💎 Get our popular bond course bundle & save $80: www.diamondnestegg.com/home#_paa2isucf 💎 Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners 💎 Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters 💎 And join our super-supersaver membership for regular market updates & monthly live member Q&As ua-cam.com/channels/nexoc6tvesvcCEzZhmI-Ag.htmljoin >>>>>>>>>> WATCH NEXT >> Our Bond Courses vs UA-cam Membership | Which Is Right For You: ua-cam.com/video/H5h4Eyh0hjo/v-deo.html >> Bond Beginners Course Sneak Peak | I-Bonds vs TIPS: ua-cam.com/video/uXPzbje1g2E/v-deo.html >> Bond Masters Course Sneak Peak | How To Build A Bond Ladder: ua-cam.com/video/p90IDmXn19s/v-deo.html >>>>>>>>>> SOURCES & FOLLOW-UP VIDEOS FOR TODAY'S VIDEO: Detailed SIPC video: ua-cam.com/video/kY5BswpUlf4/v-deo.html ERISA & Your 401(k) video: ua-cam.com/video/SAJu0oG6bb0/v-deo.html ________ www.sipc.org/list-of-members/ www.sipc.org www.sipc.org/for-investors/what-sipc-protects www.sipc.org/for-investors/investors-with-multiple-accounts www.sipc.org/for-investors/investor-faqs www.finra.org/investors/insights/if-brokerage-firm-closes-its-doors www.fidelity.com/why-fidelity/safeguarding-your-accounts us.etrade.com/l/f/asset-protection www.merrilledge.com/help-support www.schwab.com/legal/account-protection international.schwab.com/account-protection www.sipc.org/media/annual-reports/2023-annual-report.pdf >>>>>>>>>> Here is the overview for Bond Beginners: 1. Bond Basics What A Bond Is & How A Bond Works Why Invest In Bonds New Issue vs Secondary Market Bonds Interest Rates & Bond Prices Current Yield & Yield To Maturity Always Remember This! Buying At Par, Above Par & Below Par Different Types Of Bonds Wrap-Up 2. The Risks Of Bond Investing Seven Key Bond Risks Credit Risk Interest Rate Risk Reinvestment Risk/Call Risk Inflation Risk Liquidity Risk Currency Risk & Country Risk Bond Risk Mitigation Strategies Wrap-Up 3. US Treasuries Overview What Are US Treasuries Why Invest In Treasuries Where Can You Buy Treasuries How Are Treasuries Taxed Wrap-Up 4. Treasury Bills What Are Treasury Bills (T-Bills) When Do T-Bill Auctions Happen Where Should You Buy At Auction Auto-Roll When Buying At Auction Where To Find Recent Auction Results High Rate vs Investment Rate Reopening Auctions Cash Management Bills (CMBs) Buying & Selling On Secondary Market Wrap-Up 5. Treasury Notes & Bonds What Are Treasury Notes & Bonds When Do Auctions Happen Buying Treasury Notes & Bonds Auction High Yield vs Interest Rate Floating Rate Notes (FRNs) Treasury Zeros (STRIPS) Wrap-Up 6. TIPS (Inflation-Protected) What Are TIPS When Do TIPS Auctions Happen Nominal vs Real Yields Negative Yields How Do You Adjust TIPS For Inflation Taxes On Phantom Income Secondary Market Liquidity Wrap-Up 7. I-Bonds (Inflation-Protected) What Are I-Bonds How Does I-Bond Interest Work I-Bonds vs TIPS The Annual I-Bond Limit Wrap-Up 8. Agency Bonds The Universe Of Bonds What Are Agency Bonds How Are Agency Bonds Taxed Treasuries vs Agencies Who Might Want To Consider Agencies Yield-To-Call & Yield-To-Worst Where Can You Buy Agency Bonds Wrap-Up 9. Municipal Bonds Our Bond Universe Gets More Complex What Are Municipal Bonds How Safe Are Munis How Are Munis Taxed The De Minimis Rule Social Security & Medicare Premiums Treasuries, Agencies & Munis Who Might Want To Consider Munis Wrap-Up 10. Corporate Bonds Our Bond Universe Is Complete What Are Corporate Bonds How Safe Are Corporates Corporate Bond Hierarchies Five Key Features Of Corporate Bonds How Are Corporates Taxed Treasuries vs Corporates, Etc. Who Might Want To Buy Corporates Wrap-Up >>>>>>>>>> Here is the overview for Bond Masters: 1. Stocks vs Bonds Historical Performance Are Bonds Really Less Volatile Why Invest In Bonds Accumulation vs Decumulation Allocation of Stocks vs Bonds Wrap-Up 2. Which Bonds Might Be Right For You Treasuries & Other Types of Bonds Nominal vs Real Yields Inflation vs Non-Inflation-Protected Taxable vs Tax-Advantaged Accounts Wrap-Up 3. Bond Ladders & Other Bond Strategies Normal vs Inverted Yield Curve What Is A Bond Ladder 5 Important Bond Laddering Questions Laddering When Rates Are Rising Laddering When Rates Are Falling Laddering When Rates Are Uncertain What Is A Bullet What Is A Barbell Wrap-Up 4. Holding to Maturity vs Selling Early Why Hold to Maturity When To Sell Early Before Maturity Tax Implications Of Selling Early Wrap-Up 5. Individual Bonds, Bond Funds, Etc. Why Buy Individual Bonds Why Buy Bond Funds Bond Fund Considerations Key Bond Fund Concepts CDs vs Treasuries Other High-Yield Investments Wrap-Up 6. Our B.E.S.T. Model Portfolios By Age Our B.E.S.T Model Portfolios By Age Model Portfolios In The Industry B.E.S.T Model Portfolio Difference How Much Do You Need To Retire? How I Use The Rules of 100, 110, & 120 B.E.S.T Model Portfolios (20s) B.E.S.T Model Portfolios (30s & 40s) B.E.S.T Model Portfolios (50s & 60s) B.E.S.T Model Portfolios (70s+) Wrap-Up 7. The Decumulation Phase What Is The Decumulation Phase? Bear Markets & Recessions What Can You Do In Bad/Bear Markets Decumulation Tax Considerations The 4% Rule The Bucket Strategy The Flooring Approach Jen’s Bucket Strategy With A Twist Wrap-Up >>>>>>>>>> Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
