SIPC

Gold_Measurement_486

SIPC

TalkingHats

To start, my stocks in a broker are federally insured through SIPC, good luck to those who lost coins in Binance and to those who will lose them in the inevitable next big hack

mikeq232

SIPC protects up to 500k of cash and securities in the account but only protects a max of 250k in cash.

Over-Computer-6464

There are three levels of protection. One is the SEC customer protection rule 15c3-3. This requires brokers to segregate (not commingle) your fully paid or excess margin securities. If you have a margin debt the broker can use as they chose securities from your account out to a total market value of 140% of your current margin debt. Securities beyond that 140% of the debt are "excess margin securities" and are protected/segregated just like fully paid shares in your cash account. This protects your securities from creditors of the broker. If a broker goes bankrupt your securities will be moved to a new broker. You are relying upon your broker to comply with this SEC rule. Pick your broker carefully. The second protection is the $500k per customer SIPC protection. This covers fraud/embezzlement/misdeeds/carelessness by brokers. This is rarely used. Many brokers carry additional private insurance, The coverage limits is a total for all customers, so while it may sound like a lot of insurance coverage it is not really much per account.

thinoo_v2

Mostly fair, with a couple of things they skipped. The segregation they describe comes from the SEC customer protection rule and applies to fully paid shares, so if you've opted into a fully paid securities lending program, the shares out on loan aren't sitting in your segregated account and may not be covered by SIPC at all, you'd be relying on the collateral the broker posted instead. Uninvested cash in a high-yield sweep usually sits at partner banks under FDIC rather than SIPC, which is fine but comes with different limits and rules. And the realistic downside of a clearing firm failure is less about losing assets and more about your account being frozen for weeks while a trustee moves it to another broker, so it's worth knowing whether lending is switched on in your settings.

dagilisek

I'll say mostly accurate because Apex's SIPC disclosure says it covers up to $500k per customer with half of that for cash. Apex also carries excess coverage with a $150M firmwide limit that's capped per customer at $37.5M for securities and $900k for cash. Neither covers market losses but only a broker failing and assets going missing.

thegrimytheology

i mean that's basically the standard setup for most fintech brokers these days, not really anything special the weak point is always what happens if apex itself goes under in a really catastrophic way. the SIPC coverage is nice but 150M is a tiny drop in the bucket when apex holds something like 100B+ in customer assets. if there's actual fraud or commingling that exceeds their capital buffer, you're fighting over scraps that said the odds of that are astronomically low. apex is huge and boring and makes money on order flow and margin lending, not by doing dumb shit with client funds. the parent company thing is whatever though, there's zero guarantee they'd step in if things got bad enough if you're really worried about it, moving to a broker that self-clears like fidelity or schwab eliminates the third party risk entirely. but for most people the convenience of public's app outweighs the theoretical edge case of double bankruptcy plus fraud

ACCNrd

If the concern is some sort of brokerage related failure, SIPC coverage exists. If the concern is default on the underlying Treasuries, the same government that defaulted on its debt would be paying FDIC related claims.

Worry-Mountain

fair, SIPC is plenty for me too. i keep going back and forth on whether the extra yield from CDs is worth locking anything up

reaper527

> I'm thinking of opening accounts on a second platform. there's no point to doing that at the volumes you're talking about. the main point of doing this is 1. to get around the SIPC insurance limits of 500k/account per bank 2. to have some access to an account if one is having server issues.

olduvai_man

True it isn't FDIC insured because it's a MMF rather than a bank deposit but it does have SIPC coverage. If that isn't sufficient, then I've got bigger financial problems lol.

OrdinaryReasonable63

If your money market account blows up (e.g. a crisis in short term funding market) you can forget about all of your other investments. Besides even during the GFG money markets fared fine. Inflation risk is there of course but that’s the trade off for liquidity). You can also talk about counterparty risk if the brokerage blows up but SIPC insurance should cover that.

DanTaude599

Honestly it comes down to what problem you're actually solving. If it's just "spread the risk of fidelity vanishing" that's not really a thing, SIPC covers you either way, so I'd rather keep it simple and consolidate. The only time I'd split is if a second broker gives you something fidelity doesn't, like a specific fund family or a cash sweep rate that's actually better, otherwise it's just more tax forms in february for no real benefit.

geomaster

let's see if your account is compromised and scammers attempt to lift all your funds, well think how you would deal with this. the accounts would be frozen and no outgoing transfers would be allowed. with a second brokerage you can still conduct business. with just one you're stuck SIPC insurance offers 500k of insurance on securities. brokers typically will have some other form of insurance to cover balances above that but if you are really concerned then having another account at a different firm can help with this

