Feb
Millionaires comprehend the basic rule: Diversify!!
They don't put their “millions” all in one place. The funds are invested in a variety of stocks, bonds, mutuals, and yes some cash. Smart investors don't worry about who “insures millions”. They do their research, pick high quality investments, and keep on buying when the market goes down. Like Warren Buffet says: “Buy fear, sell greed.”
High levels of liquidity are actually a bad idea. It means there's cash laying around losing value (relative to inflation) when it could be invested and working instead.
Answer:
To address your question specifically, they split the money up among banks. If, for example, the FDIC covers $250,000, and you’ve $1 million, you'd split it up among 4 banks and they'd each cover their share, up to $250,000.
In reality, most money is indeed invested in stocks and bonds, in which case no insurance is offered and the question, at that point, is irrelevant.
Liquidity is a separate issue. That just depends on the differing levels of tolerance for risk each investor has. Securities such as CD's, money market accounts, etc are fairly liquid. Stocks and bonds are also liquid to a point, but you run a bigger risk of having to take a loss if you have to sell at a specific time, versus being able to wait until the market is in your favor to sell.
Answer:
Safe is relative.
They generally keep it in bonds and other negotiable instruments.
Also some cash, precious metals and coins (in a safety deposit box in the bank).
Answer:
I would say stocks and such but even that is scary to me these days. I'm assuming that they have there money in several different places. I never keep all of my eggs in one basket.
Answer:
They diversify by spreading investments out in difference instruments.