QUESTION: Are T-bills held in a brokerage account considered "cash" for purposes of protection (and thus, subject to the lower protection limits) OR are they deemed to be securities?
I knew I had high exposure when I had a 401K account, but I rolled that over into an IRA account 3 months back. At that point I did ask my broker (Fidelity) about coverage over and above the $500K/Account limit - they did comment to the additional coverage, but they didn't go into the nuances like Jennifer did in this presentation. That 1$ Billion additional coverage is alot, but I read that if the SHTF, it would get peanut buttered over all exposed fidelity accounts. This Vid is the wake up call I needed to rethink and open additional accounts and redistribute. Incredibly timely info. Thanks Jennifer.
@@Dave-my1we When I retired I had over 7 figures in my 401K. It was self directed, but under Fidelity at the $500K SIPC limit. Since I've rolled it over I can now redistribute fractions of my total holdings with multiple brokers now and get full SIPC coverage. The "high exposure" was that I wasn't fully insured for the full amount of my holdings. It's now on my calendar for next week to open a few more accounts with different brokerages and get the money moved.
@@Dave-my1we The fact while I was working and had a 401K, I could not redistribute any of my self-directed 401K assets to other brokerages. I had $500K SIPC insurance on a 7 figure account. Only since I've retired and rolled my 401K to an IRA, can I now open additional IRA accounts with other brokerages and work towards full SIPC protection against 100% of my assets.
My self-directed 401K (7 figures) thru Fidelity only had $500K of insurance. I couldn't split up the account as a 401K, but after rolling it to a IRA now allows me to cover 100% of my investment thru parceling between other brokers.
Excellent reminder about broker risk! One thing to keep in mind is that even if you are eventually made whole (or nearly so…), it’s important to have funds elsewhere to tide you over in the meantime.
Perfrect video. It answered all my lingering questions. I watched your video about Schwab and was thinking I needed to do something. Put my mind at ease.
Thanks for all of your work on this topic as the information, especially on the protections provided beyond those of the SIPC can be difficult to find.
why would securities be missing unless the brokerage firm was using the clients securities as collateral on losing bets without the client's knowledge?
I looked into this question a few months ago on my own. I called Fidelity. They made the excess coverage through Loyds of London sound like it applied per customer (1 billion). I remember because they said, “and I think that should cover you, you do have less than 1 billion, right?” But it would make sense that it is an aggregate figure. In any case, the money is pretty safe. If I was that worried, I could open a second brokerage acct, but I don’t.
I bought a stock that I intended to hold only a few hours. When I tried to sell the stock for a profit of several thousands of dollars, the major brokerage company completely shut down, logged me out and said sorry I could not log in. When I asked for the money back they told me to go screw myself. Is there anything one can do under this circumstance? This major brokerage firm knew they blocked everyone from selling during these hours. This seem like theft. When they finally got back online, my stock was at a loss. It seems very, very suspecious that the firm did not allow logins until the stock was at a loss.
Jen can you cover income annuity vs building bond ladders for cash flows? It seems income annuities in some cases would have a higher payout for joint-life then bond ladders
Keeping my assets in a brokerage account seems to me to be much safer than any bank because of the segregated assets that are not physically in the broker's possession. I only use banks for paying bills and checking account, and depositing income.
