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

FAQs

What happens to my investments if Vanguard becomes insolvent? ›

In the unlikely event that we become insolvent, your money and investments would be returned to you as quickly as possible, or transferred to another provider. This is because your money and investments are held separately from our own.

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.

Insurance coverage

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 by FDIC insurance.

All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future results.

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.

When the market cratered, investors withdrew $16.4 billion from Vanguard's index mutual funds. What accounts for remaining index mutual fund outflows? Johnson says it could be clients pulling out money because they're retiring, or because they're negatively affected by the pandemic.

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.

About Vanguard

Vanguard's mission is to "take a stand for all investors, to treat them fairly, and to give them the best chance for investment success."6 It prides itself on its stability, transparency, low costs, and risk management.

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.

Vanguard's ETFs and mutual funds are go-to choices for long-term investors for many reasons: Vanguard funds tend to be low in cost. Vanguard has built its reputation as a low-cost asset manager, and it remains one of the industry's lower-cost providers. Vanguard funds generally pursue simple, reliable strategies.

Can my mutual fund go to zero? ›

Can my mutual fund investment value go to zero? The chances of your mutual fund investment value going to zero are practically almost impossible as it would mean that all the assets in the fund's portfolio will have to lose their entire value. However, the returns from a fund can go to zero or even become negative.

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.

If you have cash available in your account, you can withdraw it following these steps: Log into your account. From the left-hand menu, go to 'Payments' Choose the 'Money out' tab.

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.

User reports indicate no current problems at Vanguard

Vanguard offers financial services including with a focus on mutual funds and ETFs.

Yes, the Vanguard Cash Plus Account is our version of a cash management account. Like other cash management accounts, it includes a bank sweep that moves your cash into a network of program banks, where it's eligible for FDIC coverage.

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).

Brokerage accounts hold investments such as stocks, bonds, and mutual funds, which aren't insured by the FDIC. Vanguard accounts are protected by Securities Investor Protection Corporation (SIPC) insurance. This insurance covers up to $500,000 in securities and up to $250,000 in cash if the firm fails.

When a mutual fund closes, investors can't buy more of it. Current investors can remain invested in the fund, however, and they are also welcome to sell their shares.

You'll need to send us a secure message, including the amount you want to withdraw. We'll do the rest for you. The whole process – selling the funds and proceeds clearing in your bank account usually takes 7 to 12 working days depending on the fund's settlement period.