SirGlass

Banks and brokerages operate differently FDIC is for banking ; there is SIPC for brokerages but they are very different In simple terms banks commingle money . There is not real difference between the banks money they use to pay bills, pay employees and your money you deposit with them. It all goes into the same pile This is sort of dangerous because it means if the bank is bad at being a bank and loses money , your money is also gone. What is why banks are heavily regulated and FDIC insurance exists Brokerages do not operate like that; there is a clear segregation between the brokerage assets and your assets If a brokerage is bad at being a brokerage and loses money, they cannot use your assets to pay their bills, their creditors cannot lay claim to your assets If a brokerage fails your assets are generally safe and will just be transferred SIPC exists for basically fraud. Your brokerage does commingle assets (what is illegal and fraud) or your brokerage says they bought stock but really didn't and pocketed the money (What is also illegal and fraud)

greytoc

What would you consider a large sum? Most brokers have excess of SIPC insurance for insolvencies. Growth of your contributions is irrelevant based on your choice of broker. What matters is your portfolio construction and choice of investment manager if you use specific funds.

wl-hung

FDIC is for cash. And it's $250k per account type per institution. SIPC covers $500k per account type per institution. And most brokerages, including Fidelity, have private insurance on top of that.

Personal_Neat_8171

the panel’s focus on data routing and direct cash handling feels more like a pretext than a real threat–SIPC says you're safe, but the optics are gonna haunt Webull for a few quarters. maybe a short-swing trader can cash in, but longtime users likely just wait it out while the stock seeks to find its footing again.

Signal_Pace_7968

For anyone with an account there: the stock dropping and your account being at risk are two different things. Your securities are held separately from the company's own money, and SIPC covers up to $500k per customer (of which $250k cash) if a US broker fails. This report is a congressional panel, not a regulator action, so nothing changes for accounts today. If the cash part worries you, that's the bit to keep under the limit.

netpirate2010

I think they're probably confusing FDIC with SIPC insurance.

Historical_Low4458

I use different brokers to keep my accounts separate. All the major brokers are SIPC insured, so things like insolvency shouldn't be a concern for anybody who uses the major companies.

theblindness

While checking accounts lose about 3% of spending power per year from inflation, a HYSA or CMA earn just barely enough interest to keep pace with inflation. The CMA functions similar to the brokerage account with a debit card and some additional checking features, similar to what you’d get from an online bank like Ally or Capital One. Unlike the normal brokerage which can only select between a couple money market funds as the core position, you can choose whether your core position in a CMA is swept into FDIC-insured accounts at partner banks like a Fintech, or a money market fund like your normal brokerage, insured by SIPC. You can also manually purchase into other funds eligible for auto liquidation like FDLXX, in case you live in a state with state income tax and prefer a 100% treasuries fund. Debits will draw from cash balance, followed by core position, followed by other funds eligible for auto liquidation, like FDLXX. Pros are online banking like a checking account with funds automatically sweeping to an interest-bearing core position like a brokerage account. The CMA is technically a type of cash-only (no margin) brokerage account with checking features, so it can hold the same stuff as your brokerage account. They have early direct deposit, so if you deposit payroll to it, it should be available about the same as any other bank checking account, with early direct deposit, about 1-2 biz days early compared to a checking account without early direct deposit. Also unlimited ATM fee reimbursement, even international ATMs. Cons are the mostly same as the brokerage account. If you pull from another bank via ACH Debit, there’s a 10 biz day settlement times, but funds still sweep to your core position the next trading day to start earning interest right away. You should probably keep a local bank account for teller services, but the CMA can cover just about all of your online banking, using a single account for checking and savings.

BigDipper0720

Mmm. I'm not sure this is exactly right. VMFXX is a security. One owns shares of VMFXX. One does not own the underlying securities Securities in a Vanguard account would be SIPC insured. This means if those VMFXX securities go missing, SIPC will replace them (eventually) with the same number of shares of the same security, VMFXX. Note that if your shares of VMFXX lose value between when they go missing and when SIPC replaces them, then that monetary value is lost. This would be a highly unlikely event for a money market fund holding only Treasury securities, though. That risk applies more to shares of stock or stock mutual funds. SIPC replaces securities; not cash or security value.

pi3point14159

Oh boy did I learn a four figure lesson on what it means to be FDIC and SIPC insured when I was earning 6% on my crypto at a time when cash interest rates were around 1%. Then the biggest crypto company collapsed… https://en.wikipedia.org/wiki/Voyager\_Digital

darienrude_dankstorm

Not FDIC or SIPC insured. I'm unfamiliar with how much risk there is for a smart contract exploit or something. But I'd rather get 7% interest from something else. 

