Investor Protection

Provider Risk

1

A risk that is commonly forgotten is provider risk, which is associated with the financial health of a broker. The risk is that the stockbroker that you invest with goes bust, putting your investments in jeopardy.

2

When picking a broker, they should be registered and authorized by the financial conduct authority (the FCA). That way your investments will be protected under the Financial Services Compensation Scheme.

3

If your investments are protected and your broker goes bust, you’ll be eligible to receive up to £85,000 in compensation. Obviously, a lot of investors have more than this figure and could lose a lot of money. 

4

It’s important to invest with a reputable broker. Many of which are listed on the stock market (such as AJ Bell or Hargreaves Lansdown), allowing you to keep an eye on their financial performance.

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1. How much can you expect to earn from a cash investment?

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