With the recent market volatility and headlines about bank failures, we thought it might be helpful to define some of the terms you’ve likely been hearing and how they may apply to your own savings and investment accounts.
FDIC Coverage – The Federal Deposit Insurance Corporation insures cash deposits at banks and other financial institutions in the event the institution becomes insolvent. It is backed by the United States government and covers up to $250,000 in deposits per investor ($500,000 for joint accounts) per insured bank.
SIPC Coverage – Custodians like Schwab or TD Ameritrade are often used to hold securities for your investment accounts (brokerage, IRA, or Roth, for example). The Securities Investor Protection Corporation insures the securities in your investment account up to $500,000 (including $250,000 in cash) in the event the custodian becomes insolvent. It does not protect against market losses in your investment account.
Supplemental/Private Custodian Insurance – many custodians will also carry supplemental insurance to provide additional safety for their clients’ assets to help offset investment balances over and above what is covered by SIPC in the event of insolvency.
Market turbulence and news headlines can be unsettling. If you’re feeling uneasy or would like to talk about your specific situation, please feel free to call or book an appointment using the link below.