Beginning-Fig-9089

FDIC vs SIPC

King-Ed-7s-Cacti

I am old, have fidelity, firstrade, merril lynch....and robinhood.....I watched daily the gamestop saga and Robinhoods evolution.....I moved a few bucks to RH, and got the bank acct, c card, savings.......I am slowly moving to them....if fidelity etc....were this efficient and fast in their banking ecosystem, I would have moved by now, but RH is so much easier to trade, and move money, it is how banking should be, I have not deep dived into their financials yet, I will, but I feel like they are in touch with the future, and fidelity and such are holding on to ghosts of the past...........just my opinion....also fwiw, I opened a Roth in a few minutes, should have done it sooner, I really think they are the future......everyone says do not get to comfortable with the trading interface, but that type of person is going to fall for gaming style everything.....I am all in on RH. The SIPC corp insures up to 1/2 a million per customer of invested cash, and 1/4 mil for money sitting in account, right now that is good for me.....just opinions......

Business_Goat8171

SIPC only protects you if the broker goes under and loses your shares-it doesn't protect the value of the initial amount you invested if the price of some of your stocks drop. FDIC guarantees the principal you originally invested. SGOV doesn't need a U.S. default to lose money or freeze-rate swings, fund liquidity limits, or settlement delays do that. You're confusing broker safety with principal safety.

Glass_Performer1174

SGOV etc are SIPC covered which is as good as FDIC. The assets are covered if the brokerage goes down and you'll still own the assets. Unless you are saying that SIPC won't cover you if the federal government can't make good on treasuries? Which I guess is true but if that happens then your HYSA is equally in jeapardy and we all have much bigger fish to fry because we're all cooked at that point.

r2002

I'm not sure myself but according to Fidelity: >SIPC will cover up to $500,000 in securities, including a $250,000 limit for cash, in each qualifying account if your SIPC-member brokerage firm has financial troubles.

Capable_Card_986

SIPC protects against broker failure, not investment losses. If your 401k actually owns the securities , the assets are generally seperated and should transfer to another custodian

ArtComprehensive7403

Small thing: I’d separate “brokerage I trust to custody money” from “app that feels nice.” For $2k in ETFs, either is probably operationally fine, but I’d compare boring stuff first: SIPC/clearing setup, recurring ETF buys/fractional shares, export/tax docs, customer support, transfer fees, and whether the UI nudges you to trade more. If Robinhood isn’t missing anything you actually need, no need to panic-move. Just don’t let the app turn ETF investing into checking a scoreboard every day. Fidelity/Schwab are boring in a good way, which is kind of the point for long-term stuff.

Historical_Low4458

Large brokerages will typically have extra SIPC insurance. If you want to know if they do, then you can always contact them and ask.

BigDipper0720

Note also that SIPC does not work the same as FDIC. SIPC replaces lost securities, exactly as they were. Not dollar amounts. If in a bad event you lost your 100 shares of PEP, SIPC would restore your 100 shares PEP to you. PEP may have dropped 50% between when it was lost and when it was restored. That loss stays with you. Also, SIPC does not restore lost cash, but some brokerage cash might be in the broker bank product which may be FDIC insured.

DaemonTargaryen2024

>What happens to a 401k over the SIPC limit 401ks aren't covered by SIPC (unless it's in a brokerage-link). 401ks are covered by [ERISA](https://www.dol.gov/general/topic/retirement/erisa). >and your institution holding your 401k became insolvent (or fraud occurred), do all 401k accounts remain whole? Yes. 401ks are held in trust. If the employer or 401k recordkeeper goes bankrupt, the 401k itself is unaffected, as it's housed separately. 401ks are so ridiculously [regulated](https://www.irs.gov/retirement-plans/401k-plans) that large scale institutional fraud is impossible. >Generally, how safe is a person’s money if their 401k is over $500k and the brokerage goes under or if fraud occurs? Very safe, and again there's no $500k SIPC threshold for 401ks. It's not safe from *market* losses of course. >Would they be screwed if a major firm fails/fraud occurs? Not at all

postulate4

Doesn't matter. Both are SIPC insured.

CameUpMilhouse

Protected up to $500k under SIPC.

green-dawgg

This is what SIPC insurance is for, you’re good bro

nauticalmile

Fidelity carries excess coverage underwritten by Lloyd’s of London, protecting up to $1B per customer and up to $1.9M on uninvested cash for the same categories of loss as SIPC.

blackalls

SIPC insurance covers up to $500,000 per customer.

Foreign-Struggle1723

Robinhood sells its payment for order flow to market makers like Citadel, and they often take a wider spread on trades. Personally, I don't think Robinhood has been around long enough to earn my trust, especially given their reputation for promoting speculative trading. Now that they're even getting into event betting and prediction markets, it further solidifies my hesitation. I would hate to see people transfer large IRA assets there only for Robinhood to go belly up. Even with SIPC insurance and SEC custody rules keeping assets segregated, a failure would likely freeze client accounts for days or weeks during a forced buyout or transfer to another broker—a massive headache for a seven-figure retirement nest egg. While Robinhood has achieved profitability recently, a huge portion of their identity is still tied to transaction volumes and retail trading spikes. In contrast, legacy brokerage firms like Vanguard, Fidelity, and Schwab have highly diversified business models—earning predictable revenue from asset management fees, workplace 401(k) administration, and retail banking services. Their revenue mix is far more stable and balanced compared to Robinhood's.

