What Happens to Our Investments if Schwab, Fidelity or Vanguard Collapse?
1,686,119
Published 2023-03-17
We cover both of these questions in today's video.
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Video Resources
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SVB Balance Sheet: d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/4b031…
Schwab Balance Sheet: content.schwab.com/web/retail/public/about-schwab/…
What if Vanguard went bankrupt: investor.vanguard.com/investor-resources-education…
FINRA: www.finra.org/investors/alerts/if-brokerage-firm-c…
Fidelity Safeguarding accounts: www.fidelity.com/why-fidelity/safeguarding-your-ac…
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ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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All Comments (21)
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I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for...
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I like investing in close-end funds that pay monthly dividends. The trick is to hold long term and reinvest the monthly dividends plus buy more shares on a monthly basis or whenever you can afford to. This can be easily done because close-end funds are bought and sold on the stock market like regular stock. That’d be enough to create a portfolio that would pay you between $50k to $70k in dividend income
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We can only hope that doesn't happen. I do have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio dwindle away is such an eye -sore.
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Well said Rob, Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.
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If Vanguard or Fidelity goes under, we have much bigger problems than anyone can imagine. The fear created from the largest brokers going under would cause a massive crash in everything. Even the Fed and Treasury couldn't contain the fallout.
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Heard someone say the best season for a financial breakthrough is now, especially with inflation running at a four-decade high. I have approximately $750k stagnant in my port_folio that needs growth. What is the best way to take advantage of this downturn?
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This is the clearest explanation I've seen on the difference between banks and brokerage firms. It not only states the facts but also provides simple and accessible ways to verify the information. Having been in the financial services industry for over 20 years, I appreciate that this explanation was delivered without fear-mongering or bias, offering an excellent summary.
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As someone with a brokerage account at Charles Schwab, this was excellent information, thanks for making this video.
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Sir, your channel is a Godsend. I have been so worried about my money in my checking account at Schwab. I had no idea it was insured. This is a great relief. I am happy to subscribe. Thank you.
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Very good job explaining. You might want to point out that one of the biggest crimes FTX did was mixing client's money with with their own investments.
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Understanding personal finances and investing will most likely lead to greater financial independence. By being knowledgeable about money and investing, individuals can make informed decisions about how to save, spend, and invest their money.
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Thank you very much for preparing this video. I was one of the people who asked you to do this. Kind regards Lincoln
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Super helpful. Thanks for cutting through the noise and making a complicated subject understandable. Although I think my money is relatively safe at a bank or brokerage, I do worry about temporarily losing access to my money due to solvency issues, hacking, cyber attacks, fraud, or a simple misunderstanding. So perhaps maintaining cash accounts at multiple financial institutions would be a good idea.
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Thank you very much Mr. Berger for unpacking a very complex matter and explaining it in simple, understandable terms. 🎯
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Thank you. I called Vanguard and asked this question and they never responded. Subscribed and upvoted.
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Happened on this by accident, but it is information I was seeking and things are pretty much as I thought. Thanks for the reinforcement. I am definitely subscribed from here on out! Thank-you!
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Excellent and straightforward explanation of the differences between brokerage firms and banks. Very much needed, thanks Rob
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You didn't address this, but what happens if the custodian that is holding the funds goes bankrupt. At least with Fidelity, Vanguard, or Schwab we somewhat know those companies and how they are run. Now it appears we have to do our research to see how the custodians are doing as a business. What happens if one of the brokerages was using SVB as their custodian?
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It's always a pleasure to have you here as a mentor, i learn a lot from your videos, and it has helped me in decision making, particularly in the financial sector.
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Excellent overview Rob. This is precisely the type of information needed several weeks ago so that depositors would not have behaved out of fear and moved deposits from SVB. Any banking system, especially our with rules, regulation and oversight (some may say were asleep) requires confidence in order to remain a solid institution.