This is an excellent point. Who.e your assets at a brokerage may be subject the market risk, the assets are yours. In a bank, while the cash is yours, a bank makes money by LENDING your deposits to other borrowers at a higher rate than they pay you on your deposits. You don’t have “market risk” on cash deposits at banks but you “sorta” have credit risk on loans made by the bank which involve your money. Hence fdic insurance. Brokers don’t “loan” your securities. They stay with you. Unless there is massive fraud at a broker, your assets the day before a broker collapse will be the same the day after a collapse (net of any changes in the market price of a security)
Excellent discussion ! Learned some things I wasn’t clear about after 50 years with one broker. BTW, I assume government agency bonds are considered securities under SIPC. Are the government money market funds that are all the rage these days considered cash per SIPC ? Thanks.
yes, I'd like to understand details of what happened to the investors in Lehman and Bear Stearns back in 2008 - how did they fare? the firms went under but the customers were unscathed? askling for a friend.
I take one additional srep to protect my accounts. I download the monthly or quarterly statements so I can prove what holdings I have. If a broker goes bankrupt, who's to say their computer system will be available to prove your holdings.
If those 3 were going under the US Govt and Fed would force a sale to another Bank or Brokerage Firm like when Merrill Lynch was in trouble and was sold to Bank of America
If I leave 100 shares of TSLA in account and it 50x’s in 10 years, am I out of luck. Should I transfer to different accounts every so often to boost original value of stock in that account?
Great explanation. Very educational! What those 770 thousands claims are related to? I mean, any examples? I am overwhelmed by huge amount of claims if related to some misbehaving or similar... zvz
If client funds are in separate accounts why crypto investors lost big portion of the investments in BlockFi and Voyager. Or Crypto accounts work differently?
Thank you, Jen, for that peace of mind info. You didn't mention TIAA. Is that company also included in these safeguards? Debating whether to stay with them v switching to Schwab. Also, do you recommend having a CFP during retirement years?
@@MikeSmith-dd7oz I have been told that they are insured by the FDIC and also told that they are not. I am going to add another brokerage until I get a definitive answer.
Great video. It gives food for thought especially for consolidation of CDs at one broker. I had assumed I had $500k per CD FDIC coverage (joint account) so I could have $2m of CDs at Schwab with 4 different banks and be covered and could also have another $1m of T Bills safe as long as the US government does not default. Are you saying that is not the case?
I have yet to get a concise answer to the question of CD / FDIC coverage on multiple CD's that are held in a brokerage. I made the same assumption as you did. I have been told that CD's within a broker are separately insured per bank and I have been told they are not. It is a very good question.
I have about 1.5 million in a Schwab brokerage. Besides my IRA and ROTH accounts, I have subaccounts with different beneficiaries. That is one account with my sons as beneficiaries, one account with my stepdaughters as beneficiaries. When the SIPC insurance looks at my two accounts, does the insurance company consider the two subaccounts (each with a different account number) as two different individual accounts, or as one individual account. These subaccounts do not meet the trust or other requirements you mentioned.
So, If you have shares of a schwab (or similar) money market fund in a brokerages account at ETrade or another brokerage, and Schwab fails is your investemet in the fund not covered by SEPC because your brokerage (ETrade ) is NOT in financial trouble ?
I have one question. What about brokered CDs of another bank purchased through your broker? Are they counted against the broker's $500,000 SIPC limit, given that they are assets on the books of the issuing bank and should have FDIC protection? For example, suppose you have a $700,000 account with Fidelity, and your assets purchased there (which show up on your monthly statement) include a $100,000 CD with Wells Fargo Bank, a $100,000 CD with Goldman Sachs Bank, and a $100,000 CD with Bank of America. Would you be fully covered by SIPC protection on the remaining $400,000 in assets held by Fidelity, or would you be $200,000 over the SIPC limit because your monthly statement shows a total of $700,000 in assets?
Were regular people with brokerages protected when the banks screwed housing and collapsed in 2008? I know This seems snarky but it’s a legitimate question. I enjoy your videos.
As I understand, it’s safer to have a cash account rather than a margin account. If so, if the broker collapses, the account is simply transferred to another broker. Plus, a broker like E*Trade is part of Morgan Stanley, a too big to fail investment bank, so, the account has this extra safety. Is the above true?
Investment banking and retail brokerage are totally different business. Morgan Stanley’s brokerage sucks. That’s why they need to buy E*trade to survive.
I thought it is also covered by differing beneficiaries. For example, let's say I have one million in my Roth IRA with $500,000 going to one beneficiary and $500,000 going to another beneficiary. My understanding is that they would both be covered for $500,000 each or one million in total. Can you clarify your understanding of beneficiary and SIPIC coverage?
Is the SIPC actually equipped to have timely processing of a situation where a massive brokerage had a loss of accounts/funds? I have to imagine this scenario is almost impossible, but if it were I have to imagine it may be a long slog seeing your money again.
Good to know - thank you. 😎 And let me ask other viewers: Anyone use Merrill? BoA keeps suggesting that I open a Merrill account - with investments counting towards overall relationship balance. Anyone in a similar situation? Any problems with Merrill?
