SIPC

Typical_Two_5746

It’s technically not as safe. I’m not sure it’s all that relevant, but SIPC protects the shares in your account while FDIC protects the *value* of your account. For example, you have 1000 shares of SGOV which is worth roughly $100k. If the value of SGOV dropped to $0 (more on that later), SIPC would guarantee the shares but they would be worthless. That same $100k at an FDIC insured bank would be secure. You would get your $100k, unless we went full mad max and the U.S. government ceased to exist. Now of course, short term treasury bills are the backbone of the global financial system so in the event of a collapse that severe, I’m not sure the dollar would have any value. But, it’s worth noting that there could be a scenario where the U.S. treasury completely defaults but there is still a U.S. government which would insure the dollars.

sleepyjuan

From ChatGPT O3 model: TL;DR – keep it in cash-equivalents, not “investments.” Here are the usual suspects, all virtually risk-free and liquid inside 12 mo: 1. 6-month T-Bills – Buy on TreasuryDirect or in a brokerage account. Yield ~5.1% today, exempt from state tax, backed by Uncle Sam. Redeem or roll when they mature. 2. High-Yield Savings (FDIC-insured) – Ally, Capital One 360, SoFi, CIT, Marcus… all floating around 4.3-4.6% APY and you can pull the cash anytime. 3. No-Penalty CDs – Ally’s 9-mo at 4.55%, CIT’s 11-mo at 4.90% etc. FDIC coverage, but you can break early with zero penalty if you find a house sooner. 4. Prime Money-Market Fund (VMFXX, SPRXX, FDLXX, etc.) – ~5% 7-day yield; not FDIC, but ultra-short gov’t paper and SIPC-protected in a brokerage. For a down-payment you must have on a fixed timeline, don’t chase anything with market risk—stick to cash, CDs, or Treasuries and sleep easy.

SirGlass

Unless the brokerage was committing fraud and co-mingling assets (what IS illegal and would be fraud) nothing, your assets are transferred to another brokerage SIPC insurance protects against this fraud , the brokerage losing your assets . Example if you have 1000 shares of VTI , and somehow your brokerage loses them SIPC will work to return you those 1000 shares SIPC will not insure the value of those 1000 shares, if VTI drops by 50% thats just an legitimate investment loss

AICHEngineer

Well they have the full backing of the united states government, and since its a brokerage account I assume they have standard SIPC coverage which replaces missing stock and other securities on the order of half a million dollars. Just use one of the big name brnad brokerages and youre safe as can be

ViolaKiddo

Two things. If you want to park it somewhere and make a decent return. A money market mutual fund may be your friend. And the second part to that is liquidating a portion to buy equities, bonds, or commodities(but mostly equities). This allows you to take advantage of different price points in the volatility. A lot of FAs would start like this when building a portfolio. That being said this isn’t financial advice I’m just a funny guy on the internet. Money market mutual funds are not FDIC guaranteed and is a security investment that can result in the loss of principal. Past president doesn’t indicate future results. That being said they are insured by SIPC in the sense as if the investment firm you invest in goes bankrupt or loses your securities they will spend up to 500,000 to recover your assets. Please correct me if I have anything wrong.

SecretInevitable

Money you will need in the next five years should be in cash. My funds for this purpose are in high yield savings, not even in a brokerage at all. You could also use a money market fund at any broker, I just favor FDIC insurance on the HYSA over SIPC for MMs, and also to resist the temptation to YOLO that money.

Efficient_Top_811

Fidelity’s Cash Management Account is a great place to park cash for an emergency fund. For the following reasons: 1) pays a decent interest rate… 2) allows access to my money by…Debit card/ATM card 3) allows me to write checks 4) allows me to pay bills in Bill-Pay 5) allows me to manage on my phone/tablet 6) money protect by SIPC or FDIC , depending on your core set-up. 7) Fidelity has 57.1 million customers….somebody must like them.

gumbo_chops

Money markets are covered by SIPC which protects up to the same amount of cash per account as FDIC, i.e. $250,000

AccidentalPickle

Money market. Check out Vanguard Money Market VMFXX. Pays more than 4%, is SIPC insured and you can easily tap it to invest whenever you’re ready.

Christopher_Ramirez_

Semantics. I can say insurance is a bet on the future solvency of the counterparty. In this case, your broker and the SIPC program.

Mrbusiness2019

SIPC gets its money from annual fees that brokerages are required to pay (kind of like insurance premiums). They have a ~$4B reserve fund, and if that’s not enough, they can borrow from the U.S. Treasury…so it’s not taxpayer-funded by default, but it has a government backstop. It only kicks in if a brokerage fails and customer assets are missing… not if your investments just lose value. SIPC is like a co-op safety net funded by brokers, with a federal credit card in its back pocket if the financial world catches fire. It’s solid for individual broker failures (like MF Global or Lehman’s brokerage arm), but not designed for system-wide collapse. In that case, you’re on your own unless Congress steps in.

