Investor Protection Definition
Investor protection means that up to a certain limit, you receive 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 varies country by country. In Europe the amount of investor protection it is usually € 20,000, while in the US is significantly higher, $ 500,000. Some other countries like Australia does not provide any investor protection.
The investor protection amount is usually guaranteed by a state fund.