Hopefully brokerages are better scrutinized now adays than they were a few years back when Peregrine Financial imploded because of fraud. That was an interesting experience to try to get reimbursed for customer loses. BTW, watch out what you have your money invested in. Some securities like FX trades are not necessarily covered by anything.
I'm confused about cash vs. Fidelity's SPAXX money market fund. SPAXX is where your cash sits after a sale of an asset. So how do I diversity into cash to receive the SIPC coverage for cash and have separate funds in SPAXX so I have coverage for this money market account separately? They're one and the same
Fidelity also has a cash sweep that is very low interest but insured. SPAXX interest is reflective predominantly of the reverse repo facility rate. It's considered safe, but not insured.
If someone had say $1.5M at a Brokerage, of which $1M were Treasuries, they could transfer the Treasuries to Treasury Direct. That way they would be fully covered by SIPC insurance at their brokerage. And the $1M in Treasury Direct is backed by the full faith of the US Government (instead of the full faith of Schwab, Fidelity, Vanguard, ...or Lloyd's of London).
Good question. I've been buying directly from TD, but wanted to move everything under one roof (Fidelity), but it looks like eliminating the middle man (brokerage) and buying from TD is the safest way to go. Would you agree?
How easy is it to transfer some amount of investments from an IRA account with one broker to another broker so that I diversify my accounts and stay closer to the $500k per account?
I have it in 4 brokerages including savings plus but Charles Schwab bought td amaritrade it’s down to 3. I wish Charles Schwab didn’t take over td amaritrade. I don’t think Charles Schwab is doing good management on the TOS platform; I like it better when under td amaritrade management.
Great informations! I have Roth & Individual Accounts in Fidelity and each still under 100k should be good for a while. Is this apply 401k Account also? ❤Thank you!
I am glad to have the $500k coverage you speak of but the excess coverage seems like there are so many outs for the insurance company not to pay. Since I think people don't usually have Roth IRAs and other retirement accounts that are convenient to break up amongst multiple brokerage accounts, your $4 million dollar example investor really does not have many good options unless they ok with opening 6 or 7 accounts with different brokerages. Do they? An investor with $10 million is just out of luck and needs to get a lawyer quick should the worst happen as far as I can tell.
I had the same thought about what higher value (like that $10M) do to protect their assets. There are only so many options. Maybe someone reading this can comment.
Is SPAXX money (or other Money Market Fund account - FZDXX) considered as 'CASH"? There is no other way to hold cash in an FIDELITY Individual Brokerage account or IRA
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>> Our Bond Courses vs UA-cam Membership | Which Is Right For You: ua-cam.com/video/H5h4Eyh0hjo/v-deo.html
>> Bond Beginners Course Sneak Peak | I-Bonds vs TIPS: ua-cam.com/video/uXPzbje1g2E/v-deo.html
>> Bond Masters Course Sneak Peak | How To Build A Bond Ladder: ua-cam.com/video/p90IDmXn19s/v-deo.html
>>>>>>>>>>
SOURCES & FOLLOW-UP VIDEOS FOR TODAY'S VIDEO:
Detailed SIPC video: ua-cam.com/video/kY5BswpUlf4/v-deo.html
ERISA & Your 401(k) video: ua-cam.com/video/SAJu0oG6bb0/v-deo.html
________
www.sipc.org/list-of-members/
www.sipc.org
www.sipc.org/for-investors/what-sipc-protects
www.sipc.org/for-investors/investors-with-multiple-accounts
www.sipc.org/for-investors/investor-faqs
www.finra.org/investors/insights/if-brokerage-firm-closes-its-doors
www.fidelity.com/why-fidelity/safeguarding-your-accounts
us.etrade.com/l/f/asset-protection
www.merrilledge.com/help-support
www.schwab.com/legal/account-protection
international.schwab.com/account-protection
www.sipc.org/media/annual-reports/2023-annual-report.pdf
>>>>>>>>>>
Here is the overview for Bond Beginners:
1. Bond Basics
What A Bond Is & How A Bond Works
Why Invest In Bonds
New Issue vs Secondary Market Bonds
Interest Rates & Bond Prices
Current Yield & Yield To Maturity
Always Remember This!
