Stocks held in street name are safe with a reputable broker

— -- Q: If my broker is holding securities for me in street name, do I lose my position in those companies if the broker goes under?

A: When most people buy a stock, they contact their broker and that's it.

But there's quite a bit that goes on behind the scenes. One of the most important aspects is the way you "hold" the stock. There are three main ways to hold a stock, which are described in detail here.

Most investors who use brokers, generally own their shares in street name. In that case, the brokerage owns the stocks in its own name, but lists you as the owner in its records. There are advantages and disadvantages, which are discussed in the Ask Matt column linked above.

Some investors don't like the idea of shares being held in the firm's name, not their own. This probably isn't something you should spend time stressing over, though. Brokers are required to keep client assets and their own assets separate.

And in the event that a reputable broker takes your assets, you're protected up to $500,000 by the Securities Investor Protection Corp. (SIPC). If your shares were stolen, even if in street name, SIPC would replace the securities. You can read more about SIPC and find out if your brokerage is covered by SIPC here.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.