Fidelity Investment Accounts - Insured?

[3kids4me]

I should probably know this but I don't. Are 401k account or any account help with an investment company like Fidelity insured in any way? Or, can one conceivably lose it all overnight?

Thanks....

 

[timeos2]

No and yes. The very nature of non-insured investments.

 

[3kids4me]

No and yes. The very nature of non-insured investments.

Um, no and yes? Do you mean no they aren't insured and yes I could lose everything overnight? Does that mean that people are going to start moving their stuff out of investment companies?

P.S. I actually just called Fidelity which I should have done in the first place. Investment companies are covered by SIPC (Securities Investors Protection Corporation) insurance to $500,000 and Capco private insurance for some companies (including Fidelity).

 

[timeos2]

Um, no and yes? Do you mean no they aren't insured and yes I could lose everything overnight? Does that mean that people are going to start moving their stuff out of investment companies?

P.S. I actually just called Fidelity which I should have done in the first place. Investment companies are covered by SIPC (Securities Investors Protection Corporation) insurance to $500,000 and Capco private insurance for some companies (including Fidelity).

But unlike bank accounts SIPC is a private company not the Government (decide for yourself if that is good or bad) and therefore, like a car warranty company, cold cease to exist if they get hit with too many losses. Plus they DO NOT guarantee the investments - only that the money you have in the fund - whatever value that is - is protected from fraud or theft. If the fund itself goes broke or loses big time you get zilch. That's the nature of investing.

 

[3kids4me]

Hi John,

I'm really talking about bankruptcy of the investment company...no one can insure against stock market losses but I'm talking about money held in money markets or cash reserves with a company like Fidelity.

But I get you on the private company thing. What are your thoughts about that?

Sharon

 

[timeos2]

But I get you on the private company thing. What are your thoughts about that?

Sharon

Well, I'm not a big Government guy but they are the only ones with the ability to print money. So no matter if they have it or not they can in fact back up things like a bank failure even if its mortgaging the future for our kids. A private company can only spend what it has or can borrow - then the well is dry. So since they base premiums to the insured companys such as Fidelity on a formula and then re-insure with other companies there is a limit to what they can absorb. Of the two the Government has to have the edge in this case.

 

[MULTIZ321]

For more info on Securities Investor Protection Corporation - http://www.sipc.org/

and also Hoover's Profile: Securities Investor Protection Corporation

As stated earlier in the post SIPC insures customers' securities (up to $500,000 per account) against losses due to the financial failure of brokerage firms. Losses caused by fluctuations in market value are not protected. Note that coverage of cash (or cash equivalents) is only covered to $100,000.


Richard