Reddit Posts
Brokerage failure and margin accounts and short lending
What's the absolute maximum you can have in Robinhood?
Whenever u r using US exchange broker, Make sure it's SIPC registered.Because The US govt under securities & investor exchange protection act will return ur money in any case. I am using ALCAPA. India is not a problem everything is SEBI registrated.
Does anyone insure their account more then SIPC offers?
Fidelity Removes All Money Market Sweeps Except FCASH from Non-retirement Accounts
Looking for a new Broker and trading platform!! Suggestions needed!
SIPC Coverage - Is it per Broker, per Account, or something else?
Why does my margin balance keep growing despite not buying on margin? Also FDIC insured deposit?
CME Group: if you think WTI is a manipulated commodity or a necessity- it once upon a time was until 1983
What'd happen to my t-bills if they mature during the default of a broker ?
SIPC insurance limits - combined for multiple broker accounts?
Shorts too far on this! Too early for accurate short data. $CWD is Starting to Bounce from Extreme Oversold Zone!
Back to the NAZ! $CWD is Starting to Bounce from Extreme Oversold Zone!
I have some money I'd like to put in HYSA, but I have some questions.
How are your deposits and investments protected if your bank bankrupts?
How are your deposits and investments protected if your bank bankrupts?
ELI5: How are Government money markets held primarily in agencies and repo agreements not the absolute safest places to store money, even above FDIC or SIPC?
SIPC limitations for currency held on a brokerage account
Are ETFs protected by SIPC? I didn't see ETFs in the list of securities protected by SIPC at https://www.sipc.org
What investor protections exist for the cash that is held for cash secured puts?
Are money market funds like VUSXX considered a security? Do you still own the security if the firm fails?
As an individual investor, what risk do I have if my broker goes under?
For Those Over FDIC (or SIPC) Limits, What's Your Strategy?
SIPC insurance: Is it meaningless if a brokerage goes bankrupt?
Silicon Valley Bank $SIVB Collapse Explained Like I'm 5:
Silicon Valley Bank $SIVB Collapse Explained Like I'm 5:
Silicon Valley Bank $SIVB Collapse Explained Like I'm 5:
Silicon Valley Bank $SIVB Collapse Explained Like I'm 5:
NO SIPC INSURANCE on Lent out shares during a Bank Run. It is YOUR Responsibility to make sure it is turned off. Here is how.
Is it safe to leave a large amount of money in fidelity?
eToro vs Revolut: Which Platform Is Better For Trading and Investing
"Fully Paid Securities Lending" rates and general opinions on programme
SIPC Coverage / Splitting Money Across Multiple Financial Servcies Companies
Question about SIPC insurance, "Customer Name Securities" in terms of brokered cds.
public.com offering up to $10k for transferring stocks?
Claiming your stocks via SIPC when your broker goes bankrupt
Do any of you keep amounts above FDIC/SIPC limits in your accounts?
Hey, Working stiff here.🙋♂️ I have an important question for those who know more than me.
Fidelity representatives are trying to help buy their technical issue is putting me at risk of margin call. Fidelity also removed my post
What happens if Webull vanquishes due to liquidity issues
Mentions
If only this is what SIPC did hahah
Hi i was told any losses on robinhood are insured by SIPC, i would like a refund please 🤓
1) SIPC protects against the brokerage failing - [SIPC - What is SIPC?](https://www.sipc.org/for-investors/introduction) 2) No, TOS Is very powerful and capable that can help you make more profitable trades, plus manage your account better. Like learning to drive a Ferrari you will want to learn how to handle such a powerful broker app. Take the time and learn it. There are many videos and other training online, but it will take some time. Start here - [Learning Center (thinkorswim.com)](https://tlc.thinkorswim.com/center) There are many on r/Thinkorswim who can help if you get stuck. 3) Click 'All', then 'Filter and then 'Order Status' to get what you want. It really is not that complex. In general trading is better on a desktop and full screen, so you always give up something when using a mobile device. However, many are able to use phones or tablets to trade. Tablets can offer a better experience, and some laptops can be very small. As you are limited in what you can do during the day, you might consider finding a strategy that will not require as much interaction. Things like opening 30+ dte so that there is less need to make adjustments, and automating closing using GTC limit orders can both be very helpful. It's all about the strategy and process to fit it into your schedule.
OP also doesn’t know the first thing about brokerages. They don’t need a bailout. If they go under your money is insured through SIPC for $500K per account. And that’s not even accounting for the fact that all your invested securities are held in a separate firewall outside of the brokerage’s legal reach. Meaning that if there is a cash shortage at say Fidelity, they aren’t allowed to touch your investment accounts and you don’t lose anything unless they break the law and start giving away your property. And no manager at Fidelity wants to go to jail for that, and even if they do, that’s when SIPC insurance kicks in. If they go bankrupt the ONLY thing you have to worry about is a few days of no access while everything is sorted out and your entire acct is transferred to another brokerage. And to play devils advocate, if they ever do need a bailout (this has nothing to do with the safety of your assets but it’s to preserve jobs and the too big to fail scenario)… in what world is the gov not going to bail out Fidelity???
