Investor Protection Definition
Investor protection means that up to a certain limit, you get your money back if the broker goes into bankruptcy or commits fraud. It is an important factor to consider when you open an account with an online broker. When you open a trading account at a brokerage, you usually get investor protection.
The investor protection amount defines the limit of protection and it can vary from country to country. In Europe the amount of investor protection is usually €20,000, while in the US it is significantly higher, at $500,000. However, some other countries, like Australia, do not provide any investor protection at all.
The investor protection amount is usually guaranteed by a state fund.