Buying At Par, Above Par & Below Par
Different Types Of Bonds
Wrap-Up
2. The Risks Of Bond Investing
Seven Key Bond Risks
Credit Risk
Interest Rate Risk
Reinvestment Risk/Call Risk
Inflation Risk
Liquidity Risk
Currency Risk & Country Risk
Bond Risk Mitigation Strategies
Wrap-Up
3. US Treasuries Overview
What Are US Treasuries
Why Invest In Treasuries
Where Can You Buy Treasuries
How Are Treasuries Taxed
Wrap-Up
4. Treasury Bills
What Are Treasury Bills (T-Bills)
When Do T-Bill Auctions Happen
Where Should You Buy At Auction
Auto-Roll When Buying At Auction
Where To Find Recent Auction Results
High Rate vs Investment Rate
Reopening Auctions
Cash Management Bills (CMBs)
Buying & Selling On Secondary Market
Wrap-Up
5. Treasury Notes & Bonds
What Are Treasury Notes & Bonds
When Do Auctions Happen
Buying Treasury Notes & Bonds
Auction High Yield vs Interest Rate
Floating Rate Notes (FRNs)
Treasury Zeros (STRIPS)
Wrap-Up
6. TIPS (Inflation-Protected)
What Are TIPS
When Do TIPS Auctions Happen
Nominal vs Real Yields
Negative Yields
How Do You Adjust TIPS For Inflation
Taxes On Phantom Income
Secondary Market Liquidity
Wrap-Up
7. I-Bonds (Inflation-Protected)
What Are I-Bonds
How Does I-Bond Interest Work
I-Bonds vs TIPS
The Annual I-Bond Limit
Wrap-Up
8. Agency Bonds
The Universe Of Bonds
What Are Agency Bonds
How Are Agency Bonds Taxed
Treasuries vs Agencies
Who Might Want To Consider Agencies
Yield-To-Call & Yield-To-Worst
Where Can You Buy Agency Bonds
Wrap-Up
9. Municipal Bonds
Our Bond Universe Gets More Complex
What Are Municipal Bonds
How Safe Are Munis
How Are Munis Taxed
The De Minimis Rule
Social Security & Medicare Premiums
Treasuries, Agencies & Munis
Who Might Want To Consider Munis
Wrap-Up
10. Corporate Bonds
Our Bond Universe Is Complete
What Are Corporate Bonds
How Safe Are Corporates
Corporate Bond Hierarchies
Five Key Features Of Corporate Bonds
How Are Corporates Taxed
Treasuries vs Corporates, Etc.
Who Might Want To Buy Corporates
Wrap-Up
>>>>>>>>>>
Here is the overview for Bond Masters:
1. Stocks vs Bonds
Historical Performance
Are Bonds Really Less Volatile
Why Invest In Bonds
Accumulation vs Decumulation
Allocation of Stocks vs Bonds
Wrap-Up
2. Which Bonds Might Be Right For You
Treasuries & Other Types of Bonds
Nominal vs Real Yields
Inflation vs Non-Inflation-Protected
Taxable vs Tax-Advantaged Accounts
Wrap-Up
3. Bond Ladders & Other Bond Strategies
Normal vs Inverted Yield Curve
What Is A Bond Ladder
5 Important Bond Laddering Questions
Laddering When Rates Are Rising
Laddering When Rates Are Falling
Laddering When Rates Are Uncertain
What Is A Bullet
What Is A Barbell
Wrap-Up
4. Holding to Maturity vs Selling Early
Why Hold to Maturity
When To Sell Early Before Maturity
Tax Implications Of Selling Early
Wrap-Up
5. Individual Bonds, Bond Funds, Etc.
Why Buy Individual Bonds
Why Buy Bond Funds
Bond Fund Considerations
Key Bond Fund Concepts
CDs vs Treasuries
Other High-Yield Investments
Wrap-Up
6. Our B.E.S.T. Model Portfolios By Age
Our B.E.S.T Model Portfolios By Age
Model Portfolios In The Industry
B.E.S.T Model Portfolio Difference
How Much Do You Need To Retire?
How I Use The Rules of 100, 110, & 120
B.E.S.T Model Portfolios (20s)
B.E.S.T Model Portfolios (30s & 40s)
B.E.S.T Model Portfolios (50s & 60s)
B.E.S.T Model Portfolios (70s+)
Wrap-Up
7. The Decumulation Phase
What Is The Decumulation Phase?
Bear Markets & Recessions
What Can You Do In Bad/Bear Markets
Decumulation Tax Considerations
The 4% Rule
The Bucket Strategy
The Flooring Approach
Jen’s Bucket Strategy With A Twist
Wrap-Up
>>>>>>>>>>
Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that:
1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances
2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
QUESTION: Are T-bills held in a brokerage account considered "cash" for purposes of protection (and thus, subject to the lower protection limits) OR are they deemed to be securities?
Nobody explains these things better than Jennifer does in these videos.
Thanks!
I knew I had high exposure when I had a 401K account, but I rolled that over into an IRA account 3 months back. At that point I did ask my broker (Fidelity) about coverage over and above the $500K/Account limit - they did comment to the additional coverage, but they didn't go into the nuances like Jennifer did in this presentation. That 1$ Billion additional coverage is alot, but I read that if the SHTF, it would get peanut buttered over all exposed fidelity accounts. This Vid is the wake up call I needed to rethink and open additional accounts and redistribute. Incredibly timely info. Thanks Jennifer.
What would be your “high exposure” with your 401(k)?
