Disclaimer: this is how I understands all this, I could be wrong though > Funds are invested to be able to get that 3% return. If they are, then they are not

Disclaimer: this is how I understands all this, I could be wrong though > Funds are invested to be able to get that 3% return. If they are, then they are not insured either. SIPC doesn't insure bad investment decision, thus if the 3% return fail, you would lose money. The SIPC protect the cash that is stored there which you are going to invest at some point. Let say you put 1000$ there and you invest 200$, it's alright, theses 800$ are protected whatever happens, but if you put 1000$ there but wasn't planning to invest anything, then it's not alright and this is the issue. It's mostly a semantic point, but that semantic is what make it manageable for the SIPC.