WellsTrade even though I know I’ll get slack but they have been heavily regulated the past few years. Their brokerage is very good I have a Schwab and Fidelity for comparison. Their brokerage is covered by SIPC and Lloyds. You can buy stock fractions starting at $10 and you can buy anything. You’re not limited to the S&P 500 like at Schwab it’s much cleaner and you avoid a lot of the junk stocks Fidelity likes to show you. In addition you can connect a Wells Fargo checking directly to it and you’ve got branches you can visit for help or to deposit into your checking or brokerage. Also I’ve never used a computer I’ve strictly used WellsTrade on my iPhone works great!
Robinhood and Vanguard are your best options. Also, you could just use Fidelity too. All the brokerages in the U.S. have the same SIPC insurance. They’re all equally safe.
I still dont understand. Youre worried Robinhood will go bankrupt? Why? Your holdings are covered by SIPC and will simply be transferred to another brokerage in the extremely unlikely event that happens.
Most likely failure mode is they get acquired by another brokerage. SIPC is mainly relevant for cash. Securities are held at DTC, even in a messy failure those should be fine. But it would be annoying for sure
My only concern is that you need to keep your money there for 5 years. Will Robinhood be around in 5 years? I don’t know. SIPC only covers up to $500k.
>it's pointless opening new accounts with the same provider It depends. Some people like to have separate accounts to segregate trading vs investing. Different account types are also treated separately - so a Roth account and a taxable account are considered separate accounts for SIPC coverage. So are joint accounts from individual accounts. In general - unlike banks - because customer brokerage accounts are separate from the broker's balance sheet - it's usually not an issue. That's why there are rules for things like margin and net cap requirements, security collateral, etc. for brokers.
Thanks for clarifying that I'm looking at SIPC and not FDIC. > Note that like in banks - multiple accounts of the same type in the same name are aggregated for coverage purposes so having multiple taxable accounts in your own name is the same thing. Interesting, so it's pointless opening new accounts with the same provider. > However - many brokers also carry what is known as excess of SIPC insurance so that the insurance limits are much high - usually in the several million-dollar range. That's good to hear - and makes my (future) worries easier. It's unlikely I'll ever have more than a million or two, lol.
I think you are misunderstanding a few basic things. FDIC provides insurance coverage for bank depositories and not other types of accounts. A brokerage account is structurally different than a bank. Brokerage accounts are legally segregated from the operations of a broker. So - if a broker becomes insolvent and the business is seized by regulators - the SIPC arranges for the orderly transfer of the accounts at the failed broker to another broker. The SIPC will also insure the brokerage account if assets are missing up to 500k including up to 250k in cash. See here - [https://www.sipc.org/for-investors/what-sipc-protects](https://www.sipc.org/for-investors/what-sipc-protects) Note that like in banks - multiple accounts of the same type in the same name are aggregated for coverage purposes so having multiple taxable accounts in your own name is the same thing. However - many brokers also carry what is known as excess of SIPC insurance so that the insurance limits are much high - usually in the several million-dollar range. It's also important to note that the way that custody works in a brokerage account protects investors. A good example is what happened with the massive fraud that occurred with FTX in the US. When FTX failed and was seized - only crypto accounts were impacted. FTX customers who hold stocks and ETFs have their stock accounts in a separate custodial accounts and those accounts were all unaffected by the fraud and eventually transferred to other brokerages when the FTX custody company also failed.
FDIC insurance covers bank accounts and CDs, not brokerage accounts. SIPC is what helps cover if you if something weird happens at a brokerage. If you're really worried about your brokerage failing, then why open multiple accounts at the same one?
SIPC doesn't protect against "breaking the buck". Extremely rare but people should not think that SIPC is the same as FDIC.
It’s VERY safe. Not only does Fidelity money market accounts use SIPC, they have additional coverage thru Lloyds of London. I actually prefer FDLXX, most of the earnings are state tax free.
It’s very safe there. While not FDIC insured, it is SIPC insured. Plus it’s ~5% yield now. If you have a Vanguard account VMFXX is at ~5.25%
Agree. For those worried, SIPC covers up to 500k and RH has purchased additional insurance on top. https://robinhood.com/us/en/support/articles/Account-protection-with-SIPC/ Finally, IF RH went under they would be scooped up by another brokerage and moved over.
You have a self managed, you signed a arbitration agreement. You’re talking about pennys. SIPC covers only if the broker failed.
I just transfer my Roth IRA from Schwab of around 40K and got over 1K of free money with the 3% match. Immediately got VTI (90%) and VXUS(10%) invested. I won't look at that account again until next year to make a contribution and re-balance. I'm also on the credit card wait-list, which I see as a 4% cash back on everything with no caps because if you redeem that 3% cash back to your brokerage they will match with an extra 1%. That 1% match is making me also think about moving funds from my brokerage at Schwab, but haven't looked at the terms yet. I don't know why people hate Robinhood, they look like a no brainier to me and they are SIPC insurred. They are even better for not invested cash at 5% APY.