@@Dave-my1we When I retired I had over 7 figures in my 401K. It was self directed, but under Fidelity at the $500K SIPC limit. Since I've rolled it over I can now redistribute fractions of my total holdings with multiple brokers now and get full SIPC coverage. The "high exposure" was that I wasn't fully insured for the full amount of my holdings. It's now on my calendar for next week to open a few more accounts with different brokerages and get the money moved.
@@Dave-my1we The fact while I was working and had a 401K, I could not redistribute any of my self-directed 401K assets to other brokerages. I had $500K SIPC insurance on a 7 figure account. Only since I've retired and rolled my 401K to an IRA, can I now open additional IRA accounts with other brokerages and work towards full SIPC protection against 100% of my assets.
My self-directed 401K (7 figures) thru Fidelity only had $500K of insurance. I couldn't split up the account as a 401K, but after rolling it to a IRA now allows me to cover 100% of my investment thru parceling between other brokers.
" 4 million is a NICE amount." Nice? More like impressive.
Excellent reminder about broker risk! One thing to keep in mind is that even if you are eventually made whole (or nearly so…), it’s important to have funds elsewhere to tide you over in the meantime.
Wow this was fantastically thorough and you made it super clear. Thank you!
I have it in Vanguard for 25 plus years. It’s still there and growing.
but their customer service and platform do not nearly compare to CS.
It only counts as "There" When it is in your hands.
Perfrect video. It answered all my lingering questions. I watched your video about Schwab and was thinking I needed to do something. Put my mind at ease.
When the excess SIPC insurance kicks in, have to make sure the bank that provide the insurance can survive the claims.........
Thank you. Now, if only I had 4 million😂😂
😂😂😂
This topic is exactly what I was looking for! Thank you so much Jennifer, your presentation as always is top notch !
I think the greater risk is a malicious breach or ransomware. Does the SIPC still cover where there is no institutional misconduct?
Good question
Thank you for a informative video on this important subject.
Outstanding Jennifer! Thank you. JP Porto
Thanks for all of your work on this topic as the information, especially on the protections provided beyond those of the SIPC can be difficult to find.
why would securities be missing unless the brokerage firm was using the clients securities as collateral on losing bets without the client's knowledge?
Addressed at 12:30 on the video
I looked into this question a few months ago on my own. I called Fidelity. They made the excess coverage through Loyds of London sound like it applied per customer (1 billion). I remember because they said, “and I think that should cover you, you do have less than 1 billion, right?” But it would make sense that it is an aggregate figure. In any case, the money is pretty safe. If I was that worried, I could open a second brokerage acct, but I don’t.
you're the best. Love the info you provide.
So, is Schwab U.S. Treasury Money Fund (SNSXX) considered a "cash" account, or just a normal stock/bond account - meaning its covered up to 500k?
it's a mutual fund, so it's covered under SIPC
I bought a stock that I intended to hold only a few hours. When I tried to sell the stock for a profit of several thousands of dollars, the major brokerage company completely shut down, logged me out and said sorry I could not log in. When I asked for the money back they told me to go screw myself. Is there anything one can do under this circumstance? This major brokerage firm knew they blocked everyone from selling during these hours. This seem like theft. When they finally got back online, my stock was at a loss. It seems very, very suspecious that the firm did not allow logins until the stock was at a loss.
Jen can you cover income annuity vs building bond ladders for cash flows? It seems income annuities in some cases would have a higher payout for joint-life then bond ladders
Thank you for explaining everything about the brokerage account. You make it very plain and simple.😊
This is great information but how does the insurance work with a "bail in?"
Keeping my assets in a brokerage account seems to me to be much safer than any bank because of the segregated assets that are not physically in the broker's possession. I only use banks for paying bills and checking account, and depositing income.
This is an excellent point. Who.e your assets at a brokerage may be subject the market risk, the assets are yours. In a bank, while the cash is yours, a bank makes money by LENDING your deposits to other borrowers at a higher rate than they pay you on your deposits. You don’t have “market risk” on cash deposits at banks but you “sorta” have credit risk on loans made by the bank which involve your money. Hence fdic insurance. Brokers don’t “loan” your securities. They stay with you. Unless there is massive fraud at a broker, your assets the day before a broker collapse will be the same the day after a collapse (net of any changes in the market price of a security)
Excellent discussion ! Learned some things I wasn’t clear about after 50 years with one broker. BTW, I assume government agency bonds are considered securities under SIPC. Are the government money market funds that are all the rage these days considered cash per SIPC ? Thanks.
Thank you, Jennifer !
I took my ETF out. Don’t wanna deal with SIPC
Whould you recommend DRS for long term investors?
Very informative and I feel better my money is safe.
yes, I'd like to understand details of what happened to the investors in Lehman and Bear Stearns back in 2008 - how did they fare? the firms went under but the customers were unscathed? askling for a friend.
How do you keep records of your securities in case of data loss, etc.?
