I have a large sum of money invested in an IRA with Fidelity.?
Question:
Answer:
I think it would be rare for Fidelity to go broke; however, anything can happen. With that said, there is an organization called the Securities Investor Protection Corporation (SIPC). Per the SIPC's Mission Statement:
"When a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers' cash, stock and other securities. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court.
Although not every investor is protected by SIPC, no fewer than 99 percent of persons who are eligible get their investments back from SIPC."
FYI, Fidelity is a member of SIPC.
I would go to www.sipc.org for further info.
I would also agree with the other responder in diversifying who you have your funds with. There are other investment products and companies you can also invest with instead of having all your funds with one company.
market is good now do not worry fidelity has excellent money managers
The way to safeguard against this is to not have all your eggs in one basket. Fidelity is a great company, and it's probably not going under any time soon. But have the mutual funds with more than one company. Diversify your stocks, too. The best way to pick stocks is to look in your cupboards at home. Take the things you use most, and see if they're traded on the stock market.
Another thing to keep in mind is the difference between an IRA and a Roth IRA. In an IRA, you aren't taxed initially for the money you put in, but you're taxed on all the money you take out. Taxes always go up, and you end up paying tax on the interest you made in your IRA. In a Roth IRA, you pay taxes on the principle when you put it in, and you don't get taxed on the interest or what you take out (unless you're under 65). You end up paying less in taxes in the long run.
If Fidelity goes broke it won't matter where your money is because that is the last sign of the apocalypse.
Seriously, the money in the mutual fund is offset by the stocks, bonds, etc. that the fund owns. Of all the risks your money is subject to, Fidelity's solvency is waaaaay down on the list.
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