EugMeister

Heard the US government through the Securities Investor Protection Corporation (SIPC), guarantees up to $500k if the brokerage becomes insolvent. Is it safe to have over $2,000,000 in only one brokerage?

earningslensAI

You are mixing crypto concepts ("cold storage") with traditional finance. For long-term stock investing, you just need institutional brokers with trillions in AUM and SIPC insurance. I split my portfolio between **Charles Schwab** and **IBKR**. I don't spread my assets because I fear them going bankrupt (SIPC handles that), I do it just in case one of them has a temporary IT outage on a volatile trading day. Keep it boring.

tang-tw

I am 38 years old and come from a poor family in a developing country. I only started investing in the US stock market last year. I opened a US securities account online using my passport. It's a small US brokerage firm that offers SIPC insurance and a customer service hotline in my country's language. My current assets are only $29,000. I didn't know about ETFs before and thought the stock market was just another form of gambling. I missed out on ten years of investment opportunities.

South-Ad2783

Unfortunately, DeGiro is not part of the SIPC. However, his assets there are still insured up to €20.000, cash up to €100.000. See: [https://www.degiro.com/uk/helpdesk/about-degiro/safeguarded/if-something-happens-degiro-are-my-investments-protected](https://www.degiro.com/uk/helpdesk/about-degiro/safeguarded/if-something-happens-degiro-are-my-investments-protected)

Few_Cheesecake9618

SIPC insures up to $500,000 in securities, does not account for market volatility just shares

SkepticalInvestor21

This is actually a really good question that more people should think about. Brokerages are required by FINRA to maintain multiple independent records of customer positions, and they typically use a combination of: - Real-time backups across geographically separated data centers - Daily reconciliation with clearinghouses like DTC/NSCC - Third-party custodians that maintain separate records - SIPC insurance covers up to $500k if the brokerage fails entirely The bigger risk isn't actually data corruption - it's operational disruption while they restore systems. Most major brokerages have been stress-tested on this stuff pretty heavily since 2008. That said, keeping screenshots of your statements quarterly isn't a bad idea for your own peace of mind.

nauticalmile

It’s not uncommon — many have a local brick-and-mortar bank they deal with, 401(k) or similar at employer’s custodian of choice, personal investment accounts like IRAs and/or taxable brokerage at another institution, etc. Generally, it just adds complexity. There’s an argument for security e.g. having some money in a second place should you lose access to the first. For actual bank accounts, using multiple institutions may be warranted if you exceed FDIC or NCUA coverage. I’m personally not quite as concerned about SIPC coverage for brokerage accounts. Since joining an employer who uses Fidelity as custodian for their 401(k), HSA, ESOP and RSU plans, I’ve also consolidated my own taxable brokerage and IRA accounts there as well. As it is, I currently have ten accounts at Fidelity, including my main savings/emergency fund invested in VBIL… I do still keep some money (<$10k) at my local credit union and run my every day expenses through there.

Nemarus_Investor

Have fun with no SIPC insurance and finding out there were no shares in your name at any point.

GregorSamsanite

SIPC protects up to $500k in a brokerage account, so in theory having accounts at different institutions would offer more protection. I'm not arguing that it's a good enough reason to do that or that you should have multiple accounts, but it's a possible reason that someone might do that.

Independent_Name_601

This is what we would call an echo. The dilemma is who is exposed to private credit? And what happens next? The players: mega asset, large asset financial institutions and private equity. Private equity is the scary one because they aren’t required to protect their loan unless their PFI required it via covenant. The banks will be fine unless the government/regulators crack a whip and see get to net zero exposure by either buying bonds/holding reserves, or selling the loans off - but to whom would they go? That’s the major crack. A likely scenario is a required write down of the assets, charge off the loan, and allow the borrower to pursue refinancing with a traditional lender at the modified loan amount with a government guarantee (much like the HARP program). Require the FIs to hold a higher capital threshold (say 12-14% instead of 10-12%). And obviously penalize via SEC, and bank regulators for the next 5 years and restrict growth again. Further restrict lending/cap loans from non-FIs. If a company wants to be a non-FI institutional lender, require them to purchase insurance much like brokers buy SIPC or banks buy FDIC insurance. Because they are creating a systemic issue in the credit market they get to be regulated now since they can’t be trusted. Further, any borrower who had this type of loan go bad should be restricted from utilizing another government-backed loan and a permanent mark should be placed on the principal’s personal credit and business credit. Any bailout awarded to individual business or lender should be required to be paid back at a rate of 500% of amount awarded and an interest rate equal to their calculated NIM plus fee income. Any collected proceeds should then be returned to the bailout fund until the 500% threshold is reached.