Take it a step back. The deposits are in a sweep account and are FDIC and/or SIPC insured.
> there is very limited risk that the FRN yield could drop below the fixed T-bills and underperform but the risk of market losses are very close to zero, and small even if the worst comes to pass. I don't care about underperformance. I care about losing the capital. So I think I am sade here. > Maybe iShares would commit financial fraud on a literally unprecedented scale and not own the underlying securities lol I have 500K SIPC insurance so I should be fine then too.
Is it safe for European investor (Poland )to hold ETF? I’m new in investing. 37M from Poland. Started to read posts here from February. I’ve bought some Vanguard and iShares SP500 on Revolut and XTB. Now want to start with IBKR. But now I have concerns about safety of my funds. 1) Revolut - it’s written, that they don’t hold any stocks but third party company does, that SIPC protected for 500k$. So it’s ok, I don’t need to worry? 2) XTB - 100% till 3k eur and 90% for 3-22k eur. So it’s safe for investment of 3k eur. Not interesting 3) IBKR - for Poland it is Interactive Brokers Ireland. And there I see 2 different statements. One - that 90% til 22k euros are protected , and second that SIPC for 500k$ Can somebody tell, if it is safe to keep 100k eur in Revolut and IBKR Ireland ?
Some relevant background learning if you are not aware: You have to pay for safety. On a real basis, after tax, etc, "safe" assets generally lose to inflation(with rare occasional exceptions). Roughly in order of safety: * FDIC insured accounts (HYSA, CD's, etc) * Treasuries(to include I/EE bonds, tips, etc) * Money Market funds(MMF) (SIPC insured) * Cash like ETF's (SGOV, ICSH, USFR, etc) * MYGA's (SPIC insured) * Bank Accounts not FDIC insured, i.e. you went over the FDIC limits. * Stable Value Funds (SVF) * Municipal Bonds (not guaranteed, but generally state income tax free) * Short term bonds * Medium term bonds * Long term bonds * Real Estate(un-leveraged, i.e. no mortgage) * Preferred Stocks * Annuities, not SPIC insured * Leveraged Real Estate (i.e. mortgaged) * Equities FDIC insured accounts, MMF, generally lose to inflation. Some treasuries should keep up with inflation at least(TIPS, iBonds, etc) but after taxes, you probably won't. MYGA's are in the same boat, you might be able to beat inflation, but maybe only barely(and involve lots of insurance paperwork, apparently) and after taxes, doubtful. Bonds can beat inflation, but there is zero guarantee. bonds except for the past 40-ish years have not even kept up with inflation. This is the rare occasional exception, alluded to earlier. Real Estate will probably keep up with inflation, and if you treat it like a real business, you might even make some money. Preferred stocks should beat inflation, but takes on considerably more risk than everything else above it, but after taxes you probably can make a little. Equities should handily beat inflation, risk is obviously higher. The safer the money, the less people are willing to pay you for it. There is no free lunch.
Not everyone has access to good MMF's. State tax exemption is another piece of the puzzle, and once you get past SIPC insurance levels of cash/cash like things, it mostly doesn't matter if you are in a MMF or not. Also, if you have funds across brokerages, something like SGOV can be nice since you can own it across all of your accounts, unlike most MMF's which are generally very specific to a particular brokerage. There is also USFR, ISCH, etc there are quite a bit of these cash-like ETF's out there.
Your shares are either sold and returned to you or transferred to another broker. Also, the first sentence on the SIPC website says that cash and stocks are protected. So I’m not sure where you got that from. https://www.sipc.org/for-investors/what-sipc-protects#cash Vanguard is owned by its customers. I don’t even use vanguard but I know it’s secure and reliable. There is still no difference in insured risk between someone’s ETF in Vanguard and your stocks. There is a greater risk in your single Tesla stock going to zero because of its rash founder.
So like you said, has nothing to do with what you previously said. SIPC is a false security.
I know how they make money. They have an expense ratios which they charge to hold their funds among other financial services. So like I said, for them to go under, they’d have to have a shit load of people pull their money out of those funds which could really only happen if people lose faith in the underlying companies. So like I said, a lot of companies would need to fail. That said, there’s SIPC which covers you up to 500k and I believe vanguard holds their securities separately from everything else so in the event vanguard goes under, the securities would be moved to another custodian.
Even if RH fails they don’t own your assets, so it is still going to be there for you to transfer to other brokerage. SIPC comes in only if RH was a complete fraud such as did not buy assets at all and just pocket your money, which is extremely unlikely. Even then the insurance covers up to 500k. There probably isn’t any case out there from modern times where investors lost their assets/cash from brokerage going under. US laws have made brokerage safety proofed, you can be worry free with any brokerage if you aren’t a trader.
