# Where is there more money: Bank Accounts or Brokerage Accounts?

There is a significant amount of money in the stock market in US companies. For example, look at the largest US company by market cap - Apple. It is currently worth over 800 billion US dollars. I've heard there is about 1 trillion total US paper dollars. So Apple would cost you about 80% of all US paper money. I've also heard people say it is just 'funny money' and the 800 billion is not 'real money'. I would think there are brokerage accounts out there that account for the 800 billion that is Apple - that it is not just a made up number. So my question is, is there more money in traditional bank accounts like Bank of America checking and savings accounts or in brokerage accounts where the money in the account is accounted for by shares of companies and possibly other equities like ETF shares? What are the actual numbers? Is it even close? I see many of the big tech companies getting to around half a trillion dollars and it makes me wonder where all this money is when you also see articles that say something like 40% of Americans don't have $1000 in savings available for an emergency. • You seem to be confusing the concepts of 'wealth' and 'money'. – Giskard Jun 5 '17 at 7:31 • How so? I understand people can have other assets like home equity or goods. I am asking about bank account balances versus brokerage account balances. I am probably confused about where stock is accounted for. For example, where do the shares of company founders like Zuckerburg reside? Do they get brokerage accounts like ETrade for their shares or is it recorded somewhere else that they have the shares? It seems to me brokerage account totals would have to dwarf banking account totals given the market caps of companies today or most of the shares are not recorded in brokerage accounts. – user13472 Jun 5 '17 at 22:05 • Many people would assume that "brokerage amount balance" is the cash balance in the brokerage account. The "account value" (not sure what would be the standard term) is the total value of the account, which includes the cash balance plus the value of assets, such as the market value of equity or bonds. You seem to be enquiring about the account value, which economists often refer to as "wealth". In other words, your terminology is somewhat confusing. – Brian Romanchuk Jun 6 '17 at 1:13 • Also, you should edit out "derivatives" from your question. In particular, ETFs are not derivatives. – Brian Romanchuk Jun 6 '17 at 1:17 • I would think most people would include the values of equities and bonds in their 'brokerage account balance'. Yes I was initially inquiring about the 'account value' as you describe it but you do make a good point that the account can have cash in it as well. – user13472 Dec 4 '17 at 5:42 ## 3 Answers At the time of writing this answer, I would note that the question is somewhat confusing. The issue is that the question uses the common definition of the word "money" which corresponds to the term "wealth" in economics, while "money" has a narrow technical meaning (referring to the "money supply aggregates"). This section is the part that is confusing. For example, look at the largest US company by market cap - Apple. It is currently worth over 800 billion US dollars. I've heard there is about 1 trillion total US paper dollars. So Apple would cost you about 80% of all US paper money. I've also heard people say it is just 'funny money' and the 800 billion is not 'real money'. (Please note that I have not validated these numbers; the exact values are not important.) Paper dollars (technically, "currency in circulation") is one form of financial instrument, and is a component of the various money aggregates. It is easy to work with, because it has a fixed value. The shares of a company (equity) are another financial asset, but they are not a component of the money supply. (That is, they are not "money" from the perspective of economics.) The value of equities change continuously during the trading day. If there is good news, the price of a stock could double, doubling the wealth of all of the holders. This means that a shareholder's brokerage account value could double, without any "money" changing hands. Is this "real" money? It is certainly wealth. But it would be effectively impossible for all Apple shareholders to sell at the same time at the current share price, and so the market value cannot be converted into "money" at the current market capitalisation. This is not a problem for U.S. paper money - it can always be redeemed at par (for a bank account balance). Therefore, there is a logic to not treating the market value of a company as the same thing as the equivalent amount of money in the bank. As for the comparison of sizes, any numbers I give will be outdated when later people read this answer. I will instead send you to a good source of data - the U.S. Federal