Dull_Principle2761

Where does the SIPC get its cash from. I didn’t know this.

Mrbusiness2019

Many major brokerages (like Fidelity, Schwab, IBKR) also have additional private insurance that goes beyond SIPC—often hundreds of millions. In the U.S., SIPC (Securities Investor Protection Corporation) protects brokerage accounts up to: • $500,000 total per customer • Of which $250,000 can be cash

Embarrassed_News6103

I’ve had 90 shares of PNC and 30 shares of Pepsi since I was born, I guess given to me by my grandpa. I’ve never touched any of it. I also have this third account with PNC that says QPNCQ- PNC BANK DEPOSIT SWEEP PROGRAM NOT COVERED BY SIPC and I have no clue what it is, but there’s like 3 grand in it. Wtf should I do with these stocks? Not planning on selling or anything because of the market but are they good ones to have? Do I need to diversify in the future? I also have like $40K in my bank account I’m not doing anything with. Should I buy more stock?

Many-Enthusiasm1297

Ahh yes 1929 before the FDIC and SIPC existed, stop fear mongering

JunkReallyMatters

SIPC coverage doesn't insure the value of your investment—it protects you if your broker fails. Having said that if it’s a money market that invests in government securities that should be pretty safe, although who knows these days..

Work2Tuff

Aren’t they SIPC insured?

FourteenthCylon

Just like the money in your bank account is insured through the FDIC program against loss caused by the bank failing, federal SIPC insurance covers brokerage accounts from the risk of the brokerage going bust. There's a $500,000 limit per account, but I'm nowhere near that yet. https://www.bankrate.com/investing/sipc-insurance/

ServerTechie

Leave the money in Fidelity, it’s perfectly safe there, you’re not required to invest it. In fact you should keep Brokerage money it in FDLXX, it’s a high yield money market fund that barely taxes the interest earned. For the Roth, if you don’t wanna buy equity then consider FCNVX. It pays a little more than FDLXX and you needn’t worry about taxes on Roth gains. It’s not uncommon folks to leverage brokerage as savings accounts, in fact it gives you more choices on how the cash is stored. Cash in Fidelity is also protected by SIPC, which actually insures higher than FDIC does.

std_phantom_data

The cash is FDIC insured because it's held by other banks. There was a case of another fin tech losing track things. i try to keep most of my cash with them in SGOV.   They have SIPC insurance and equities are held by a 3rd party. be sure to turn off security lending, they is not covered by SIPC I am concerned that I was told not long ago that they will no longer support TOTP for 2fa, only SMS. 🤮 But they might add support for passkeys( currently I think it's limited to not all devices).

meshreplacer

If you hold over SIPC yes net-cap would be of concern. I would not feel comfortable having an account over SIPC size limits there.

limestone2u

Not interested in the Vanguard funds per se. More interested in diversifying my money.. With Musk/Trump braying about getting rid of the FDIC and their going after law firms & media outlets that offend them; want to make sure that if Schwab makes a misstep, or Musk/Trump go after SIPC that I will not be cut off from my IRA & brokerage account. Me Paranoid much?

DebtLife_Projects

I personally keep mine in a MM fund. Earns 4.2% (higher than a HYSA), SIPC insured, and easy enough to access if I need it (only takes a business day to sell and transfer the money).

AccidentalPickle

Right now I have basically all of my cash in VMFXX. It’s got a 4.3%ish yield which is better than my HYSAs and it’s SIPC insured.

SirGlass

It depends how. If the brokerage is hacked or suffers a security breach SIPC should cover it. However if you fall for a scam and accidentally give scammers your user name and password and they log on using your credentials well generally that's not covered .

Legaon

You are only insured, if the investment account falls under the aspect of being (SIPC insured). —>SIPC insurance = your investment account is insured to the maximum of $500k dollars. Aka: if you were to manually allocate $500k dollars, that is “the maximum of SIPC insurance.” If you were to manually allocate MORE THAN $500k dollars, the extra amount — will not be covered by SIPC insurance. —>If your account gets hacked, by a 3rd party. And the 3rd party starts (selling shares for cash + etc). SIPC insurance, does not cover for (investors who have their accounts compromised). Although, it depends on circumstances. —>If (Robinhood platform), were to (get hacked) or (go bankrupt) — because the platform had experienced some unexpected event. SIPC insurance, would cover for that. Although, you are responsible for SIPC insurance aspects. It is a much safer aspect, to just open up your investment account with (Schwab) or (Fidelity). Name brands matter, in the investment world.

claywhat

Where do you think insurance companies like FDIC and SIPC park their money?

