huge investment, and we want to know that if something so bad happens that the house no longer exists, we’ll be able to recoup at least some of that investment.
The FDIC, a government agency, functions in a similar way, except instead of insurance on your home, it’s insurance on the money you have in the bank. That is, if your bank goes out of business, you won’t lose the money you had invested there (up to a point–there are limits on how far FDIC insurance extends).
But what about investments you have in financial organizations that aren’t banks? In 1970, the government addressed this issue by creating the Securities Investor Protection Corporation, or SIPC. When broker-dealers become protected by the SIPC, they effectively buy insurance so that if they go bankrupt, their investors will be able to recoup their money, up to $500,000.
It’s important to note that SIPC coverage doesn’t kick in if investors simply lose money because their investments decrease in value. But it’s a great way to make sure that investors aren’t left holding the bag if their broker goes under.
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How to Do a Direct IRA Transfer
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Funding a Safety Net: Calculate Your Target Amount
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Explore your first goal
This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.
Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.
If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.