by Kat Derrig

Created on: October 24, 2008

Not since the Great Depression has the average person been so distrustful of banking institutions. Financial collapses and government bailouts have been all over the front page lately, so it's not surprise that people worry about putting their hard-earned money in an account that is not guaranteed to be there tomorrow. Most middle class Americans, however, don't have to worry - all bank accounts, both checking and savings, are FDIC insured up to 100,000 dollars. Any investment beyond that is not covered. So if you are like me, and have less than that in the bank, go ahead and deposit that paycheck.

There are several reasons why it is safer to put money in the bank rather than, say, bury it in the backyard. One, your funds earn interest, even if it just a small percent. You will earn more if you invest in an FDIC-insured online savings account, such as Emigrant Direct. These accounts are great to have as an emergency fund, to save for college or a new car, or even just a rainy day. With money in a savings account, you have easy access to it through ATM's without having to carry around cash, which can be lost or stolen. If you lost your ATM card, you can report it and often are not liable for fraudulent charges - whereas once cash is gone, it's gone.

If you do have more than $100,000 sitting around the house, it's understandable that you would be worried about putting it all in a single bank account. Just recently several banks made headlines when wealthy account holders lost a lot of money when the banks failed. A better idea would be to diversify - put some money in a checking account, some in a high-interest saving account, some in a CD, and of course, as much as you can in a retirement fund like a 401k or IRA. And now might be the best time to invest in some stocks, while the prices are low.

Another good investment option is real estate - the average person has most of their wealth tied up in their home. Even with the recent mortgage company bailouts, don't give up on the dream of buying a house. Try to put at least 10% down, 20% if possible, to keep your monthly payments affordable.

So don't give up on banks just yet. With the economy in the state it is, Americans need to have faith that things will get better, instead of emptying their accounts and making the problem worse. Many bank failures during the Great Depression occured because investors panicked, and withdrew all their funds.

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