FDIC insurance protects your assets in a bank account (checking or savings). SIPC insurance, on the other hand, protects your assets in a brokerage account. These types of insurance operate very differently. Let's take a look at how they protect you.
The Federal Deposit Insurance Corporation (FDIC) is a federal agency that protects customers against the loss of deposit accounts (such as checking and savings) in FDIC-insured banks. Here are some important facts to know about FDIC insurance:
The FDIC insurance limit applies to each account holder at each bank. Here is how the FDIC defines coverage for different account holders by some common ownership types:
The Securities Investor Protection Corporation (SIPC) is a nonprofit membership corporation that was created by federal statute in 1970.
Unlike the FDIC, SIPC does not provide blanket coverage. Instead, SIPC protects customers of SIPC-member broker-dealers if the firm fails financially. Coverage is up to $500,000 per customer for all accounts at the same institution, including a maximum of $250,000 for cash.
SIPC does not protect investors if the value of their investments falls. When you think about it, this makes sense. After all, market losses are a normal part of the risk of investing.
For more information, go to SIPC.org.
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Investing involves risk, including possible loss of principal.
The information on this website is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager.
The Charles Schwab Foundation is a 501(c)(3) nonprofit, private foundation that is not part of Charles Schwab & Co., Inc. or its parent company, The Charles Schwab Corporation.
Charles Schwab & Co., Inc. ("Schwab"). All rights reserved. Member SIPC.