greytoc

No - you are incorrect, And you are misunderstanding what that means. That is not how SIPC works. "SIPC protects cash in a brokerage firm account from the sale of or for the purchase of securities. Cash held in connection with a commodities trade is not protected by SIPC. Money market mutual funds, often thought of as cash, are protected as securities by SIPC. SIPC protects cash held by the broker for customers in connection with the customers’ purchase or sale of securities whether the cash is in U.S. dollars or denominated in [non-U.S. dollar currency](https://www.sipc.org/for-investors/investor-faqs#does-sipc-protect-foreign-currency-in-my-brokerage-account)." Source - [https://www.sipc.org/for-investors/what-sipc-protects](https://www.sipc.org/for-investors/what-sipc-protects) A money market mutual fund is treated like a security under SIPA as you said. What that means that the protection is from loss of the security - not the loss of value of the security. If a money market mutual fund breaks the buck - that difference is not protected. SIPC protects the account if a brokerage becomes insolvent and there is a shortfall in the account value. That's the 250k limit. It has nothing to do with protecting a money market mutual fund's NAV to be set at $1. "Investments in the stock market are subject to fluctuations in market value. SIPC was not created to protect these risks. That is why SIPC does not bail out investors when the value of their stocks, bonds and other investment falls for any reason. Instead, in a liquidation, SIPC replaces the missing stocks and other securities when it is possible to do so."

baby_budda

It is accurate. A money market mutual funds held in a brokerage account are covered by SIPC insurance. They are treated as securities under the Securities Investor Protection Act (SIPA) and are protected up to the $500,000 limit per account, which includes a maximum of $250,000 for cash.

AccidentalPickle

SIPC insured. Some risk in the underlying securities but next to zero. I am carrying a ridiculously high amount in VMFXX currently as it pays nearly 4.5% and is darn safe. Letting the recession winds blow before I invest it back in equities.

BRK_B94

SIPC

McKnuckle_Brewery

Your 529 isn't insured like a bank either. Nothing in a brokerage or tax-advantaged plan is. So please don't let that guide your decisions. There are FAR more prevalent risks to contend with. Brokerages are insured through SIPC however. I have 529 plans with Fidelity and Franklin Templeton. Both have a money market option inside the plan, so earnings remain tax-free. In prior years, I withdrew known expenses to a money market fund in my brokerage account and staged it there. I simply transferred it to my student or had it debited by the school during the year. I left a small "catch-up" withdrawal for the very end that was precise, so I didn't exceed qualified expenses. But this was in 2022-2024. I still held 30% stocks in these accounts then. 2025 is a whole 'nother story. I de-risked the whole ball of wax. I also hold individual bonds in a taxable account, but these are very different from a bond fund. For context, in 2022 my freshman entered college. Now I have a junior and another freshman. Both will keep using funds for grad school as well.

Greedy_Fondant_1188

This is what I learnt recently. SIPC protection means nothing to individual retail investors. When Lehman brothers went bankrupt, they did not allow the account holders to transfer their trading accounts to another broker. They instead filed for bankruptcy and every retail individual investor like us (who are not banks or financial institutions and thus not secured creditors), received only 41 cents on the dollar from SIPC. So if Charles Schwab or Interactive Brokers were to go bankrupt, don't for a minute think that they will allpw us to transfer our accounts to another broker. They too will file for bankrupty and trap us. We too will only get some cents on the dollar since the financial institutions will extract all their money first and then the leftover will be distributed to us individual investors. SIPC protection is useless. 

Greedy_Fondant_1188

This is what I learnt recently. SIPC protection means nothing to individual retail investors. When Lehman brothers went bankrupt, they did not allow the account holders to transfer their trading accounts to another broker. They instead filed for bankruptcy and every retail individual investor like us (who are not banks or financial institutions and thus not secured creditors), received only 41 cents on the dollar from SIPC. So if Charles Schwab or Interactive Brokers were to go bankrupt, don't for a minute think that they will allpw us to transfer our accounts to another broker. They too will file for bankrupty and trap us. We too will only get some cents on the dollar since the financial institutions will extract all their money first and then the leftover will be distributed to us individual investors. SIPC protection is useless. 

Greedy_Fondant_1188

This is what I learnt recently. When Lehman brothers went bankrupt, they did not allow the account holders to transfer their trading accounts to another broker. They instead filed for bankruptcy and every retail individual investor like us (who are not banks or financial institutions and thus not secured creditors), received only 41 cents on the dollar from SIPC. So if Charles Schwab or Interactive Brokers were to go bankrupt, don't for a minute think that they will allpw us to transfer our accounts to another broker. They too will file for bankrupty and trap us. We too will only get some cents on the dollar since the financial institutions will extract all their money first and then the leftover will be distributed to us individual investors. SIPC protection is useless. 