CEOPerspectiveSubsta

I think you’re focusing on the wrong layer of risk. If someone actually gets access to your brokerage account, the problem isn’t whether the asset is a stock, ETF, or mutual fund. The problem is that they control the account. At that point they can usually do things like change contact details, initiate transfers, or place trades regardless of the instrument. Also, the “sell at a terrible price to themselves” scenario doesn’t really work the way people imagine. Public markets don’t match orders directly between two specific retail accounts. Your order goes into the market order book and matches against the best available counterparty. You can’t just route it to your own account. The real protections tend to be things like: * two-factor authentication * brokerage fraud monitoring * withdrawal holds when bank details change * SIPC coverage if a brokerage fails Mutual funds settling later doesn’t really change the security model. The bigger practical risk I see in real life is not hackers doing sophisticated market manipulation. It’s people getting phished and approving withdrawals or transfers themselves.

Historical_Low4458

No, FDIC, but money market accounts like FDRXX do fall under SIPC insurance.

therealjerseytom

It's important to understand what that $500k of SIPC coverage actually means. It certainly doesn't cover loss of investment value. If you have $500k worth of Company X and Company X goes bankrupt (but your brokerage is operating just fine), well you're out $500k. Complete total loss. If you have millions of dollars in Company X, and your brokerage closes up shop for whatever reason (or closes your accounts - which happens sometimes if they smell suspicious activity), all your holdings can get transferred to another brokerage. No loss, no insurance. Brokerages operate under regulation where *their* finances are separate from *your* customer holdings. That's a major point. The SIPC thing I think covers more like... fraudulent and illegal activity, or a failure of being a custodian of your investment records. I am not concerned with having more than $500k within a single brokerage. I like having as much of my stuff under one roof as possible for the sake of convenience.

Omynt

I don't worry about Fidelity, Vanguard, or Schwab. With MooMoo, Robinhood, Webull, and the like, I keep it below the SIPC limit.

atheos42

No issue with that, and once you get any decent amount of assets, it might be in your best interest to have multiple brokers, SIPC coverage does have limits. If you want more SIPC coverage, get another broker. Cash management accounts with partner banks is a separate thing.

Emilio___Molestevez

SIPC, SIPC Excess or whatever it's called, FDIC

dagroup

Thanks again. I've never had an IRA, etc. My business gave better returns even after taxes The options trade was stopped by software, even though the higher options had filled. Yes, Schwab has many policies that are alleged to protect customers, like premarket times and tradeable stocks (Ross Cameron found). I find it is getting lots worse talking to their staff, it's almost like "no knowledge or training" required. Perhaps AI is next for them. Is your IRA restricted to how many round trips per time period, the same as margin accounts that are not PDT compliant or unrestricted like cash accounts? I don't like keeping non working cash in broker account. Thanks, I'll look into "tasty" ( [https://tastytrade.com/pricing/](https://tastytrade.com/pricing/) ) to see if they're a good fit. Cost in and out is simply a cost of business. Pricing looks very reasonable. Desktop platform is available in Linux. Lots of good items from a quick check. Thanks for the heads up! There's an important point that is not being addressed about cash secured that people should be discussing. The point is interest. As I understand it from another thread, Schwab charges 11%(?) margin interest, I wonder what if anything they pay on the cash secured. and more importantly are they secured beyond SIPC? btw.. here's the post; [https://www.reddit.com/r/freemarketstocks/comments/1rfp3z6/stock\_option\_scanner\_plus\_notes\_on\_schwab/](https://www.reddit.com/r/freemarketstocks/comments/1rfp3z6/stock_option_scanner_plus_notes_on_schwab/)

pineapplekiwipen

to begin with there is no reason i can't use multiple trading accounts which i do with thinkorswim they can't possible make enough off of my order flow + gold subscription to justify paying me the roth match and the 2% transfer on my account with assets well over the SIPC limit you're calling people kids yet you have no scale of what you're even arguing about you're just a braindead drone regurgitating people saying HOOD is bad

kodaq2001

SIPC sounds right. I remember seeing when I opened an account. Didn't realize it was $500k.

Apart-Item-9432

I assume you meant SIPC? For investments it's technically up to 500k per account type not just 250k, though if you only have cash in your investment accounts it is indeed up to 250k.

Apart-Item-9432

Still applies to SIPC, though it's technically up to 500k per account type not just 250k.

F0rtysxity

If Schwab for example is SIPC insured up to $500k and you have more than $500k to invest wouldn't you want to split up your brokerages?

