How many accounts do I need to be safe?

TamTam72

I have recently sold my house and am living in rented accommodation while we wait to find a new home. Consequently I have a considerable amount of 'cash' which is currently (almost) all in an Icesave high Interest account.

I'm getting a little nervous with the current situation re Northern Rock, stock market etc, that if (God forbid) Icesave 'crashed' I would only get back the £31,700 that can be guaranteed. To be absolutely 'safe' should you never have anymore than £31,700 in any one account or is that just being too ridiculous? I have 9 times that amount (until I find a house obviously!) so should I think about spreading my risk somewhat and opening some more savings accounts to share the cash into, and if so how many is sensible?

Thanks
(from a slightly nervous, couldn't bear to lose it all, investor ...)

steady__eddie

To be "absolutely safe", you should only have £2k with each financial institution, not account. The £35k limit guarantees that you will receive £31700 should anything untoward happen. You will see that you are down £3.3k per institution, with 9 institutions you would lose £29,700 in total.
The £2k option may be impractical to achieve as you would be looking to find 130 odd different financial institutions. Please be aware that you are only guaranteed your full money back on £2k with each organisation that you save/bank with, not £2k in each a/c. with the same organisation.
Calm yourself down, myself and many others honestly believe that this is not the end of the banking system as we know it.
You could always use the cash to buy some NR shares.

obsessed_saver

Yeah, don't worry about your cash. It's fine.

Primrose

You are undoubtedly not the only investor over the "safe" limit. but I do think the current problems are peculiar to Northern Rock and do not apply to other savings institutions (who will now be experiencing an influx of extra money from worried Northern Rock investors. I don't know whether your savings are in joint names. If they are, my understanding is that only one account holder will be compensated if a bank failed; you will not both receive the £31,700 compensation, so you would need all your savings in separately named accounts. If you are really concerned, you can split some of the money around to other big institutions. However, I suspect that a few weeks down the line, the Northern Rock situation will have stabilised and savers there will have realised that their money probably was safe. The outcome may well be that Northern Rock gets taken over by another institution, in which case there would be a much larger safety net under it.

forevergrey

Each account holder is entitled to the maximum amount of compensation even if the account is in joint names.