Greedy_Fondant_1188

This is what I learnt recently. SIPC protection means nothing to individual retail investors. When Lehman brothers went bankrupt, they did not allow the account holders to transfer their trading accounts to another broker. They instead filed for bankruptcy and every retail individual investor like us (who are not banks or financial institutions and thus not secured creditors), received only 41 cents on the dollar from SIPC. So if Charles Schwab or Interactive Brokers were to go bankrupt, don't for a minute think that they will allpw us to transfer our accounts to another broker. They too will file for bankrupty and trap us. We too will only get some cents on the dollar since the financial institutions will extract all their money first and then the leftover will be distributed to us individual investors. SIPC protection is useless. 

Greedy_Fondant_1188

When Lehman brothers went bankrupt, they did not allow the accountholders to transfer their accounts to another broker. They instead filed for bankruptcy and every retail individual investor like us (who are not banks or financial institutions) and thus not secured creditors, received only 41 cents on the dollar. So if Charles Schwab or Interactive Brokers were to go bankrupt, don't for a minute think that they will allpw us to transfer our accounts to another broker. They too will file for bankrupty and trap us. We too will only get some cents on the dollar since the financial institutions will extract all their money first and then the leftover will be distributed to us individual investors. SIPC protection is useless. 

inkslingerben

File a complaint with SIPC.

IlIllIlllIlllIllllI

I sold off a lot of my VOO and QQQ a few weeks ago, shortly after the mid-Feb peaks. Got laddered orders queued up to execute as things drop, and have plenty of brokerage cash and SGOV collecting interest/dividends in the meantime. I don't think I would truly panic unless SIPC collapses or the entire economy crashes.

Lazy-Industry2136

Yeah, no way they would/could operate without SIPC insurance

BytchYouThought

You're wrong. They're insured. You're don't seem to know brokerages fall under SIPC anyhow.They have both SIPC and literally millions in FDIC insurance.

Kwhip

RH cash account is insured through a combination on SIPC and FDIC.

VenJules

Good question. A HYSA is FDIC-insured up to $250K, so even if your bank goes under, the government steps in. Money market funds work differently. They’re covered by SIPC. They basically make sure you get your money back but don’t guarantee it holds its value. They usually stay at $1 per share, but every now and then, one dips below that. When that happened before, it was mostly funds holding junk assets, not ones backed by U.S. Treasuries. I suggest going with a HYSA if you just want something stable and easy to access. Rates are around 3.5 to 4.5% right now, which isn’t amazing but still decent. If you're looking, I suggest going with ones that have been around for several years, and you can find them on [HYSA rate comparison sites](https://banktruth.org/savings/?ttcid=hysa-rate-comparison-sites-v). Now, for some additional research, go for ones that have already made a name for themselves and have generally good customer service. You can find a lot of threads about different HYSAs here on Reddit as well.

CardinalNumber

Individuals are the weak link. Keep your phone/computer secure, don't give out your login info, don't blindly click links, don't give anyone your MFA code, don't provide important info to people you aren't 100% sure about, etc. Giving your account away to a scammer is not covered by SIPC or any other depository insurance.

xiongchiamiov

Good for asking, although next time it's good to understand before you invest in something. A bank account is insured by the FDIC, a federal institution, up to $250k. If the bank fails (which [happens surprisingly frequently](https://www.fdic.gov/bank-failures/failed-bank-list)) the federal government ensures you will get your money, albeit perhaps after months. Money market funds are usually held through a broker, in which case they're covered by SIPC insurance. This differs from FDIC in that they only guarantee you will get your funds, but not that those funds retain any particular value. Money market funds aim to stay pegged to a dollar. If the value goes below that, it's known as "breaking the buck". This happened three times before 2008, and then I think one fund then. So there's no guarantee you won't lose money. However: 1. Those returned around 95 cents on the dollar - people weren't losing everything. 2. They were funds invested in trashy securities, not ones in high quality bonds like treasuries. 3. The federal government stepped in in 2008 to make sure investors were made whole, though they'd no guarantee they will again. 4. The dodd frank act added additional regulation to enforce liquidity. If you are in a month market fund that's invested only in treasuries, the value of those is guaranteed by the federal government. So: a money market fund invested in treasuries is not the same amount of risk as a bank account. It is, however, very close.

AndrewBorg1126

Note that SIPC insures against the custodian doing fraud. The value of the things held by the custodian is not guaranteed against dropping. When the thing held by the custodian is *very* short term debt, the biggest reason it is unlikely to drop in value is because of how short term the debt is.

