Safety plays a big role where we put our money. We know the FDIC protects our bank accounts from bank failures, but does anything protect our brokerage accounts? The SIPC insurance coverage is there to protects investors when their brokerage firm fails, assuming the broker is a SIPC member.
What is the SIPC?
The SIPC, Securities Investor Protection Corporation, is a non government, non-profit, membership corporation created in 1970 by Congress. When a brokerage firm fails, the SIPC insurance is there to help return your cash and securities that are held by the firm.
This may sound like FDIC insurance, but it’s very different. Unlike the FDIC, the SIPC coverage does not protect investors from a loss in value. So, if that stock you bought two weeks ago drops in price, you’re not protected. That falls under the inherent market risks. Continue Reading…