What is the difference between SIPC and FDIC insurance for my investments?

FDIC insurance covers bank deposits — checking, savings, and CDs — up to $250,000 per depositor, per bank, and protects you if the bank fails. SIPC protects brokerage accounts up to $500,000 (including a $250,000 limit for cash) if the brokerage firm itself fails and your securities go missing. The crucial distinction: SIPC does not protect you from investment losses. If your index fund drops 30% in a downturn, that's market risk and no insurance covers it; SIPC only steps in if the broker collapses and can't return your assets. Many large brokers also carry supplemental private coverage beyond SIPC limits. Cash sitting in a brokerage's bank-sweep program may be FDIC-insured rather than SIPC-covered. Both protections are real but narrow — they guard against institutional failure, not bad markets.