PennyStonkingtonIII

You don’t have to worry about losing your money if your brokerage goes under. The SIPC protects up to 500,000 and the brokerages insurance probably covers even more. Even Robinhood is probably fine but I’d go with another broker like Schwab or Interactive. I think Schwab has the best UI (Thinkorswim) and Interactive has great margin rates. Robinhood, as far as I know, is best for trading lots of cheap options because they don’t charge commission fee per contract. If I was just going to build a big taxable position in VOO, I’d choose Interactive. If you need a quick emergency loan, you can just pull margin and it’ll be pretty competitive - like 5.25% or something- depends on market rate and your account tier.

Interstellar_031720

SIPC protects up to 500k per account even if the broker fails. Robinhood isn't going anywhere but if you're worried, Vanguard or Fidelity are more stable long-term.

blaaaaaaaam

FYI those insurance policies are usually aggregated across all users. Fidelity's $1 billion is, and it has been a while since I've read RH's but I'm 99% sure their's is too. SIPC covers a lot, but if Fidelity has some cataclysmic fraud that brings it down, the $1 billion is going to get chopped up so many ways that you'll get peanuts. It'll have to be a government bailout that saves people.

LEAPStoTheTITS

I don’t understand what the worry is when you still have SIPC insurance. If you’re over half a mil you should have it in multiple brokerages anyway.

MarkFromPublic

Hey, thanks for being a part of Public. I work with our active traders and high net worth investors. SIPC insurance covers $500,000 total (including up to $250k of cash). This is the same at other brokers, so hopefully this shouldn't be a concern. If it is, or if you have any other questions about Public, I'm happy to answer them. We'd love to keep you here. Just shoot me a DM!

gami2billy

Pretty sure they arent covered by the SIPC insurance either. Just a poor downtrodden lot

Academic_Dust2467

First off, you’re right that this was a terrible decision and you’re not overreacting imo. That said, it may not all be lost. First, Noble Gold does have a 4.9 Trust Pilot rating on 700+ reviews so that’s encouraging (but certainly not conclusive). I’m sure their fees are hidden/unintelligible to the demographic that uses them and they’re probably quite high. But it doesn’t seem like they would just take her money and run. Second, you need to find out if she rolled the money over into a precious metals IRA account which it seems like they offer. If so, that’s huge, because the money is still likely tax-sheltered. If not, then yes, it has lost its IRA status and no longer accumulates tax free, which is really lowers returns. Third, the biggest issue here is concentration risk both in precious metals and in the company itself. You need to find out if Noble Metals accounts are protected by SIPC for one, in case the company fails due to bad management. The metals market is frothy and she is taking a huge risk by going all in on metals after a significant run up already. A portion could make sense, if she is worried about the USD, but all-in is extremely, extremely wreckless, especially for that amount of money and for her age. She did it because of “God” and all that nonsense, so it will be hard to convince her, but your best bet is to try to get her to diversify at least some of it. Try to get her to put at least 80% back into a 60/40 portfolio in an account at a reputable financial institution (hopefully it’s still in an IRA). If nothing else, try for 10 or 20%. For your own well-being, consider that, ok, gold may halve from here and silver might drop 60-80%, but not all is lost in that case either, but she’ll probably run out of money in retirement. So think about options for her if so. If she has a good bit of home equity, a reverse mortgage could keep her out of poverty, for instance. If nothing else, make sure she waits till 67 to claim social security if she hasn’t already.

Administrative_Bet28

Is there no reason to worry about SIPC protection limits if one brokerage fails?

Motor_Technology2695

Consolidating at Fidelity is the superior tactical move. Multi-brokerage setups are often relics of the pre-2019 commission era. They add friction without adding alpha. Because your focus is Roth conversions, centralizing tax data is paramount. The 2008 crisis highlighted counterparty risk, but for SIPC-protected index investors, platform fragmentation is just a management burden. Which makes simplicity your greatest asset.

villanyibarni

As other said, regulated brokers must join SIPC. I think they can provide up to $500k in protection. Dont let this worry be spread, or it'll come true bro.

Portfoliana

Your stocks are yours, they dont disappear if Robinhood goes under. SIPC covers up to $500k in securities so youd just transfer your holdings to another broker. The actual worst case is some temporary freeze while things get sorted out, but you wouldnt lose your shares. Brokerages are legaly required to keep customer assets seperate from company funds. That said if your really paranoid just use Fidelity or Schwab. They’re not going anywhere lol.​​​​​​​​​​​​​​​​

lupindub

They are covered by SIPC SIPC covers up to $500,000 in securities and cash in a brokerage account, with a $250,000 limit for cash

_rockthemike

I’m sure your investments through robinhood are covered by SIPC

Over-Computer-6464

I have two brokers, not because of fear of loss of assets but the very real risk that accounts get locked down for concerns about fraud or KYC/AML issues (know-your-customer and anti-money-laundering). The real protection is that SEC Customer Protection Rule 15c3-3 requires brokers to segregate fully paid and excess margin securities, and they are not allowed to use those securities to pledge against the brokers own debts. SIPC insurance is really only used in cases where a broker has committed fraud. Otherwise, when a broker goes bankrupt the fully paid customer assets are just transferred to a new broker. Creditors cannot claim brokerage customer assets.