AdhesivenessMotor139

If the FIDC and SIPC was eliminated tomorrow. What would you do with your funds now that they are no longer secured?

burner46

SIPC

EcrofLeinad

Money Market Deposit Accounts (MMDAs) which are offered by banks/credit unions *are* FDIC insured. [https://www.fdic.gov/resources/deposit-insurance/faq](https://www.fdic.gov/resources/deposit-insurance/faq) Money Market Mutual Funds (MMMFs) which are offered by brokers are not FDIC insured, but are SIPC insured. SIPC insurance does not protect against a decline in value of the fund but rather guarantees that in the event that a broker fails you will retain ownership of the number of fund shares a broker was holding on your behalf. [https://www.sipc.org/for-investors/what-sipc-protects](https://www.sipc.org/for-investors/what-sipc-protects)

mewalkyne

It's SIPC, and it only insures cash held by the brokerage that isn't invested in anything and the holdings. It doesn't insure the value of your MM funds if they were to drop.

Icemelon77

Literally this — all stock holdings are insured by SIPC up to $500k and any cash is insured by the FDIC up to $250k… I’m pretty sure most people here are fine even if Robinhood goes under

Mean-Performance3940

Yes, if you look back at past events you will find lots of instances where brokerages had technical problems during times of extreme market volatility. Robinhood is not a real brokerage in my opinion. Look at them the past 2 leap years, they had problems both times! I would say there is a small benefit to having 2 accounts with the larger firms if you want to buy individual stocks during rough times in the market. It’s nice to say SIPC, which helps long term to recover any lost securities due to fraud, but there is no recovering lost opportunities due to technical difficulties at a brokerage.

AstockcollapseNow

Coming soon: administration removes FDIC and SIPC protections.

Relevant-Highlight90

Let's say your two factor auth is compromised and somebody empties one of your brokerage accounts. SIPC doesn't cover fraud. Do you want to lose everything? Open accounts in multiple brokerages.

Organic_Morning_5051

\>For example, when it comes to saving accounts, since FDIC insurance is limited to $250k per account, I believe it makes sense in opening a new account when you hit the limit. The SIPC is 500k per brokerage. Regarding holdings in multiple places outside of the protection limit funds and such do not have interactions with the broker at that level. So, let's say you buy into a Vanguard fund but you are with the broker Fidelity. If Fidelity went under you have 500k protections for the cash / equivalents / contracts held presuming that there was complex elements for their execution. If, however, the Vanguard fund goes under unless there was material misstatement in their financials you're just out of luck. So for most people there's no reason to open multiple accounts but if you did putting all the eggs in one basked across those accounts offers zero protection.

Successful-Tea-5733

No not really. First off you have SIPC insurance which is $500k but really you own the equity positions, if your brokerage went under and you owned 100 shares of nike, you still own those 100 shares. There definitely is no benefit to opening multiple accounts at the same brokerage for the same reason you wouldn't open 10 checking accounts at the same bank; no additional protection. Also to your point about opening new bank accounts once you hit $250k, the ultra rich don't do that. If Patrick Maholm's has $50 mil in the bank, he's not banking at 200 different banks. Chase, BOA, Wells Fargo, those 3 for sure are not going under. If they do, your FDIC insurance is probably going down with them.

ScottishTrader

SIPC is for brokers - [Account protection with SIPC for no additional cost | Robinhood](https://robinhood.com/us/en/support/articles/Account-protection-with-SIPC/)

greytoc

That is not true. Brokers don't work that way. And neither does RH. Customer assets are held in custody and not on the balance sheet of the broker. In the event that a broker becomes insolvent, the common practice is for the accounts to be sold to another broker. If there is no buyer - which is rare, the accounts are liquidated and cash returned to customers. In the event of wide-spread fraud - customers assets are recoverable and the recovering process is funded by SIPC. It's exceeding rare for an SIPC member broker to fail and for customers to lose their money. Even when FTX failed speculator from wide-spread fraud - investors in the regulated brokerage portion of FTX recovered all their assets because those assets were held in custody. That doesn't mean that RH is a broker that I would recommend - but if you spread misinformation - it does not help your argument about why an investor shouldn't use RH as a broker.

TT_Vert

That's what i'm starting to think. I had the chat rep look at the account and transaction history. They said it was a GFV that caused it. So I think it's more misinformation than anything. The sponsored plan is w/ transamerica and they have some agreement w/ schwab I guess to provide the PCRA which I opened and moved some money from that 457b to this self guided PCRA at schwab. It seems Rule 407 has been superceeded by **FINRA** Rule 3210 but I have never seen either, any way I can tell for sure? I have no documents on the schwab side aside from one account summary statement which states Your Retirement Plan Provider TRANSAMERICA RETIREMENT SOL 6400 C ST SW CEDAR RAPIDS IA 52499-0003 1 (888) 676-5512 The custodian of your brokerage account is: Charles Schwab & Co., Inc. Member SIPC. For questions about this statement, please contact the Schwab dedicated PCRA Call Center at 1-888-393-PCRA (7272). Dave

jeffp

You should clarify that VMFXX is SIPC insured and not FDIC insured.

shiroi_ue

I wouldn't worry unless my investments are at $500,000 already. According to their Disclosure page, their brokerage and clearing services partners are under SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash) per customer.