Safety doesn’t matter, it is all covered under SIPC and FDIC. Robinhood gold also comes with other benefits, 3% contribution as well (not just transfer), 3% cc cashback, 5.25 apy cash sweep, etc. Any one of those benefits already outweight the $5 fees. Plus being able to match over the Roth limits is itself a feature.
why does it matter if I trust them? they’re SIPC insured AND Robinhood purchased additional insurance for its customers covering securities and cash up to $1 billion and cover each customer for $50 million in stock and $1.9 million in cash.
If you wife is paranoid to the point where she doubts the government, SIPC, Fidelity, and VOO/SPY split with some US LTTs then she has bigger issues and paranoia than could be easily dealt with by some diversification. If really REALLY believe that then you can "diversity" some of that cash into rural land, a bunker, food rations, and bullets. Go directly to ~~jail~~ spending money; do not ~~pass go~~ preserve wealth, do not collect ~~$200~~ dividends. Cause that's what you'll need when the inevitable collapse and nuclear-world-war-4 black-hole-swan super-pandemic zombie-apolocylpse great-great-great-depression-recession revolution comes.
The SIPC doesn’t protect the value of your investments. When RH fails to deliver you shares due to insolvency, the SIPC will just replace those shares at whatever mark-to-market it’s at and then laugh at you.
Robinhood is SIPC insured.
I use it too and I’ve seen several others in here. It’s superior to Robin Hood in terms of features. It pays 5% on cash in a cash management account with no fee for doing so. Good mobile app. Good signing bonuses. FDIC and SIPC insured. The downside is it’s Chinese owned.
RH can raise the price of Gold at any time. Also SIPC can take money months to resolve in the event of insolvency. 5 years is a long time for a bonus hold on my IRA funds. I decided not to do the deal, but it was a very tough decision.
Them holding your securities is fine. They are SIPC insured up to 250k. If you’re worried about solvency, transfer some holdings and “risk” to another broker.
Yeah I do think it's a good deal overall. Robinhood is desperate for customers so they're making some pretty attractive offers. Agreed though, let's just hope they don't rug pull. Btw, they automatically opt you into their stock lending program by default. You only earn 1% interest on any stocks that get loaned, and any loaned stocks are not insured in any way, SIPC or otherwise. If Robinhood goes out of business, you lose 100% of your loaned stocks. You can make your own decision on this one, but for me 1% yield is not worth a potential 100% loss, and Robinhood's financials are kinda shakey. I think they've gotten better with the crypto pump as crypto trading is something they depend a lot on to generate revenue as they stated when they IPO'd and I doubt they'll actually go out of business, but it's still not worth the risk to me at least. Also kinda shady that they default you to the lending program. I only found out because I got a message that some of my stocks got lent out. As soon as you opt out though, you get them back.
I have the 3%. You just gotta keep the funds with Robinhood for 5 yrs... I say go for it. People that have a problem with them complain about the meme event. If Robinhood goes bankrupt they'll either be bought by another broker and those accounts will be part of the brokerage or if they flat out go bankrupt you're insured up to 500k through SIPC. You can listen to other people about Robinhood but I know I'm insured. I am getting their credit card also which will give me 3% on everything as well. I'm not a huge Robinhood fan but the benefits are worth it.
The government normally steps in. Investments are usually insured up to 500k via SIPC.
What do you say to fearmongering that RH will collapse any minute and the IRA accounts they broker will fold. I don't think that's how it works. If RH is insolvent then whoever acquires the assets will broker those accounts. I don't think SIPC insurance is really relevant.
Several brokers offer similar programs - Fidelity’s cash management and retirement accounts are swept across 20 banks for $5m coverage, and next $500k swept to SIPC-covered money market fund. Their FDIC sweep currently pays a lower 2.72% APY, while the money market sweep is 4.96% APY. Taxable brokerage accounts are swept to money market only. You can also beat RH’s APY with many other HYSA providers without the RH Gold subscription fee, but don’t get a partner program for expanded FDIC coverage.
This is what Fidelity says on it's website: "Fidelity helps protect assets two ways: through FDIC insurance and SIPC coverage, depending on the type of account. Fidelity offers an FDIC-insured Deposit Sweep Program for certain account types: Cash Management health savings accounts (HSAs) and most IRAs. SIPC coverage protects assets held in brokerage accounts, including stocks, bonds, mutual funds, and money market funds." That's why I mentioned the FDIC but I did already know about the SIPC.
Well its SIPC that provides insurance for brokerage accounts not FDIC And SIPC is different vs FDIC; SIPC really covers "missing assets" So if you hold 1000 shares of VTI in your brokerage account and somehow those shares go "Missing"; SIPC will work to make sure you get 1000 shares of VTI back. It does not cover if VTI loses value that is just a legitimate investing loss SIPC does cover 250k of uninvested cash.
