how safe are brokerage cash accnts?

SIPC covers $100,000 (as part of their $500,000 coverage, but other than the cash, it's just protection against the loss of your securities, not the value of them).

Most large brokerages buy additional insurance above that.

It should be interesting to see the handing over of brokerage accounts at BS and Lehman, both of whom had Excess SIPC coverage through CapCo - as far as I know, to date, not a single cent has had to be paid out by CapCo. They also provide Excess SIPC coverage for a lot of other folks out there - Fidelity, Jones, Goldman, Raymond James, Wachovia Securities.

Other brokerages typically purchase Excess coverage through other third-parties.

Note that SIPC (and Excess) does not cover the value of money market funds - they are securities - they'd get you those shares, but not guarantee the $1 share price.

Most folks don't keep much in the raw cash accounts at brokerages, by design. That's why $100,000 is usually more than enough for that part of the coverage. At most this cash is usually there only between trades and excess cash sitting in such accounts is "swept" into a core money market fund.

If you've got more than $100,000 in a cash account and are not sweeping it into a money market fund, you should probably re-think your handling of that cash.

As far as the value of money market funds, I'd say not to worry. Even the calamitous breaking-of-the-buck a couple of weeks ago at The Reserve Fund Primary Fund - the one which really got all the headlines - was a NAV of $0.97. While a loss of anything at all in a money market fund is unacceptable, bear in mind the scale of losses here. If you're still worried about that, move your money-market assets to a 100% treasury MMF, but I'm not recommending that to anyone, really.

If you mean a money market fund, here's a link to info on the Treasury Guarantee Program:

Note that this applies to a money market fund. There are other kinds of cash accounts at brokerages and you may be in something else.

-HW "Skip" Weldon Columbia, SC

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Frankly, no one knows.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

How true! Honesty is welcme these days. But don't worry too much; all's well that ends well. Besides, Herbert Hoov,,, Er, sorry, I mean George Bush.... told us on TV to hang in there and everything will work out OK.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

And what would you do instead?

Elizabeth Richardson

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

It's not so much what I would do; it's what I am going to do--- vote for Obama!

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

And why do you think it will make any difference? The problem is in Congress, not the presidency.

Elizabeth Richardson

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Lets keep politics out of it then, as the moderator says; lets go back to the OPs original question. I would say his concern about the safety of brokerage accounts, cash and otherwise, is timely and well-advised. I would not suggest he put cash under the mattress. But we have recently seen something that few people would have thought possible--the failure of major banks and a world-wide credit crisis. Who is to say that brokerage accounts could not be next? Who can say that any type of account anywhere, including mutual funds, is absolutely safe? So put not all your eggs into any one basket or into one asset class. I am happy I own my home free and clear. No matter what happens the house to live in will still be there, and I will be sort of safe (as long as the electricity and gas and water still work).

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

You may not get $100,000 worth of cash coverage. Read the terms carefully. For instance, here's Scottrade's statement:

"In order for the cash to be covered by SIPC or excess SIPC, cash held in an account must be for the purpose of, or as a result of, securities transacions. Cash held in a securities account for the purpose of eraning interest, which was notthe result of a securities transaction, may not be covered by SIPC or excess SIPC."

Since the OP suggested that there was some reason for the cash being there, other than as temporary holding between sale of one security and purchase of another, one might be cautious about relying on the insurance coverage for the cash (as opposed to a MMF).

Mark Freeland snipped-for-privacy@nyc.rr.com

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.