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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.

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