I am old school. still get paper statements monthly as well as a paper copy of every trade.
thanks for good info. 👍 I was thinking about my CS account.
I take one additional srep to protect my accounts. I download the monthly or quarterly statements so I can prove what holdings I have. If a broker goes bankrupt, who's to say their computer system will be available to prove your holdings.
If it gets that bad you're going to need a bunker and a couple months of provisions and lots of guns & ammo
@@lesbolstad Happened last week with the Crowdstrike issue. Fortunately, files weren't erased or lost.
How it works in case of shorting - selling puts or call?
how about SIP, is that also covered as a category
If those 3 were going under the US Govt and Fed would force a sale to another Bank or Brokerage Firm like when Merrill Lynch was in trouble and was sold to Bank of America
What do they cover, the original cost of the stock or the current replacement value?
If I leave 100 shares of TSLA in account and it 50x’s in 10 years, am I out of luck. Should I transfer to different accounts every so often to boost original value of stock in that account?
Hi,
Are these coverages also good in case of a stolen identity and a hacker depleting you of all your funds?
good info, tnx
Great explanation. Very educational!
What those 770 thousands claims are related to? I mean, any examples? I am overwhelmed by huge amount of claims if related to some misbehaving or similar... zvz
An excellent synopsis; it does give me peace of mind. Thanks so much.
Good breakdown.
How would you compare Lehman Brothers to Fidelity or Schwab? Obviously, this relates to the bankruptcy of Lehman.
Great education. Thanks, Jennifer.
M1 Finance offers $5,000,000 insured cash.
Why don't I hear anything about IBKR?
What about US Treasuries?
How safe is IBKR? Could you make comments about that?
How about J P Morgan Chase ?
If client funds are in separate accounts why crypto investors lost big portion of the investments in BlockFi and Voyager. Or Crypto accounts work differently?
they're not covered by SIPC
Good video advice. I have money spread out in different financial companies just in case.
Does SIPC provide protection for ETF's shares ???
Thanks for the awesome videos.
Thank you, Jen, for that peace of mind info. You didn't mention TIAA. Is that company also included in these safeguards? Debating whether to stay with them v switching to Schwab.
Also, do you recommend having a CFP during retirement years?
What about brokered CDs, how do they count in this?
they would fall under cash
Brokered cd’s are fdic insured by the bank you purchased them from…so I’m told
@@MikeSmith-dd7oz I have been told that they are insured by the FDIC and also told that they are not. I am going to add another brokerage until I get a definitive answer.
Excellent video. Thank you
Great video. It gives food for thought especially for consolidation of CDs at one broker. I had assumed I had $500k per CD FDIC coverage (joint account) so I could have $2m of CDs at Schwab with 4 different banks and be covered and could also have another $1m of T Bills safe as long as the US government does not default. Are you saying that is not the case?
I have yet to get a concise answer to the question of CD / FDIC coverage on multiple CD's that are held in a brokerage. I made the same assumption as you did. I have been told that CD's within a broker are separately insured per bank and I have been told they are not. It is a very good question.
Are money market funds considered to be cash?
Great video! Right on.
So you diversify between brokerage firms. Why? What is your rationale?
I have about 1.5 million in a Schwab brokerage. Besides my IRA and ROTH accounts, I have subaccounts with different beneficiaries. That is one account with my sons as beneficiaries, one account with my stepdaughters as beneficiaries.
When the SIPC insurance looks at my two accounts, does the insurance company consider the two subaccounts (each with a different account number) as two different individual accounts, or as one individual account. These subaccounts do not meet the trust or other requirements you mentioned.
So, If you have shares of a schwab (or similar) money market fund in a brokerages account at ETrade or another brokerage, and Schwab fails is your investemet in the fund not covered by SEPC because your brokerage (ETrade ) is NOT in financial trouble ?
I'm using Schwab now but wanting to change and any advice which trading platform is better than Schwab if not the best.
Love your videos !
I have one question. What about brokered CDs of another bank purchased through your broker? Are they counted against the broker's $500,000 SIPC limit, given that they are assets on the books of the issuing bank and should have FDIC protection? For example, suppose you have a $700,000 account with Fidelity, and your assets purchased there (which show up on your monthly statement) include a $100,000 CD with Wells Fargo Bank, a $100,000 CD with Goldman Sachs Bank, and a $100,000 CD with Bank of America. Would you be fully covered by SIPC protection on the remaining $400,000 in assets held by Fidelity, or would you be $200,000 over the SIPC limit because your monthly statement shows a total of $700,000 in assets?
I save and then I invest so I usually don’t have a lot of cash on hand.
Were regular people with brokerages protected when the banks screwed housing and collapsed in 2008? I know This seems snarky but it’s a legitimate question. I enjoy your videos.