DardoAkaJimmy

SIPC protects 500k per account if they go under. assets are yours not theirs so bankruptcy shouldn't wipe you out. hacking is the scarier scenario honestly but major brokerages carry extra insurance. i'd probably split at like 750k+ just to sleep better

Vegetable-Twist-6689

SIPC insurance covers up to 500k per account anyway, so unless you're sitting on millions you're probably fine with one solid broker

SirGlass

>when you “buy” a stock, you are really just putting money into essentially a giant pool. When you “buy” a stock on the app, Robinhood purchases the stock and holds it for your account but it really belongs to robinhood. I mean sort of, but this is every brokerage on earth So when I go out and buy 100 shares of say AAPL stock on schwab/vangaurd/fidelity ; and lets say I hold for years, AAPL won't know sirglass owns 100 shares. Those 100 shares are registered to schwab my brokerage. Now this is not some conspiracy, its simply easier to keep track of like 5000 odd brokerage houses vs 3 billion individual investors However this is only in registration , you own the shares, like schwab cannot take the shares away from you, schwab creditors cannot lay claim to the shares or anything like that, if schwab gets in some sort of finacial trouble it cannot take your 100 shares of AAPL and sell them to pay its bills They are not IOUs like some people claim . Now for RH they are a registered and regulated brokerage they have SIPC coverage like almost every USA based brokerage. So they won't "steal" you shares or something. However RH has intentionally gamified its brokerage and uses nudges to try to make you trade, and it large part it works RH customers trade much more frequently then customers with other brokerages, and from nearyly every single study on earth , on average the more you trade, the worse you do. Now you can say "Yea but I won't trade I will just buy on hold bla bla bla" however just remember RH business model works, people on RH do infact trade a lot more than average. So can you really just ignore all their nudges ?

Ok-Educator5253

If you hate the clunky interface at your bank you are going to hate Fidelity. I transferred there thinking it would be better. Didn’t care for all of Robin Hood’s gamification. Transferred back as soon as ACATS was done. Mobile app (which is what I use) was basically unusable. All these major sites are going to be SIPC insured for investments. Plus FDIC insured for the sweep. Robin Hood also has extra layers of cyber security underwritten by Lloyds of London for crypto security.

reaper527

they're fine, and they're definitely a company that isn't going to disappear over night. you get some people who throw temper tantrums and make ignorant comments stemming from regulatory stuff related to the meme stock craze of 2020 and citadel. that being said, it doesn't hurt to use a few different brokerages. they all have things they're good at and things they're not good at. (RH's dividend tracking is completely atrocious for example, but their margin rates are the best in the industry) splitting between multiple brokerages also gives you a little extra piece of mind when you eventually grow to the point you've exceeded the 500k cap for SIPC coverage since that covers 500k **per brokerage**.

lupindub

FDIC is to insure bank deposits, I think you are thinking about SIPC. Regardless, being a publicly traded company has nothing to do with being covered by SIPC since there are plenty of brokers like Fidelity who aren’t publicly traded but are still covered by SIPC

LordSnarfington

Retirement accounts are SIPC insured up to 500k and even has supplemental insurance on top of that. Even if they went out of business SIPC would do an asset transfer to another broker, if HOOD was worse and they don't even have your shares SIPC would buy them to make you whole. If you're above 500k it may not be a bad idea to have multiple accounts but that's just generally good advice

SonyShooter35

Highest transfer bonus I've seen. AFAIK they're legit, you're money is SIPC insured so I think the risk is pretty minimal.

zonk84

Meh, setting aside *managed* options -- The key is that your brokerage platform should be a member in good standing of SIPC and FINRA. That guarantee nothing except reporting compliance of course. Personally, I have two different platforms: Fidelity and Wealthfront. The former because they service my 401k plan - so all things considered, I chose to use them for "taxable individual investment account". I like the platform generally and everybody is no fee nowadays on pure buys. I have Wealthfront because they're my HYSA - I also have a taxable robo-ETF and more recently, I use them for my Roth IRA. I like it a lot. Regardless though, it's more "type of account". WF recently started handling fractionals, FWIW. I see zero reason to have more than 2 -- and I think 1 (assuming SIPC/FINRA) is fine. I only have the two because I don't have a choice with my 401k and I just liked the robo options with WF more than Fidelity

