Skip to main content

The downside of bankruptcy-proofing your investments is that it’s kind of a pain.

So there’s quite possibly some aggravation ahead for a reader who wondered about the risk of loss in his investing account if his online broker goes under.

“I have a seven-figure account,” he wrote. “What would I lose if the broker went bankrupt or became insolvent?”

Story continues below advertisement

It’s conceivable that assets in client accounts could be lost if a broker became insolvent. To ease concerns about this, the Canadian Investor Protection Fund was created. It’s basic for online brokers to be a member of CIPF, which covers holdings in an eligible account to a maximum of $1-million if a firm becomes insolvent. Some brokers may offer additional insurance to protect clients in case of insolvency, but that’s not typical.

Investors who hold more than $1-million in assets in a single account have to decide whether they’re worried enough about the risk of insolvency to go to the bother of opening a second account elsewhere to stay within CIPF limits. Over the years, I’ve heard from many readers who maintain accounts at two or three online brokers. But anyone who values convenience will want to watch over just one account.

My suggestion: Stay within the CIPF limits in all accounts and remove broker insolvency from your list of financial things to worry about. Brokers very rarely go under, and they tend to be fringe players when they do. But one of the lessons of the global financial crisis is that rot can set in at all levels of the financial world.

Investors who hold a lot of money in guaranteed investment certificates face similar questions about keeping money safe in case a financial firm goes bankrupt. Canada Deposit Insurance Corp. covers eligible accounts at member institutions for up to $100,000 in principal and interest. If you’re conservative enough to use GICs extensively, it makes good sense to keep within CDIC limits at any one bank.

To be clear on CIPF, it does not cover investors against declines in the value of their holdings, against fraud or bad advice. Its mission is to cover cash and securities that disappear from your account after your firm goes under.

-- Rob Carrick

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

Story continues below advertisement

Stocks to ponder

Bank of Nova Scotia It is 11 per cent away from its record closing high set back in November of 2017. However, the stock chart looks promising with the share price on the verge of potentially forming a “golden cross." Jennifer Dowty looks at the charts.

Acadian Timber This is a small company with a low profile. But a recent ownership shakeup and the arrival of a new management team provide two reasons to give the stock a closer look. A third reason: The stock’s dividend yield is 6.8 per cent. David Berman shares his rationale.

The Rundown

Off the radar but with spectacular gains: Little-known stocks among the TSX’s top performers over the past three years

While many investors prefer the familiar confines of the Canadian large-cap universe, most of the best-performing stocks live outside of the S&P/TSX Composite Index. The 30 listings on the Toronto Stock Exchange with the highest total return over the past three years include 16 stocks not included in the country’s main index, which currently totals 233 names. Tim Shufelt reports

Story continues below advertisement

Look deeper, and there’s plenty of reasons why investors should fear a Trump impeachment

Most of Wall Street’s finest minds are brushing off investors’ worries about a potential impeachment of Donald Trump. No need to fret, they say, because any attempt to remove the U.S. President is not going to get very far. This carefree attitude makes sense if you view the issue as simply a question of whether the impeachment inquiry launched Tuesday in the U.S. House of Representatives has a chance of going all the way and forcing the current occupant out of the White House. That is not going to happen, because any attempt to remove a Republican president will inevitably die in the Republican-controlled Senate. But those who are playing down a potential impeachment are ignoring the bigger question of what the inquiry means for markets over the year ahead. Ian McGugan shares his insight

Others (for subscribers)

Short sales on the TSX: What bearish investors are betting against

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Story continues below advertisement

Thursday’s Insider Report: Three REITs seeing action

Friday’s Insider Report: Vice-chair cashes out $11-million from this dividend stock as it rises to a record high

CIBC director is buying as the stock outperforms peers

Ten reasonably priced TSX industrial stocks showing profitability and efficiency

Avoid large-cap bias: Here are 15 quality U.S. stocks you won’t find in the S&P 500

Others (for everyone)

Story continues below advertisement

WeWork, Peloton, Uber and Lyft: Disappointing IPO performance has Wall Street skeptics questioning startup strategy

Cyclical shares key to determining endurance of U.S. stock rally

Globe Advisor

Five tax strategies to improve investors’ financial well-being

Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.

What’s up in the days ahead

Story continues below advertisement

Sanity is seeping back into markets. Fantasies are fading. Good news? That all depends on where you stand. Ian McGugan will explain.

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @globeinvestor

Click here share your view of our newsletter and give us your suggestions.

You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.

Compiled by Globe Investor Staff

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter