Q: What does SIPC mean and what does it do?
A: Most brokerages carry Securities Investor Protection Corp. (SIPC) insurance, protecting your account for up to $500,000, including up to $250,000 in cash claims. (Many carry additional insurance, too.)
This doesn’t protect you against a loss in value of your holdings.
Instead, it protects against the financial failure of broker-dealers.
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To ensure that a brokerage is SIPC-protected, check its website for assurance or call it up and ask.
Learn more about brokerages and how to choose a good one at sipc.org.
The Motley Fool