I was just wondering what you think of the future of our system? I know that we (tax payers, that is) support traditional banking via government sponsored insurances such as FDIC and NCUA to protect deposits, and it has been this way since the great depression.
But in the modern era, people aren't satisfied with placing their savings in such low paying financial vehicles that traditional savings accounts or CDs offer. My guess is that most Americans have money in some kind of stock or bond market investment these days due to the ease in which investing can be done by Joe Average via the internet and low cost securities businesses like Charles Schwab or Share Builder.
I read somewhere that the UK charges .25% on trades as a tax. This is interesting for several reasons:
*It is likely that when things are going badly, people won't panic sell as they have another 1/4 percent tacked on to a stock that is already losing ground.
*The taxes would give investors pause before making frequent trades, and take some of the volatility out of the market.
*(I don't know this, just guessing), but the taxes collected could go towards any future bail-outs that may be necessary.
I don't trade. I buy and hold. The few times I've tried trading, I pretty much broke even, but I didn't find it to be a fun or satisfying way to spend my time, so I'm invested in several mutual funds instead (I have a few favorite stocks that I'm keeping. I just like the companies and what they are doing for the environment).
Is there a securities insurance backed by the federal government in our future? It is probably high time we did something like this. Leaving money in a CD or even a traditional savings account is nearly the same as stuffing a mattress with your savings. I just checked Bank of America's website for my state and their passbook savings is paying 0.20% APY. Yep, less than 1% interest. I'd be better off buying a bunch of Pokemon cards or something.
Is it time to regulate at least Mutual Funds? And have the fed back investments with insurance for investors?
I think that would give Joe and Jane Average more faith in our banking system and encourage more investing and prevent volatility in markets as well as making more capitol available for lending. All while regulating the mutual funds and reducing risks taken by fund managers.
I'm sure another riskier fund sub-set would emerge, that would be uninsured. These funds would need to carry a kind of disclaimer more strongly worded than current mutual funds have. Something along the line of "If you invest in this fund you may never see your money again!" That way people who enjoy the risks can still invest in these funds.



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