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As Benjamin Graham once said: the first rule in investing is not to lose any money. Safety must be our primary concern as investors.

Vanguard has gathered a lot of trust over the past decades from retail investors. But what if the worst-case scenario happened and Vanguard goes bust?

Are your funds safe? And how is Vanguard insured?

Is Vanguard SIPC insured? Vanguard is a member of the Securities Investor Protection Corporation (SIPC) which protects investors’ funds up to $500,000. In addition, Vanguard has secured coverage from Syndicates at Lloyd’s of London up to an aggregate of $250 million. Vanguard brokerage accounts are also protected by two-factor-authentication to prevent unauthorized access.

In this article, we’ll cover all safety aspects that might affect your account with Vanguard. You’ll learn about Vanguard’s extensive insurance policies as well their account safety measures.

Lastly, I’ll also go over the unlike scenario that Vanguard went out of business and what would happen to your funds.

How safe is Vanguard?

There are two main aspects to Vanguard’s safety to consider: security and insurance.

Safety MeasureVanguard Brokerage
Authenticator app
SIPC membership✔️
FDIC insurance
Private insurance✔️
Ownership by investors✔️
Vanguard’s Safety

The security aspect deals mainly with account and app security to protect your funds from unauthorized access.

The insurance aspect is directly related to a potential loss of your funds. Insurance can protect your funds from loss in case that something happens to Vanguard or the custodian holding your funds.


One important security feature that Vanguard has in place is two-factor authentication. 2FA is an additional security layer when logging in to your account. It makes it far more difficult for hackers to gain access without your knowledge.

Vanguard security

When logging into your account or completing any transaction involving funds will ask you for a security code.

However, this feature is optional. In order to activate it – which I highly recommend – you’ll have to put down your phone number and enable the feature in your Vanguard account settings.

Unfortunately, Vanguard only offers 2FA through sending SMS codes. This method has proven insecure in some circumstances where hackers had been able to obtain access to the victim’s phone line via the provider.

A more secure option would be to have your security code generated directly from your mobile device. The Google Authenticator does a good job at that, but Vanguard does not offer this option.

In summary, their site and app security is decent. It’s highly unlikely that you will lose your funds through unauthorized access to your account especially when you have 2FA turned on.


Insurance can come in several forms. There is insurance for cash reserves, insurance for securities, and insurance for other forms of equity.

Out of these three, insurance for securities is usually the most important for investors, since we will not be holding large amounts of cash in our brokerage accounts.

Additionally, it is vital to understand the concept of custody. Every brokerage in the U.S. needs to keep customers’ funds in a custodial third-party account.

In the case of Vanguard, all funds are held in custody by Vanguard Brokerage Services which is a subdivision of Vanguard Marketing Corporation.

Is Vanguard Insured?

is vanguard sipc insured
is vanguard sipc insured

Vanguard’s insurance is two-fold: through membership of the Securities Investor Protection Corporation (SIPC) and through private insurance of Syndicates at Lloyd’s of London.

The SIPC protects claims for investors’ securities up to a maximum of $500,000 of which $250,000 can be cash reserves. Pretty much all registered brokers or dealers have to be SIPC members by law.

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Of course, I have verified Vanguard’s membership with the SIPC. Below you’ll see that VANGUARD MARKETING CORPORATION is listed as a SIPC member, of which the custodian of our funds, Vanguard Brokerage Services, is a division.

Vanguard Marketing Corporation - SIPC membership

Now, on to the second insurance Vanguard has opted for: Syndicates at Lloyd’s of London.

This insurance policy covers funds of all brokerage clients with an aggregate limit of $250 million for all claims of securities and cash and incorporates a per client coverage limit of $49.5 million for securities and $1.9 million for cash.

In conclusion, not only are your funds well protected through the custodial scheme and the SIPC, but Vanguard has secured additional coverage via a private insurer.

This combined should give you peace of mind that your assets are safe with Vanguard.

Is Vanguard covered by FDIC?

Vanguard is not covered by FDIC, since the Federal Deposit Insurance Corporation (FDIC) only insures bank accounts. As of today, Vanguard does not offer any checking or saving accounts.

The equivalent of FDIC coverage for brokerages is SIPC membership.

Why Vanguard is one of the safest brokers

What is Vanguard?

Vanguard is one of the most trusted asset management companies in the United States. Their founder, Jack Bogle, believed in putting investors first and helping us succeed. That’s why he basically invented index funds.

Vanguard was built and grew on that very philosophy and mission. And up until today, they are striving to reduce costs for investors while increasing the quality of their investment products.

Vanguard’s unique ownership structure is an expression of the above philosophy. The Vanguard Group is owned collectively by its funds. This means investors in a Vanguard fund become part-owners of that fund, and thus, of The Vanguard Group itself.

What happens if Vanguard goes out of business?

Now that we’ve covered the insurance and security side of things, let’s turn our attention to some of the more dramatic events that might unfold.

If Vanguard went out of business, your funds would be safe. Here’s why: The Vanguard Group which administers all the funds and investment products does not own any of the funds. In fact, it’s the other way around. The funds – and thus the investors – own The Vanguard Group.

This means that if The Vanguard Group would go bankrupt – which is highly unlikely in itself – they would have no recourse to your funds. The individual mutual funds and ETFs would simply continue to exist as independent entities.

Vanguard Excess Sipc Coverage

Vanguard, a renowned investment management company, offers excess coverage for its customers through the Securities Investor Protection Corporation (SIPC).

This additional protection safeguards investors’ assets in the unlikely event of the company’s insolvency. Vanguard’s commitment to providing comprehensive investment security sets it apart in the financial industry.

Bottom Line: Is Vanguard SIPC Insured?

Of course, nothing is 100% safe but Vanguard is as safe – if not safer – than any other broker out there.

Their accounts are secured with two-factor authentication and your funds are insured by the SIPC and Lloyd’s of London. Even if Vanguard went bust and declared bankruptcy your funds would be safe!

In our economy, trust still remains an essential factor. Just as you trust your bank not to lose your money you should trust Vanguard to keep your assets safe.

So, sleep well and keep on buying index funds.

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Facts And Answers:

Is Vanguard Fdic Insured?

Yes, the Vanguard Group provides investment options such as mutual funds and ETFs, but they are not FDIC insured. FDIC insurance typically covers bank deposit accounts, not investment products. Thats what the SPIC insurance is for, but yes Vanguard is FDIC insured. See the full article: Is Vanguard Fdic Insured?

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