Investor protection is an important factor to consider when you open an account with an online broker.
When you open a brokerage account, you usually get investor protection. Investor protection means that up to a certain limit, you receive your money back if the broker goes into bankruptcy or commits fraud. The investor protection amount defines the limit of protection.
The investor protection amount varies country by country. In Europe, 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.