> I have several IRAs and 401Ks, one of my IRA accounts is sitting at Fidelity but it's over the FDIC limit and I'd like to pare it down to $200k, the other half I'd like to move to Robinhood because the FDIC will only protect one of each type per customer per bank and RH has a 3% bonus on where you deposit. Let's stop here because I believe you have a substantial misunderstanding of how insurance coverage works. Investment accounts generally do not receive FDIC coverage with some small exceptions (sometimes cash held inside an investment account). Investment accounts instead have SIPC coverage. And most large brokerages have additional insurance coverage above and beyond what SIPC covers. https://www.sipc.org It's important to understand what SIPC covers and the difference between banks and brokerages. With a bank, when you deposit your money the bank is entitled to mingle it together with other depositors and then lend it out to people. So if the bank were to experience a liquidity event, your money potentially isn't there because it's been lent out. But a brokerage doesn't do that. When you open an investment account and buy, for example, $200,000 in Apple stock, the brokerage is just a custodian and record keeper. Your Apple stock isn't being mingled with other peoples' Apple stock. If the brokerage were to completely fail and go out of business, your portfolio of Apple stock would just be moved to another brokerage. Broadly and simply speaking, what SIPC coverage protects you from is fraud. So if you go on Fidelity's web site and put in an order for $200,000 in Apple stock and they take your money and instead buy cocaine and hookers, you've been defrauded and SIPC insurance will step in and make you whole. I can all but guarantee you that Fidelity is not defrauding you. It is very, very common for people to have investment accounts in the six and seven figure range. There is simply no reason for you to try to spread around your investments to keep them under the FDIC limit. You are just adding unnecessary complexity. I hope this puts you at ease.
Yeah my only concern is if you have an account over SIPC limits and RH kicks the bucket
It depends on the size of your account. Like all brokers, the account values are insured up to levels depending on the broker's excess-of-SIPC insurance. Cyber-attacks also vary greatly. So - for attacks that target a broker's customers, you also have to practice some level of diligence like picking good passwords, not falling for spear-phishing, etc.
There's some custodial risk and SIPC insurance covers 500k per individual per account, but that's not a big one that keeps me up at night. There are some nice perks to having separate accounts (better loan rates, credit card bonuses / foreign fees, waived wire fees), and it's easy to track across accounts with an app. I don't like having bank connections to accounts, so I made [an app to track my investments](https://jch.app?s=i), but there are lots of options (previously, I used PersonalCapital) out there.
Unless your account is holding cash, when your broker goes bankrupt, you still own all the securities. When you sell, your broker isn't the one buying, so worrying that they won't have the money to cash out is unnecessary. So all your shares can just be transferred to another broker and life goes on. SIPC only protects cash and missing securities. And most brokers have extra coverage beyond the SIPC limit.
Right now, I hold stocks, etfs, etc with one broker, and have a HYSA at a different institution. I'm thinking of moving a big chunk of the money from HYSA to SNSXX for better returns (due to taxes) and easier management. It does feel like I'm keeping too much of my money in one account, but as long as I stay within the $500,000 limit for SIPC, this should be pretty safe right?
Anything invested is insured by SIPC, but that's only up to 500k.
I think that maybe you are very confused about how stock investing and share ownership works. First - what country are you in? The laws and regulations that govern the operations of a broker vary by country. In the US - the concept of an omnibus account is a normal occurrence and requirement for all brokers. That's how a broker separates customer funds from their own operating funds. So if a broker becomes insolvent or bankrupt, when regulators seize the business - the customer funds are separately held and can be recovered or transfered to another broker. Stock and share ownership is normally held in street name - that means that a custodian holds the shares of a customers and registers the ownership with a transfer agent. If the broker, custodian, or transfer agent goes bankrupt - management of the shares are simply moved to another company. In the US all brokers and custodians are required by law to be members of SIPC - this organization is an insurance mechanism that will fund the recovery of customer funds in the case of broker or custodial broker insolvency. Most countries also have regulators which mandate how much capital and collateral brokers must have to remain solvent and manage risk. If you are not in the US - countries like the UK, Canada, etc, have similar mechanisms. Tl;dr - you are focused on the wrong things when selecting a brokers - see the wiki here for some factors that you want to consider when selecting a broker - [https://www.reddit.com/r/investing/wiki/index/gettingstarted/#wiki\_how\_do\_i\_choose\_a\_broker\_to\_invest.3F](https://www.reddit.com/r/investing/wiki/index/gettingstarted/#wiki_how_do_i_choose_a_broker_to_invest.3F)
>People thought that was true with Madoff, and SBF, and others. Madoff was running an un-registered hedge fund, there is a reason you have to be an accredited investor to invest with a hedge fund because there is little to no oversight so you are expected to do your own due diligence SBF was running an off shore crypto exchange , and an offshore hedge fund You are really comparing apples to oranges here. Brokerages , ETFs, Mutual funds are pretty heavily regulated by a number of organizations FINRA, SEC, SIPC , independent auditors. Hedge funds or shady offshore exchanges might not be. Also Mutual funds/ETFs are basically their own company ; if Schwab goes bankrupt is cannot just confiscate shares inside SCHD/SCHX/SCHB and use it to pay their debts, because its not "their shares" the fund owns the shares
For the SIPC limit, my brokerage portfolio exceeds the limit, is the 250k for cash a separate limit? e.g. if I have 250k in cash and 500k in stocks in vanguard, It would protect 250k in cash and 250k in stocks? Though it might not matter that much. If vanguard goes bankrupt I have bigger things to worry about :P
Assets in a brokerage account are insured by [SIPC](https://www.nerdwallet.com/article/investing/sipc-insurance-what-it-does-and-does-not-protect) rather than FDIC.
