Insured limit for index funds

For residents of Spain.
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Charlo
Posts: 1
Joined: Sun Dec 18, 2022 3:31 am

Insured limit for index funds

Post by Charlo »

I want to invest in Vanguard index Funds starting with a lump sum of 150,000 then monthly contributions. All the platforms (My Investor etc) have an insured maximum of 100,000 euros. What do people do if the objective is to reach financial independence this way as the quantity invested would be way higher than 100,000. Is it necessary to use various different platforms?
llin
Posts: 30
Joined: Sat Aug 13, 2022 10:54 pm

Re: Insured limit for index funds

Post by llin »

Securities insurance (in the US) is via the SIPC and covers the failure of the broker/dealer and not the stocks themselves. The platforms are just custodians of your shares, if they go belly up the shares would be transferred to a new firm. SIPC would cover cash shortfalls.
Stork
Posts: 175
Joined: Wed Feb 17, 2021 9:44 am
Location: Portugal (EU)

Re: Insured limit for index funds

Post by Stork »

As this is posted in the Spain forum I assume it is Spanish/EU rules the question goes about.

Bank accounts, and that should in most cases include cash held at a broker, is covered by deposit insurance guarantee which is €100,000.- per depositor per bank.

Stocks held at brokers are different. In principle (this is always a dangerous term) they should be kept separate from the brokers own stuff and you should get your holdings if the broker goes belly up. In reality this can be more complicated, and the cover for brokers are lower and set by national rules. AFAIR it is €70,000 in Spain, but €25,000 in Portugal and €20,000 in Germany. I think it is high in France.

In any case, not enough for a fair number of people.

That leaves you to your own due diligence. A good starting point is this article: https://www.bankeronwheels.com/how-to-c ... ck-broker/

We chose to split our money between IBRK and DEGIRO, and now also hold bonds directly through a Danish bank.
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