US Stock Investing: What Actually Protects Your Portfolio?

If you use any modern fintech platform to buy US stocks from abroad, your account is guarded by a regulatory safety net called SIPC. Before you scale your global portfolio, here is the quick, point-by-point breakdown of the standard protections — and how to evaluate the extra layers some brokers purchase.

Fast Facts: What is SIPC?

• The Mandate: The Securities Investor Protection Corporation (SIPC) is a US nonprofit created by federal law to protect customers if a broker-dealer fails.
• The Blueprint: SIPC steps in during broker liquidation to return missing securities and cash, often by transferring your assets to another brokerage.
• Eligibility: There is no US citizenship or residency requirement. Non-US investors receive the same protections at SIPC-member firms.

Core Protection Limits

SIPC coverage is capped at $500,000 per customer, including a $250,000 limit for cash. The remaining amount applies to securities such as stocks, ETFs, and mutual funds held in custody.

The Optional Layer: Excess SIPC

Many clearing firms and broker-dealers purchase additional private insurance often called “Excess SIPC.” This coverage is not mandated by law, and limits vary by broker and custodian. If you want the exact limits, check your broker’s disclosures or clearing firm’s insurance page.

What SIPC Does Not Cover

• Market losses: SIPC does not protect against price declines or poor investment performance.
• Platform outages: App downtime or execution issues are commercial disputes, not SIPC events.
• Account compromise: Unauthorized access or cyber theft is outside SIPC’s mandate (check broker cyber protections separately).

Source: SIPC investor guidance on coverage limits and protections.