Question

What is the difference between FDIC and SIPC?

Answer 1

FDIC stands for Federal Deposits Insurance Corporation and SPIC means Securities Investor Protection Corporation.
And the distinction between the two could make a big difference in how much you get back if something were to happen to the financial institution with which you've invested.

if your bank is covered by the FDIC, your money is insured for up to $2,50,000 per deposited . And if you have money parked with another financial institution covered by the FDIC, you are also covered for up to $2,50,000/- there.

That means if the financial institution you're banking with fails, you will get your money back. IF YOUR BANK FAILS, you will get refunded dollar for dollar the money you put in, plus interest up to the date the institution went under.

In contrast m if our institution is a SPIC member , you do not get the same level of coverage. If something happens tou your brokerage firm, you are covered for up to $5,00,000/- with a $2.50,000/- limit for cash.

but there are limitations in it that it does not protect the value of any security whereas FDIC protects.

SPIC does not cover you if you were sold worthless investments, received bad advice or were steered toward investments that are inappropriate for you.