Reserve's "Flow of Funds Report" (the Z.1 Report). Link to Z.1 Report This report offers a quarterly summary of financial statistics for the United States. It contains data on flows - the value of transactions in instruments for the quarter, as well as balance sheet data ("stock variables" in economics jargon). I would recommend just looking at the balance sheet tables for now. In particular, you can look at the table for "Households and Nonprofits" (table L.101). It has a breakdown of household (and nonprofit) balance sheets. (Link to html table for households.) As of the end of 2016, households held \$15874.2 billion (\$15.87 trillion) in corporate equities; that does not include indirect holdings. Meanwhile, bank deposits and currency was only \$1237.2 billion, (or \$1.24 trillion). In other words, equity holdings swamp narrow "money" holdings (currency and bank deposits) for households. (Total bank deposits are much larger. I just wanted to compare direct holdings; the reader will have to look at the tables in their entirety to see total asset and portfolio sizes.) The other balance sheet tables will also be useful to find the relative sizes of financial asset holdings by various sectors. This may help answer your concerns. • Aren't there ways to hold equity without a brokerage account? I've had paper stock certificates before. Now I have book entry through Computershare computershare.com/us There are paper certificates and book entry. en.wikipedia.org/wiki/Book_entry Why should either involve a brokerage account? – DavePhD Jun 6 '17 at 17:14 • Yes, you can; this is obviously what has to happen if the firm is private. For public firms, most individuals probably hold through brokerage firms. However, a significant portion of equities are owned by insider/founders, and those shares might not be held through a brokerage. Thus the weighting of non-brokerage holdings is high. In any event, the Z.1 covers all known shares. – Brian Romanchuk Jun 7 '17 at 11:37 • This reference has commercial bank deposits being a factor of 10 higher than the answer is saying fred.stlouisfed.org/series/DPSACBW027SBOG Brokerage account holdings are somewhat higher, but only if non-stock brokerage accounts are included dol.gov/sites/default/files/ebsa/researchers/analysis/… – DavePhD Jun 7 '17 at 12:27 • @DavePhD, my answer referred to household deposit holdings only, not all deposits. This is an apples-to-apples household portfolio comparison. Quantitative easing has bloated commercial deposits, so the current configuration of asset holdings is unusual. I will add a note to reduce potential confusion. – Brian Romanchuk Jun 7 '17 at 13:18 • Mainly, you only include checkable deposits. Instead, "total time and savings deposits" adds 9 trillion. – DavePhD Jun 7 '17 at 13:22 If all types of brokerage accounts are included, meaning stock, bond, mutual fund and call money, as well as IRA and defined contribution brokerage accounts, then the value of the brokerage accounts is somewhat greater than bank deposits. The most recent analysis of brokerage accounts was publish at the end of 2015, Brokerage Accounts in the United States. A total value of \$15,825 billion was determined for 2013 (the last year analyzed), though only \$4,274 billion was due to stocks outside retirement accounts. The amount in bank accounts is much more well-known than brokerage accounts. The FDIC publishes the amount of deposits in all FDIC insured institutions for 30 June of each year: 2013: \$9,433,522,000,000
2016: \\$11,271,811,000,000

Keep in mind that a brokerage account is only one of 3 ways to hold stock, the others being a physical certificate and direct registration.

The "common man" conception of money is not helpful to think about these issues. Money is not ONLY currency and notes anymore. These are just a TOKEN used to distribute goods and provide exchanges. They are not the real stuff. For example, when you make a bank account transfer, you are not moving TOKENS. Why would you? Banks are given these tokens by the central bank in order to keep a smooth movement of payments.

So Apple does not have 80% of all tokens of the US economy in a vault somewhere. Why would they? It's dangerous! They have such ownership of wealth, but in the form of a current account and other assets.

So you need to think differently between a claim on wealth, WHICH CAN BE TURNED INTO TOKENS, and the TOKENS THEMSELVES.

• I follow this idea of wealth versus tokens and the idea that there can be more tokens made. I feel there has been a swelling of wealth versus paper money lately. For example, there are many billionaires even though the highest paper money value is 100 dollars. I would think with so much wealth in the system, we would want at least to have 1000 dollar bills. Using checks and credit cards and possibly bitcoin and recording who owns what electronically is also effective. – user13472 Dec 5 '17 at 17:31