MoreLogicPls

It's SIPC insured up to $500k, so you're fine. I also have multiple brokerage accounts in case I need money quickly and there's an internet outage type situation

Barry-Zuckerkorn-Esq

Just because everything is shades of gray doesn't mean that some aren't lighter or darker than others. Yes, sticking money into a global index tracker is a bet that: * The broker will actually keep shares of that index fund in the appropriate amounts on your behalf, or at least that SIPC insurance will make you whole if your broker fucks it up. * The index fund itself will properly track the index through its own portfolio management. * The underlying securities reflected in that index will have some value in 30 years, from a spectrum of a poor return all the way up to a good return. If you want to call that semantically gambling or not, I don't have a strong opinion on that. But it's not totally risk free. And thinking in terms of risk is more productive than trying to draw the line between types of risk that do or do not qualify as "gambling."

mjd5139

SIPC insurance has a 500k limit. Reputable platforms have additional bonds and insurance covering accounts but spreading assets across platforms is a good idea.

thethrifter

SPAXX and FDLXX are money market funds. They act like a HYSA except they are SIPC insured instead of FDIC insured. (Both up to 250k) The 75k principle is not affected unless there is a "breaking of the buck" event. From AI search... ​In the 50+ year history of money market funds, "breaking the buck" has only happened three times across the entire industry and Fidelity has never had a money market fund break the buck. ​1978: A small fund fell to $0.94 due to rising interest rates. ​1994: A fund fell to $0.96 because it used risky derivatives (which are now largely banned for these funds). ​2008: The Reserve Primary Fund fell to $0.97 because it held debt from Lehman Brothers when the bank collapsed. Although SPAXX is invested on US treasuries, the value does not fluctuate like TLT or other bond funds and is pegged to $1usd. SPAXX is considered the safest money market by most standards.

crimeo

Yes, SIPC has paid out many times and never failed as far as I'm aware.

crimeo

lolwat, if they lied about the number being too high, they'd have to pay you out for the higher number anyway and lose hundreds of billions of dollars, or go bankrupt and SIPC bails you out

cookingboy

Well we’ll see on how it turns out. If it’s all a scam like you said then I expect these platforms all get sued into oblivions along with investment bankers that sourced larger deals to the order of tens of millions of dollars. MV has been around for a long time and is a registered broker dealer that is overseen by the SEC and is part of FINRA and SIPC, so I doubt they’d intentionally scam people for relatively small amounts while risking the fate of the whole company. I put in money in mid-2020, and now thinking about it those opportunities practically disappeared after 2021, maybe it has to do with shares no longer being available.

std_phantom_data

I turned it off because the lent shares are not covered under SIPC insurance. So if the company has issue you could just lose these with no recourse 

Dr_Dick_Dastardly

Think it's an individual circumstance type of decision. The advantage is that you may make a little extra money, which is nice if you're talking about a stock that doesn't pay a dividend. Disadvantages are you can't control which of your stocks are lent, dividends become cash payments (if you were trying to DRIP), and it can cause some weird tax implications. Liquidations or being wiped out is a bit more difficult to say. You maintain ownership and can sell your shares at any time, but you're no longer covered by SIPC insurance. You won't lose the shares no matter what happens to the borrower, but if Robinhood itself goes under, you could lose them. Robinhood claims it will pay you a cash equivalent if that happens, but who really knows what would happen. When I looked at it, I realized the little bit of money I might make wasn't worth the headache if something went wrong.

virtual_adam

So to my point * you have no idea how their platform is secured , if they have government SIPC insurance (they don’t). It would be very easy for them to just say their system was hacked you lost your money. Sorry * like I said it’s free money for them regardless because even if 1% of their trades are profitable, that’s where they make money, and they don’t owe the 99% who lost everything anything. You take all the risk and no reward. They take no risk and 10% of any reward

OkCan7704

One brokerage is fine honestly. JP Morgan's insured up to $500k anyway (SIPC), so your money is protected even if they go under.

marinsteve

Custodial diversification is a thing, especially for accounts over the SIPC 500k limit and where liquidity is very important. If a broker fails, what you lose for a while is access to your money. You'll get your shares back eventually, but you may be out of pocket for a while.

atheos42

Unless you have assets that exceed the SIPC limits, I would use a single broker. 500k in securities and 250k in cash.

teckel

Frozen is not the same as wiped out. I've been frozen out of my brokerage account temporarily due to a network/software issue. And with investment assets, the broker is just a custodian, this means SIPC insurance isn't even needed. There's also secondary insurance. If you can give an actual custom who was wiped out, please share evidence. If you can only claim potential losses due to a temporarily outage, that's not at all what we're talking about and has zero to do with being "wiped out". I sold nothing in 2008 during the crash. I did do some buying in 2009. Basically, show some actual cases of customers being "wiped out".