>One thing I know is that if vanguard goes bankrupt the money wouldn't be protected like HYSAs but is that it? Most brokerages are covered by SIPC, similar-ish to that of FDIC for banks. Though, the key difference is that it doesn't protect your investments from going under based on market conditions, but will protect you if the brokerage itself that is holding your investments has issues. That is to say, if the US defaults on its credit, the world becomes a madmax movie, and VUSXX breaks the buck, SIPC will not pay you for lost value. However, if just Vanguard, as a brokerage goes bankrupt, your shares in VUSXX are protected. From the SIPC: >SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash. Most customers of failed brokerage firms are protected when assets are missing from customer accounts. There is no requirement that a customer reside in or be a citizen of the United States. A non-U.S. citizen with an account at a brokerage firm that is a member of SIPC is treated the same as a resident or citizen of the United States with an account at a SIPC member brokerage firm. >SIPC protection is limited. SIPC only protects the custody function of the broker dealer, which means that SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins. https://www.sipc.org/for-investors/what-sipc-protects Also, it is important to note, since I just did my taxes, Vanguard doesn't report state tax exemption very clearly (at least for VFMXX), be sure your exemption is being applied correctly, I had to calculate mine manually using this guide: https://investor.vanguard.com/content/dam/retail/publicsite/en/documents/taxes/usgoin-2024.pdf.
Most brokerages have Roth IRAs where you can get the Bitcoin ETF though you would not have custody of the coins. Keep in mind that if you find an IRA that allows self-custody of bitcoin, it may not be SIPC insured. So when the service fails, you will lose your money.
move to Fidelity it has FDIC insurance (to protect your uninvested money un your core account) and the SIPC ( to protect your brokerage account)
Come on why not  Is your broker SIPC ? Which letter does it start with ?
BTC ETFs (which many house BTC on Coinbase) are SIPC-insured if I understand correctly. Owning BTC on Coinbase is not.
BTC ETFs good for SIPC insurance
You were able to resolve the issue with your bank. The purpose of the FDIC is simply to protect you when you can’t resolve the issue with your bank because they no longer exist. Investment companies aren’t included in the FDIC because your money is invested and investment involves risk whereas at a bank your money is a deposit and can’t lose value. They need to have different working because it can lose value and is still insured by the SIPC.
SIPC is better and pays back faster.
FDIC insurance protects you against bank failure, not hacks. Brokerages have a rough equivalent in SIPC insurance, but it’s less important because brokerages are not lending out your deposits to earn an interest spread, they are just investing them for you. So even if your brokerage fails, you still own the underlying securities, and in the event of a failure, there would be a process to have them transferred to a different brokerage.
1) Brokerages are covered by SIPC, not FDIC 2) SIPC doesn’t protect you from being “hacked”
Brokerage firms are SIPC insured
FDIC does not cover your situation, FDIC covers you from BANK failure. SIPC would cover you from a brokerage failure but still not for your situation.
I have not really hear of them but honestly if you have an amount over the FDIC coverage amount I would opt not to use a bank but open a brokerage then invest it in a safe asset like an ultra short term bond ETF (SGOV, BIL) or even a government money market mutual fund Now people will point out these are not FDIC insured or you might still exceed SIPC insurance, but honestly the only way you lose money is if the government defaults on their debt, and if the gov is defaulting on its debt well FDIC (what is backed by the government) will be worthless anyway
If you’re concerned about a major broker in this way, you’d want to make sure they are SIPC insured and stay under the maximums. If insured, there’s an explicit guarantee to the securities and cash in the account.
In terms of Schwab going bankrupt, don’t worry about. In the rare event they file bankruptcy, SIPC will step in.
Do you know if SIPC counts on less established platforms like Acorns or Robinhood where you can invest in ETFs?
Its the same return unless fees vary. SIPC is often used to extend coverage to $500K. [https://www.schwab.com/legal/account-protection](https://www.schwab.com/legal/account-protection) Many firms "bank" your cash across multiple banks keeping each under $250K so they split cash for you: [https://www.fidelity.com/why-fidelity/safeguarding-your-accounts](https://www.fidelity.com/why-fidelity/safeguarding-your-accounts) And Vanguard: https://investor.vanguard.com/investor-resources-education/article/sipc-vs-fdic-insurance
I opened my own brokerage accounts and Roth IRA when I was 19 or 20 and I had the Roth maxed when I was 21 or 22. Just because you didn't have life figured out u til your mid to late 20s, doesn't mean not all people do. The Internet is filled with actually valid financial advice, and it's super easy to open real financial brokerage accounts on an app on your phone that are SIPC insured.