VeblenWasRight

I’d say it’s pure preference then if you are happy with investment choices. Workplace plans will often restrict your investment choices or charge higher fees. Brokerage IRA may let you access more securities. May have better (or worse) security. Better apps, website, customer service, links to financial software. There is also the SIPC insured limit to consider although my view is that risk is pretty small with any legit provider. Personally I rolled over everything into the big providers mainly for security (IT). I split roughly evenly (eggs in one basket). I’m not an active trader but I do have an allocation to individual securities, so I want that access, but I also want access to the lowest cost etfs. Disclaimer: I’m not a CFP but I’m also not an average joe in terms of background. My knowledge is based upon: managing my own accounts, once-upon-a-time oversight (high level nit nuts and bolts) a workplace plan, and having some confidence I’m not a muppet.

Squezeplay

That would be the safest, I'd just point out SIPC coverage is less important than FDIC for example, because with a brokerage the assets are in your name. If Robinhood just goes bankrupt normally, you would just get all your assets back in full, SIPC isn't involved, none of the assets are part of the bankruptcy. Its not like a bank for example where they lent your money and don't have it. SIPC is more for straight up scams like Madoff that take your money and don't actually buy the assets, or if Robinhood was somehow so mismanaged they don't complete the actual purchase for some reason. But given how Robinhood receives payment for order flow this would seem really unlikely.

pr1onedad

Seems like for a retirement account that will just sit with no trades there is not much to worry about with SIPC coverage So if one wants to take advantage of current 2% match and only leave the account in RH for the required 5 years, is around $350k a good amount to roll over since $350k will grow to right under the $500k SIPC coverage (5 years at 7% rate of return). I imagine it would be best to keep rollovers under the full coverage protection.

Xyrus2000

Of course. We're just waiting for the market's irrationality to run its course before things start collapsing. Except this time don't expect the FDIC to back you up. Or the SIPC. Or any other federal agency. They're going to take your money, your 401ks, and your IRAs.

GloomyCardiologist16

If it's insured with a brokerage, it should come with SIPC coverage for up to $500,000 of securities

Historical_Low4458

You're right. When I initially read the comment, I read it as the money was safe if the broker went bankrupt (which with SIPC it is), not if it was safe to invest SGOV. That might where some of the misunderstanding is coming from.

DaemonTargaryen2024

Thanks, yeah agreed. They’re confusing two separate topics: 1. are money market funds protected from loss under SIPC: NO 2. are money markets likely to lose money: also no

RIP_Soulja_Slim

This being downvoted is a real sign of how bad the advice in this sub can get. SIPC expressly doesn't guarantee market losses, and they consider money market funds breaking the buck to be a market loss.

DaemonTargaryen2024

100% agreed. Just don't want OP thinking SIPC protects them from that

DaemonTargaryen2024

# [Are money market mutual funds protected by SIPC? Are they subject to the $250,000 cash limit?](https://www.sipc.org/for-investors/investor-faqs#:~:text=Money%20market%20mutual%20fund%20shares,%24250%2C000%20limit%20applicable%20to%20cash) >It is important to remember that, although many investors treat money market funds like cash, they are securities and, as such, may lose value. In a liquidation proceeding under SIPA, subject to the limits of SIPC protection, SIPC will return money market fund shares to a customer, but will not protect the customer against any decline in the value of those shares.

DaemonTargaryen2024

SIPC doesn't protect against market losses

DaemonTargaryen2024

Yes SIPC covers brokerage account. But SIPC doesn't prevent against market loss. But again we're talking about ultra short term bonds, like [VUSXX is 97% treasury bills](https://investor.vanguard.com/investment-products/mutual-funds/profile/vusxx#portfolio-composition). I wouldn't do individual bonds personally. A money market fund is far simpler. If you're uncomfortable, just do a HYSA for a marginally lower yield.

C130J_Darkstar

SIPC protects up to $500K, should be plenty safe.

icedoliveoil

That’s a big detail, is anything insured in a brokerage account? What about SIPC?

MindMugging

Money market is NOT insured by FDIC. This means you have a possibility of losing capital. Like deposits 1000 only to withdraw 950. Though the odds of that is extremely but you have the same protection as buying a stock. The brokerage is insured by SIPC this ensures that should the brokerage (Schwab) fails, your account value is protected. You are insured against brokerage risk not market risk.

