIC insured, the bank account up to 100,000, and the CD up to the value of your purchase... so the FED will return your funds to you. If you are really concerned about this, really, change banks. Go to Chase, or transfer all your checking to Fidelity. They have online banking and provide an ATM card that can be used all over the country for free.

A little more on this... Last year when all the money market funds were shaky, I moved all my cash to CD. I bought a Chase CD through Fidelity. Lets say Chase went belly up, Fidelity has the CD for me, I could either let it mature since it is FDIC insured, or sell it on the secondary market, either way, my money was safe, and Fidelity handles the CD with no worries for me.

[keret]

Thanks...and what happens if Fidelity goes belly up?

Please don't tell it cannot happen because that means you work for them.

[MTRIG]

Like I said, CDs are FDIC insured, Govt. Bonds are a promissory note of the US Govt. The SEC would have the bank records you would get your money back, belly up or not, you would not lose.

We can go on with the "what ifs" forever. The final straw is if you fear the Uncle Sam will revoke his FDIC or promissory note of assurance to you that you will get your money, you may want to bury your money in a hole that only you know the location. :-)

Okay, now about that Fidelity account...