Quora Answer: Is It Possible to Have $1 Billion in Your Personal Savings Account?

The following is my answer to a Quora question: “Is it possible to have $1 billion in your personal savings account?  If yes, what are the implications?”

Conceivably, yes, it is possible, although that would be unusual.  This is assuming the bank would even allow such a thing.  The implication is that the owner of that account does not understand finance and the risk of putting everything in one basket.

Firstly, simply sitting on so much liquidity is problematic.  Taxation would be higher than the interest rate of the savings account.  Also, we have to consider that if that much cash is in a savings account, then that amount is not in circulation, which creates problems for the economy.

Secondly, this leaves the bank in a very vulnerable position since most of its deposits would likely be tied up in that one account.  There are compliance considerations that would create complications for the bank.

Thirdly, there is currency risk, since all that money is in a single currency, and there is political risk since it is in one place, and undiversified.  Should that bank somehow collapse, due to limitations of Basel II or Basel III conventions, the Federal Deposit Insurance or equivalent only covers up to $250,000 per account.  All that money would be lost.

In any case, this would never happen.  If anyone has more than $300,000 in any account, the bank would assign an investment manager to advise the account owner on investing that money and diversifying out the risk.  For a billion dollars, you would have a team of investment bankers.