SirGlass

SIPC wouldn't insure the value if the fund broke the buck. Meaning if you have 100,000 shares of a money market fund, SIPC will make sure your brokerage doesn't steal or lose your 100,000 shares. If those shares go down in value, that's an investment loss and not covered . Example if the fund breaks the buck and loses 1% , highly highly unlikely, and now the shares are worth 0.99 , well you are not missing any shares You still have 100,000 shares, they are just now worth 99,000.

therealjerseytom

SIPC insured, not FDIC. Different between banks and brokerage accounts.

planisking

If the securities still hold value, how would the excess SIPC coverage go a long way? The excess coverage is nothing compared to the value of all of the portfolios together from the users

szopongebob

I like Robinhood more than Fidelity. The GameStop thing was almost 5 years ago. That’s literally what most sheep on Reddit complain about. They’re SIPC and FDIC insured, it’s safe. Go with whatever you want.

gerlach

Perhaps, but the risk of the entirety of the firm's assets going to $0, while non-zero is likely very, very small. IOW. Even if they were to become insolvent/bankrupt (say there obligations were much higher than assets), securities held in customer accounts would still have value, so the excess SIPC coverage would go a very long way towards making most customers pretty close to whole.

planisking

 "In addition, Interactive Brokers LLC carries an excess SIPC policy with certain underwriters at Lloyd's of London,^(2) which extends the per account^(3) coverage by an additional $30 million (with a cash sublimit of $900,000), subject to an aggregate limit of $150 million" The protection seems useless above $500k, because if they go bankrupt then $150 milllion will be nowhere close to the amounts that all of the investors on IBKR platform will want to get back. Or am i missing something here?

gerlach

Interactive Brokers has excess SIPC policy with an additional $30 million above the SIPC coverage limit.

planisking

Hi there, i have 500k invested in interactive brokers and I am looking to open up an account with another broker because the SIPC protection is not active above 500k. I am not a US resident (i’m swedish but will be moving to Paraguay in 2 months). I would like to avoid us-based ETFs because of the 15% dividend tax and the Estate tax above $60k. Any suggestions for brokers that have Ireland based ETF that tracks SMP500, that would allow me to open up account and then change address to Paraguayan address? Thanks all!🙏

greytoc

It's not really the insurance that you have to worry about. Brokerages are "brokers" - meaning that they provide access to the capital markets for investing. A brokerage account is very different than a depository account. A brokerage account is segregated and it's not on the balance sheet of a broker. Your assets are held in custody on your behalf. If a broker becomes insolvent - the insurance is used to make sure that your assets are recovered and you are made whole. Not all types of assets are covered. But if you are mostly holding stocks, bonds, cash, mutual funds, ETFs - these are common assets which are covered. Where there can be an issue - is if there is widespread fraud - but in larger brokers - it's really hard to commit such fraud - because of the regulatory and consumer protection rules. And the auditors and examiners that support those rules. As an example - let's look at the speculator faillure and collapse of FTX which lead to the arrest and recent convictions of several FTX execs. Even though the FTX collapse was due to fraud where billions of dollars in crypto went missing. It was crypto accounts where investors lost their money, US customers who had stocks and ETFs through FTX were able to recover their assets. This is because stock brokers in the US must be registered and regulated - FTX operated a broker-dealer subsidiary called FTX Capital Markets. FTX Capital Markets is what's known as an introducing broker. So what that means is that they are simply providing brokerage access to stocks and they clear and transact through another firm. In the case of FTX, the clearing firm is Embed Clearing which is a wholly owned subsidiary of FTX. When FTX was seized and their execs arrested - FTX Capital Markets was orderly shutdown without any issues. And all FTX US customers that owned stocks were made whole. For a short time - FTX US customers had access to a portal at the clearing firm - Embed so that they can transfer their account to another broker. Another recent example is when First Republic Bank failed and was seized by federal regulators. Their broker-dealer and investment advisory subsidiary was sold off and account holders did not lose any money. In both of these cases, SIPC insurance wasn't even needed because the process to move accounts and handle insolvent and failing brokers are well established. And often times - there is not even a need for a broker to go into receivership because another brokers will step up to buy the business before that occurs. I can't actually recall a brokerage that has gone into receivership in a really long time. That said - what I described is about equity and fixed income brokers. It works differently with other types of brokers such as futures or commodity accounts. And crypto accounts do not have much regulatory supervision.

MindMugging

- vanguard 401K & main index brokerage - Merrill active stock brokerage - fidelity 529 (MA gives a slight tax credit) It’s broken up like this because for one reason or another I can’t consolidate them all under a single umbrella which is kind of annoying. If you’re really worried about brokerage failing/fraud (like FTX). Then keep your accounts within the SIPC coverage of 500K and make sure your brokerage is SIPC insured (most major ones are).

sonicking12

Will SIPC be safe?

