Risk with investments >20k in the EU

There's a significant disparity between the guarantees on offer between bank deposits and investments in the EU. It's up to 100k for the former vs 90% of your loss capped at 20k for the latter. It's not like this everywhere of course, the UK matches the 85k GBP it offers on bank deposits to investments if I'm not mistaken. I believe the Swiss do something similar.

For people with large 5 or 6 figure sums, who want to invest in equities, doesn't that act as a significant disadvantage going with an EU institution?

Is there something I'm missing, or am I overstating the risk? Where do people with large sums to invest (who don't want to be landlords), put their funds?

nest egg said:

There's a significant disparity between the guarantees on offer between bank deposits and investments in the EU. It's up to 100k for the former vs 90% of your loss capped at 20k for the latter. It's not like this everywhere of course, the UK matches the 85k GBP it offers on bank deposits to investments if I'm not mistaken. I believe the Swiss do something similar.

For people with large 5 or 6 figure sums, who want to invest in equities, doesn't that act as a significant disadvantage going with an EU institution?

Is there something I'm missing, or am I overstating the risk? Where do people with large sums to invest (who don't want to be landlords), put their funds?

Click to expand...

What circumstances would need to happen for the investment guarantee to pay out? How likely is that to happen? Has it ever happened before?

Fortune said:

What circumstances would need to happen for the investment guarantee to pay out? How likely is that to happen? Has it ever happened before?

Click to expand...

Many people don't have direct ownership of their share portfolio these days, just a beneficial interest. Yes, it's a genuine beneficial interest, but I think we'll only know what happens if/when one of these brokerages goes bust. There are a myriad of fintech newcomers in the investment space, in which more and more people are placing their faith, with very little comeback if the preverbal does hit the fan.

The recent example of Synapse in the US got me thinking about this. The punters thought they were covered by up to 250k in FDIC insurance as their fintech institution was holding their cash on deposit in a bank. The collapse of the middleman however meant they've been left in limbo. It's not an investing tool in this case, but highlights the risk/complexity which goes on behind closed doors.

https://archive.ph/m0iKd (WSJ article)