What happens to my investments if Vanguard becomes insolvent? (2024)

FAQs

What happens to my investments if Vanguard becomes insolvent? ›

The securities that underlie the funds are held by a custodian, not by Vanguard. Vanguard is paid by the funds to provide administration and other services. If Vanguard ever did go bankrupt, the funds would not be affected and would simply hire another firm to provide these services.

Rest easy knowing the cash in your Vanguard Cash Plus bank sweep is eligible for FDIC coverage up to $1.25 million for individual accounts and $2.5 million for joint accounts. You can keep all your money in the bank sweep or diversify into 5 available Vanguard money market funds (each with a $3,000 minimum investment).

How your money is protected. We're authorised by the Financial Conduct Authority and are required to keep our clients' money and assets separate from our own. Your money is ring-fenced in the unlikely event that we became insolvent. Clients are also covered by the Financial Service Compensation Scheme (FSCS).

All investing is subject to risk, including the possible loss of money you invest. For more information about Vanguard mutual funds or ETFs, obtain a mutual fund or ETF prospectus or, if available, a summary prospectus.

If a brokerage fails, another financial firm may agree to buy the firm's assets and accounts will be transferred to the new custodian with little interruption. The government also provides insurance, known as SIPC coverage, on up to $500,000 of securities or $250,000 of cash held at a brokerage firm.

The securities that underlie the funds are held by a custodian, not by Vanguard. Vanguard is paid by the funds to provide administration and other services. If Vanguard ever did go bankrupt, the funds would not be affected and would simply hire another firm to provide these services.

Within the industry, Vanguard is a leader in offering passively managed mutual funds and ETFs. It is known for its: Stability.

Typically, when a brokerage firm fails, the Securities Investor Protection Corporation (SIPC) arranges the transfer of the failed brokerage's accounts to a different securities brokerage firm. If the SIPC is unable to arrange the accounts' transfer, the failed firm is liquidated.

You may get back less than you invest. Any money which you hold as cash within your Vanguard ISA will not benefit from any market appreciation. Inflation will affect the real value of your investments (including any cash) in the future.

On the Plan Options page (link below), select "Withdraw cash" to receive all your money in one payment or "Set up retirement plan paychecks" to receive it in parts over time.

What are the cons of Vanguard? ›

"Shareholders of the fund are being notified and have the opportunity to exchange into another Vanguard fund or redeem shares prior to the liquidation date, at which time the fund's assets will be sold and the proceeds distributed," Vanguard said.

Once your balance is at zero and you have no active payments, send us a secure message, we'll close your account as soon as possible: Log into your account. From the left-hand menu go to Secure messages. Send us a message telling us you wish to close your account.

They must also have a certain amount of liquidity on hand, thus allowing them to cover funds in these cases. What this means is that even if you have more than $500,000 in one brokerage account, chances are high that you won't lose any of your money even if the broker is forced into liquidation.

Is Charles Schwab better than Vanguard? After testing 18 of the best online brokers, our analysis finds that Charles Schwab (96.6%) is better than Vanguard (80.3%).

Fidelity was named Bankrate's best broker for beginner investors in the 2024 Bankrate Awards. Fidelity stands out for its low costs, number of account types offered and great customer service, while Vanguard offers thousands of no-transaction-fee mutual funds and commission-free online trading of stocks and ETFs.

Money market funds and other securities held in the Vanguard Brokerage Account are eligible for SIPC coverage. Securities in your brokerage account are protected up to $500,000. To learn more, visit the SIPC's website. Up to $250,000 per depositor, per bank by FDIC insurance.

So, what if Vanguard's brokerage fails? First, the chances of Vanguard failing are miniscule. That said, let's talk about brokerage accounts for a minute. Brokerage accounts are not backed by the FDIC but by the Securities Investor Protection Corp (SIPC), which protects accounts up to $500,000.

Get the support you need

Whether you're saving for college, retirement, or other goals, investing at Vanguard gives you access to varying levels of support. Choose from a wide range of investment products—such as mutual funds, ETFs (exchange-traded funds), stocks, and more—all for a low cost.