StretchSufficient

SIPC is the brokerage equivalent

AdventurousAd3310

SIPC would like a word with your boolish brokers, bools. 

cubonelvl69

Yes lol SIPC

Over-Wrangler-3917

Lmao it's SIPC, or did you just want to use that as an opportunity to type out a slur? Lmao

Squezeplay

I don't know if they're still doing it, but a while ago it was 3% for any transfer, no limit, only req is having gold for 5 years. Pretty insane if you have a decent sized IRA. I really don't like robinhood, but they're SIPC, and I don't trade my IRA so I transferred my entire balance. Their support sucks but I can't say no to such large amounts of free money. They also had for a while 1% bonus on taxed account transfers, no limit, also insane. I was very close to doing but I figured it would be best to have at least some diversification in brokerages.

Scavenger53

FDIC and SIPC are less reliable than the US govt existing

olaf-larson

I use Robinhood for my low dollar transactions, basically the less than $20 stocks maybe. I was using TD (now Schwab :/), but switched to tastytrade for my larger dollar stuff. If nothing else, I think that the research from tastytrade is worth throwing them a bone. This splitting across multiple brokerages could also be good from a SIPC standpoint.

std_phantom_data

I am honestly not even sure what you are even trying to say. "Not a thing"?  Perhaps the issue is your communication skills.  Or maybe they give low priority to small accounts?  It's really impossible to know what happened with your issue because you didn't give any details. I am not a target RH customer. I buy and hold index funds. I will not stay long term if they don't add account lockdown to prevent ACATS fraud.  And they don't have a way to sell individual tax lots. So it's hard to do tax lose or gain harvesting. I don't trust them not to go bankrupt, but that ok because I am buy and hold and the securities are insured with SIPC. And most likely they would just be bought out if the go bankrupt. I am so fake. I have a whole list of reasons why I plan to leave after the bonus period. Right 😂 😂 😂  I actually really do like their support and if they can get their shit together with the other stuff, I would consider staying.

greytoc

This question gets asked very often. And Yes - the answer is always the same. If you want the flexibility of investing - it never makes sense to use a HYSA. You can always generate the same or higher cash yield in a brokerage account with the same risk profile as a bank account. You are also a little confused about FDIC vs SIPC. It's a common misunderstanding on why FDIC exists. Banks are depositories where deposits into a CD and HYSA are used as assets by a bank to generate income through activities such as loans. That means that excessive loan defaults or a liquidity crunch (ie a run on deposits) can cause a bank to fail and become insolvent. That's why FDIC exists. The same thing doesn't occur with assets like USFR and SGOV - the US government would have to default on it's debt. If the US government defaults on its debt - FDIC is unlikely to be able to absorb mass bank failures. That is why the 3 month US treasury bill is often used as a proxy as the risk-free rate. And also why at many brokerages, treasuries and treasury money market funds are treated as a cash equivalent. Longer explanation in the wiki here: [https://www.reddit.com/r/investing/wiki/faq/#wiki\_what\_are\_low\_risk\_investments\_with\_liquidity\_that\_can\_be\_used.3F](https://www.reddit.com/r/investing/wiki/faq/#wiki_what_are_low_risk_investments_with_liquidity_that_can_be_used.3F) and [https://www.reddit.com/r/investing/wiki/faq/#wiki\_what\_is\_a\_money\_market\_fund\_and\_how\_safe\_are\_they.3F](https://www.reddit.com/r/investing/wiki/faq/#wiki_what_is_a_money_market_fund_and_how_safe_are_they.3F) >trades should settle T+2 Equities now settle T+1. Mutual funds and money market funds have settled T+1 for years.

No-Alfalfa9903

Yes it’s safe through SIPC insurance. They are also a profitable company with a strong balance sheet 

StatisticalMan

>Liquidity isn’t a huge issue for me vs HYSA since trades should settle T+2 and I can transfer to one of my bank accounts to get cash if I need it. But I worry that there’s somehow more risk to this than having the money safe under FDIC rather than SIPC in the brokerage account. What are some other catches/risks with doing this In theory it is slightly more risky but on a 1-10 risk scale FDIC insured bank account might be a 0.1 and this is a 0.2 where corporate bonds are a 3 and a total market index fund is a 7 and gamblevesting with options is a 10. Realistcially if the US has defaulted on treasury bonds then FDIC is likely not worth the paper is worth anyways and the value of the dollar has collapsed anyways.

candidmoon212

SGOV and USFR ETFs can offer better yields than HYSAs, but they come with slight price risks since they’re market-traded. FDIC insurance covers bank deposits outright, while SIPC only handles broker failures, not market losses. You can go with HYSAs instead, as they are less of a hassle if you don’t want to deal with dividend taxes or worry about price swings. If you want something much more stable, CDs are an alternative, but you have to be okay with locking your money for a certain period. You can check [aggregator sites](https://banktruth.org/savings/?ttcid=ultimate-list-of-savings) for these, and you can also look at Reddit threads for the reputation of these HYSAs or CDs. News articles or YouTube videos are also good sources.

muchDOGEbigwow

Robinhood accounts are SIPC insured, so you should be: https://robinhood.com/us/en/support/articles/how-youre-protected/