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Insurance on Savings and Investments

Know the differences between the agencies that help keep your money safe.

Question:

What’s the difference between FDIC and SIPC insurance?

Answer:

The Federal Deposit Insurance Corp. (www.fdic.gov) protects deposit accounts from bank failures, covering up to $250,000 in individual accounts, up to $250,000 for each person’s share of joint accounts, and up to $250,000 in IRAs and other retirement accounts at each bank. The Securities Investor Protection Corp. (www.sipc.org) protects brokerage accounts. Brokerages are required to keep customers’ investments separate from the firm’s own funds. But if the firm fails and customer assets are missing, the SIPC replaces cash and securities. The SIPC returns your share of the broker’s remaining assets, then uses its own funds—up to $500,000 per account, including a $250,000 limit on cash—to buy shares and replace cash.

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