Your account(s) is insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 in total value per entity, but limits insurance on cash to $250,000 per entity. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities. Money market funds are considered a security. Cash is defined as funds not invested in a money market fund. Please see below for two examples of how SIPC insurance works.
- An individual account with $450,000 in securities and $10,000 in cash. SIPC insurance fully covers both the value of the securities, as well as all of the cash.
- Two accounts in the same name, each with $50,000 in securities and $200,000 in cash. The total value of securities is $100,000 and the total value of cash is $400,000. SIPC insurance covers the entire equity balance of both accounts of $100,000, but only $250,000 of the cash balance. $150,000 in cash would not be covered by SIPC in this scenario.
Please visit sipc.org for more information.
Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.