As I understand, it’s safer to have a cash account rather than a margin account. If so, if the broker collapses, the account is simply transferred to another broker. Plus, a broker like E*Trade is part of Morgan Stanley, a too big to fail investment bank, so, the account has this extra safety.
Is the above true?
Investment banking and retail brokerage are totally different business. Morgan Stanley’s brokerage sucks. That’s why they need to buy E*trade to survive.
@@alexzhong2002 They bought E*Trade to get more wealth management clients. Plus E*Trade has a bank.
God Bless!! 4 million. I’d like to see what they invest in
I thought it is also covered by differing beneficiaries. For example, let's say I have one million in my Roth IRA with $500,000 going to one beneficiary and $500,000 going to another beneficiary. My understanding is that they would both be covered for $500,000 each or one million in total. Can you clarify your understanding of beneficiary and SIPIC coverage?
Thank you very much...
Is the SIPC actually equipped to have timely processing of a situation where a massive brokerage had a loss of accounts/funds? I have to imagine this scenario is almost impossible, but if it were I have to imagine it may be a long slog seeing your money again.
sorry, i meant SEP
Could all these safeguards be suddenly negated via the recent Supreme Court Chevron decision?
Good to know - thank you. 😎 And let me ask other viewers: Anyone use Merrill? BoA keeps suggesting that I open a Merrill account - with investments counting towards overall relationship balance. Anyone in a similar situation? Any problems with Merrill?
Hopefully brokerages are better scrutinized now adays than they were a few years back when Peregrine Financial imploded because of fraud. That was an interesting experience to try to get reimbursed for customer loses. BTW, watch out what you have your money invested in. Some securities like FX trades are not necessarily covered by anything.
HOPEFULLY ???
@@SarahSmith-vt3oc Yeah, hopefully. Gotta always hope for the best after being burned once. Just glad it was a fairly small amount that time.
Good stuff
I'm confused about cash vs. Fidelity's SPAXX money market fund. SPAXX is where your cash sits after a sale of an asset. So how do I diversity into cash to receive the SIPC coverage for cash and have separate funds in SPAXX so I have coverage for this money market account separately? They're one and the same
This was my question as well. TY for asking and I hope we get an answer.
Fidelity also has a cash sweep that is very low interest but insured. SPAXX interest is reflective predominantly of the reverse repo facility rate. It's considered safe, but not insured.
Thanks for your help in our financial lives.
If we have a joint account does our SIPC coverage double?
If someone had say $1.5M at a Brokerage, of which $1M were Treasuries, they could transfer the Treasuries to Treasury Direct. That way they would be fully covered by SIPC insurance at their brokerage. And the $1M in Treasury Direct is backed by the full faith of the US Government (instead of the full faith of Schwab, Fidelity, Vanguard, ...or Lloyd's of London).
Good question. I've been buying directly from TD, but wanted to move everything under one roof (Fidelity), but it looks like eliminating the middle man (brokerage) and buying from TD is the safest way to go. Would you agree?
Well done
I love your videos because I learn a lot! I’m glad I found your channel!
If I have $4 million at Schwab in 30 day treasury bills just rolling it over is that money safe in our worst case scenario??
Thanks
How easy is it to transfer some amount of investments from an IRA account with one broker to another broker so that I diversify my accounts and stay closer to the $500k per account?
I have it in 4 brokerages including savings plus but Charles Schwab bought td amaritrade it’s down to 3. I wish Charles Schwab didn’t take over td amaritrade. I don’t think Charles Schwab is doing good management on the TOS platform; I like it better when under td amaritrade management.
Great informations! I have Roth & Individual Accounts in Fidelity and each still under 100k should be good for a while. Is this apply 401k Account also? ❤Thank you!
4 million? I hope she is a beautiful place sipping a cocktail.
Very informative. Thank you!
These are old and well regarded brokerages. Id be asking about the moo moos and meows meows popping up
I am glad to have the $500k coverage you speak of but the excess coverage seems like there are so many outs for the insurance company not to pay. Since I think people don't usually have Roth IRAs and other retirement accounts that are convenient to break up amongst multiple brokerage accounts, your $4 million dollar example investor really does not have many good options unless they ok with opening 6 or 7 accounts with different brokerages. Do they? An investor with $10 million is just out of luck and needs to get a lawyer quick should the worst happen as far as I can tell.
I had the same thought about what higher value (like that $10M) do to protect their assets. There are only so many options. Maybe someone reading this can comment.
god bless you
👍👍👍👍👏👏👏👏🙏🙏🙏🙏💪💪💪💪
It better be lol
Or else what?
@RBzee112 well it might be bad is all gotta Sat lol
If Schwab goes bankrupt, is there any concern about have money in any of their Mutual Funds or ETFs, like SCHD for example?
Vanguard = DEI
I have been a member of DEI since 1990. Great returns!
Is SPAXX money (or other Money Market Fund account - FZDXX) considered as 'CASH"? There is no other way to hold cash in an FIDELITY Individual Brokerage account or IRA