One Vs Two brokerage accounts

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Topic Author
johnpau
Posts: 120
Joined: Sat Dec 30, 2017 5:24 pm

One Vs Two brokerage accounts

Post by johnpau » Thu Jan 10, 2019 5:12 pm

Hi,

New to this investing world.
Currently have Roth IRA with Vanguard from past 4 years.
Opened a brokerage account with Vanguard Federal money market (settlement fund). Cash is parked here.

Questions:

All brokerage accounts are FDIC insured up to 250K ?

Since Roth IRA and Vanguard settlement fund brokerage account are two separate accounts, each 250K FDIC insured ?
I mean both combined 500K FDIC insured ?

What do investors usually do when they have 500K+ in brokerage accounts ? Do they open brokerage accounts with different vendors, so this way all eggs are not in one basket ? Example:- Vanguard brokerage accounts combined less than 500K, Fidelity Brokerage accounts 500K.


When it comes to pros on having all the brokerage accounts with one vendor(vanguard), all the tax forms come from one company.
If you have brokerage account as well with a different vendor(Fidelity), we get tax forms from both companies. But is that OK, compared to the risk of putting all the eggs in one company ?

Correct me if I'm wrong. Thanks for your time.

MotoTrojan
Posts: 5522
Joined: Wed Feb 01, 2017 8:39 pm

Re: One Vs Two brokerage accounts

Post by MotoTrojan » Thu Jan 10, 2019 5:18 pm

johnpau wrote:
Thu Jan 10, 2019 5:12 pm
Hi,

New to this investing world.
Currently have Roth IRA with Vanguard from past 4 years.
Opened a brokerage account with Vanguard Federal money market (settlement fund). Cash is parked here.

Questions:

All brokerage accounts are FDIC insured up to 250K ?

Since Roth IRA and Vanguard settlement fund brokerage account are two separate accounts, each 250K FDIC insured ?
I mean both combined 500K FDIC insured ?

What do investors usually do when they have 500K+ in brokerage accounts ? Do they open brokerage accounts with different vendors, so this way all eggs are not in one basket ? Example:- Vanguard brokerage accounts combined less than 500K, Fidelity Brokerage accounts 500K.


When it comes to pros on having all the brokerage accounts with one vendor(vanguard), all the tax forms come from one company.
If you have brokerage account as well with a different vendor(Fidelity), we get tax forms from both companies. But is that OK, compared to the risk of putting all the eggs in one company ?

Correct me if I'm wrong. Thanks for your time.
I believe Brokerages are covered by SIPC actually, which covers $500K (and up to $250K in cash) with Fidelity at-least mentioning protection above that amount. FDIC is only for bank accounts (or approved account types within a Brokerage, see Fidelity link) and yes it is $250K/persons-account.

https://www.fidelity.com/why-fidelity/s ... r-accounts

There are many threads on here with people that use multiple brokerages. I don't think SIPC/FDIC is the main concern, but more so cyber-security (a hack preventing you from accessing your money).

livesoft
Posts: 67393
Joined: Thu Mar 01, 2007 8:00 pm

Re: One Vs Two brokerage accounts

Post by livesoft » Thu Jan 10, 2019 5:32 pm

johnpau wrote:
Thu Jan 10, 2019 5:12 pm
All brokerage accounts are FDIC insured up to 250K ?
No, absolutely not. SIPC insurance does not insure that your investments will not lose money.[/quote]
I don't care about FDIC insurance because I am an investor that knows that my investments are designed to lose money.

I do care that a firm doesn't steal my money though, so I only use large, internationally-known financial institutions that have been around more than 30 to 50 years. Then if money goes missing, there will be lots of other people who will notice and do something.

As for FDIC insurance, you have to realize that someone has to make sure FDIC insurance means something. That's the Federal government, so you can cut out the middleman and just buy US Treasuries directly. They are not FDIC insured, but they don't have to be.
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Topic Author
johnpau
Posts: 120
Joined: Sat Dec 30, 2017 5:24 pm

Re: One Vs Two brokerage accounts

Post by johnpau » Thu Jan 10, 2019 5:52 pm

OK, I was mistaken. It is SIPC and not FDIC.

I know investing might loose value in money.

But as everyone said, in case the companies (vanguard,fidelity,cyber-attk) happens
are we only 250K SPIC insured per person on one company(vanguard,fidelity) ?

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