SIPC insures your securities and cash up to 500k (only 250k of cash) in the event of a broker dealer failure. If you transferred half of your portfolio to another BD you would be fully insured. I’m not saying that fidelity is at threat of a liquidation, but it is something to consider when evaluating your risk.
SIPC won't cover if the value drops. For example, you would lose 99% if spaxx was worth $0.01 tomorrow. I know that won't happen but that is really the difference between FIDC insurance and SIPC
[https://www.fidelity.com/why-fidelity/safeguarding-your-accounts](https://www.fidelity.com/why-fidelity/safeguarding-your-accounts) Click on the SIPC tab. tl;dr quote. ​ >The SIPC will cover up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account. And >All Fidelity brokerage accounts are covered by SIPC. This includes money market funds held in a brokerage account since they are considered securities. Learn more about SIPC coverage at www.sipc.orgOpens in a new window. and >Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment.
Simple answer: the broker holds the stocks, they are registered as the owners but have you assigned to the shares in their ledger. In the event they go belly up SIPC has you covered up to $500k
It's all true. I am mostly retired and have been doing all this a long time. Once your money is in cash it is FDIC insured in that account up to 250k It's a member for the Securities Investor Protection Corp. (SIPC), is regulated by the SEC, and has additional financial protection per customer up to certain amounts for cash and securities think if you keep up to 250k might be 500k You can search that so you can be informed about this moving forward. Those accounts are protected. They are investments, so you have to be careful what you invest in for retirement money. But if they go out of business the account is secured and you won't lose it
ETFs are SIPC insured only against fraud. The fund could go bust and you lose your money because the underlying assets go to zero, but as long as there isn’t fraud you would not be insured against losses.
Again none of that is correct. The institutions created them are seperate legal entities from the ETFs themselves. Institutions that have created ETFs HAVE gone bankrupt and not a single cent was lost because another company just took over management of the ETFs because the assets owned by the ETFs are ... OWNED BY THE ETFS not the management company. Side note FDIC has nothing to do with securities it doesn't apply at all. SIPC does but that only covers fraud because outside of overt fraud the assets of the ETF are never the property of anyone but the ETF. Blackrock can't legally lose the assets of the ETF ... because they don't belong to Blackrock.
>Can't do that with the ETF version if the institutions that prop it up fall down ETFs are their own legal entities. They are not owned by the fund operators they are managed by the fund operators. They are owned by shareholders. Blackrock can go bankrupt and short of overt fraud not a single ETF share will be lost by a single customer of any of their ETFs. Someone else would just take over management. In the event of overt fraud that is why their is SIPC insurance. This is similar to Fidelity going bankrupt doesn't mean you lose your APPL shares. The APPL shares held by Fidelity are not owned by Fidelity they are customer assets owned by customers.
SIPC is actually $500k not $250k. It also is $500k in actual losses. In the event of fraud it is unlikely the loss would be entire account balance so $500k in SIPC insurance would protect against non-market losses for millions potentially tens of millions of ETF shares.
>I use International Brokers (IBKR) which runs as an Australian subsidiary, the website has .au at the end. As far as I know IBRK still falls under SIPC; because of that all customers are protected even ones outside of the USA. Meaning I think it would be as safe as schwab ; being based in the USA its regulated by SIPC, FINRA and because both are publically traded companies they are regulated by the SEC and independent auditors Schwab I also know carries excess SIPC coverage , and it has private insurance. Meaning, with so many eyes on it (and private insurance that will also monitor it because it does not want to be on the hook for billions) I just see almost no scenario where customers lose money or the potential for fraud
It is SIPC insured for 500k like other brokerages. Look up SIPC, then confirm that robinhood has it (it does)
Learned something new today. It’s not FDIC insured, but SIPC ensured up to $500k
good question, I thought it was a federal entity, however according to wiki: >The Securities Investor Protection Corporation (SIPC /ˈsɪpɪk/) is a federally mandated, non-profit, member-funded, United States government corporation created under the Securities Investor Protection Act (SIPA) of 1970\[3\] that mandates membership of most US-registered broker-dealers. It seems its the same sortta governance structure as FDIC as well: [https://en.wikipedia.org/wiki/Federal\_Deposit\_Insurance\_Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation). And I see other entities such as Tennessee Valley Authority are a US government corporation.
Wow thanks so much for this will laid out post! I appreciate it a ton! Is SIPC federally backed like FIDC?
