If you're considering investing or saving a million dollars with Robinhood, you might be wondering if it's safe to do so.
The answer is that it can be, but it depends on how you structure your account.
First, it's important to understand the protection offered by the Securities Investor Protection Corp. (SIPC).
Robinhood is a member of the SIPC, which means that any loss of an investor's securities and cash held by Robinhood is protected up to $500,000 (of which up to $250,000 is for cash).
This means that if you had a million dollars in a single Robinhood account (or any US brokerage account), you would exceed the coverage offered by the SIPC.
However, there is a way to maximize your coverage.
The SIPC coverage is for each brokerage account, so if you split your million dollars between multiple brokerage platforms, you could get coverage for your full million.
This is because each account would be eligible for its own individual SIPC coverage, up to the $500,000 limit.
In addition, Robinhood offers a high yield savings account through a network of partner banks.
Deposits made to these banks are eligible for FDIC insurance up to a total maximum of $1.5 million (which will increase to $2 million on or after June 1, 2023).
That's up to $250,000 per program bank, inclusive of deposits you may already hold at the bank in the same ownership capacity.
This means that if you had a million dollars in the Robinhood high yield savings account, your money would be spread out across multiple banks, and you would be fully covered by the FDIC insurance.
In conclusion, investing a million dollars with Robinhood can be safe, as long as you understand your coverage limits for both FDIC and SIPC.
It's important to do your research and understand the options available to you, so that you can invest with confidence and peace of mind.
This article was generated using automation technology, and thoroughly edited and fact-checked by an editor on our editorial staff.