So, what is it exactly?
Nervous about clicking a button and sending your money from your trusty bank account to a new investment company? Seeing the letters CIPF is meant to give you a little peace of mind. The Canadian Investor Protection Fund (CIPF) is an organization self-funded by member companies to protect investors if one of the companies becomes insolvent.
If a company goes bankrupt and it is a member of CIPF, you may be eligible for up to $1 million of coverage if the company cannot return your money to you. It’s important to note that the financial loss must be caused by insolvency, it doesn’t cover things like losses in the stock market.
What are the pros?
You don’t have to do anything. If your investment firm is a member of CIPF, you, Joe Investor, will automatically become eligible for coverage when you open an account.
Is there anything to be careful about?
Always double-check with CIPF to make sure that the investment company is actually a member. Wealthsimple is not a member of CIPF, but our brokerage providers that hold your money are members.
In the unlikely event that an investment company becomes insolvent (it’s only happened 20 times in Canada since 1969) and CIPF gets involved, accounts will be frozen and it will take some time to access your money again.
And if you have just enormous piles of money invested somewhere, it may exceed CIPF’s rescue funds.