I'm in a very similar situation as you and had the same questions. I ended up pulling the trigger. Here are my thoughts and why did it: Robinhood is SIPC insured, so you'd be made whole (up to 500k) in the event Robinhood goes belly up: [https://www.sipc.org/for-investors/what-sipc-protects](https://www.sipc.org/for-investors/what-sipc-protects) I'll add Robinhood is a regulated brokerage, crypto doesn't have the regulation other sectors do nor do I think they have any similar insurance(?) Robinhood's Cash Sweep program banks are FDIC insured, however I don't think its possible to cash sweep the IRA (investment account only). From what I read (cause I had the same reservations as you), Robinhood stopped trading during the gamestop stuff, however many other brokerages did the same. Beyond that I haven't really read any valid criticisms (maybe they exist?). The possibility of that occurring again doesn't affect me as I'm buy/hold in index funds. I'm in the process of rolling over my old 401ks/IRA over. Plan is to buy/hold ETFs. A few thoughts: * As an added bonus, this should help me save a few hundred dollars of 401k management fees my former workplace plans were charging. * IRA match was in my account within a day or two of account funding. * Robinhood also reimbursed my $75 account transfer fee Etrade charged me. * I'm using the free Robinhood gold $1000 of leverage to invest in low risk US treasuries to pay most of the cost of Gold (mentioned above). After the 1 year is up I might cancel gold or hold it longer if interest rates are still high enough to make it cheap. * Customer support, contrary to what I've read has been fantastic for me. 2 chat supports resolved the first time by knowledgeable people who are able to read. ​ So far really happy with Robinhood -- your miles may vary obviously. If you're interested I can DM you a referral link for extra free fractional shares.
What is wrong with Apex? They are fully licensed and regulated through SEC, FINRA and SIPC
Are cash-secured puts coming at the same time as covered calls? I can't move my options flow from Robinhood until you offer those. Also, does Public release financials / any assuring data? Given you're a newer startup/private, I prob won't transfer above the excess $500k SIPC insurance unless I can see some financial strength measures. Third, does Public tag partial fills on options orders as separate tax lots for wash loss purposes? Let's say you send a 100 contract buy order for TQQQ puts, and the order partially fills 50 lots then another 50 lots, all at the same limit price in same order. If you then send a 100 contract sell order on those TQQQ puts and sell them at a loss within 30 days, the second 50 lots on your partially filled buy order will be considered a wash loss. Robinhood does that.
Thank you for your answer. Do you know how SIPC is financed in detail (couldn‘t find much on this). Would the government jump in if the SIPC has not enough money? Furthermore, is there any „evidence“ I can create as an investor so I can proof I bought certain securities?
That's basically the entire use case of SIPC.
* This article says deflation and dividends included means the actual return time was 5 years. https://www.livemint.com/Money/Oww1BVK1roWvXRUCd0VjIJ/25-years-to-bounce-back-from-the-1929-crash-Try-fouranda.html * However you're also confusing worst case with average. The quoted 25 year recovery time is for someone who put in a lump sum at the absolute peak. "Anyone who is in their 40s" as you say, would not have lump summed at the peak, so even without accounting for deflation and dividends they would be back to break even a lot quicker than you're thinking. * Lastly, a modern 1929 style crash would have investors covered by the FDIC and SIPC which were both created after the depression. These would make most investors whole even if those custodians went bust. TLDR your gloom is wildly pessimistic, even for this extreme scenario.
The SIPC protection doesn't necessarily mean that they are insuring the value of your assets. They are making sure that they will continue to fund and pay for the effort to recover those assets. There are not very many cases that the SIPC actually has to deal with. The Lehman case closed 2 years ago. And the only ongoing case is the Madoff case - [https://www.sipc.org/cases-and-claims/open-cases/bernard-l-madoff-investment-securities-llc/](https://www.sipc.org/cases-and-claims/open-cases/bernard-l-madoff-investment-securities-llc/) If you are interested - you can learn a lot about the SIPC from their annual reports which can be found here - [https://www.sipc.org/news-and-media/annual-reports](https://www.sipc.org/news-and-media/annual-reports) The SIPC is actually a pretty small organization that has less then 40 staff members.
Can you provide a source for them not having a brokerage license? Is what they on their website that they are a "registered broker-dealer" a lie? Robinhood also mentions having SIPC insurance. So, they certainly seem like a real brokerage to me. I've tried googling your specific claim but cannot find this anywhere.
What do you mean by this? Certainly news to me if Robinhood did not have its “brokerage license.” And why would the SEC allow them to operate without one? Btw this is what the Robinhood website says: > Brokerage accounts are offered through Robinhood Financial LLC (member SIPC), which is a registered broker-dealer. Robinhood Securities, LLC (member SIPC) is a registered broker-dealer and provides brokerage clearing services. Both are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).
Brokers is not the FDIC but the SIPC. With a max of 500k, and max cash of 250k.
Granted, brokerage does not matter, albeit FDIC/SIPC insured. It's up to you who you choose and how you view their practice. RBH is very user friendly. I just don't like the trading restrictions they imposed in 2021 where they faced political scrutiny and public backlash that affected the average investor. We are talking different taxable events here. The 3% IRA match RBH offers is for rollover transfers from a previous IRA/401k to their platform. OP already has a brokerage account in RBH and is not asking about rollover IRAs. Having a high-yield savings account is a safe haven but a different subject here; we are talking retirement accounts.