Brokerage Account Insurance

Wouldn't it be nice if your brokerage account was insured, so that if you made some boneheaded moves and lost half your money, the insurance would just hand it back to you? Well, sorry -- it doesn't work like that.

Still, there is a kind of insurance tied to brokerages. Reputable brokerages actually carry insurance. Just as the FDIC insures bank accounts, the Securities Investor Protection Corporation (SIPC) insures brokerage accounts up to $500,000 per account (including up to $100,000 in cash).

Many brokerages even surpass SIPC levels of insurance. There might be a shady brokerage or two out there that somehow isn't insured, though. Ask your brokerage (or prospective brokerage) for clarification on what insurance protection it offers.

Learn more about the SIPC and what it does at its informative website, and learn more about brokerages at our Broker Center. Did you know that some well-regarded brokerages are offering commissions as low as $5?

To learn more about investing Foolishly and how the business world works, visit our Fool School and our Investing Basics area. Or check out some of our inexpensive and well-regarded online how-to guides, which feature money-back guarantees.