(MONEY Magazine) – Q. I know that if my bank goes bust, my accounts are insured by the FDIC up to $100,000. But if my brokerage house goes belly up, what happens to my securities, bonds and mutual funds held there? David H. Siegan Los Angeles A. You should get your money back. A government-chartered organization, the ; Securities Investor Protection Corporation (SIPC), provides a kind of insurance. If your broker goes under, SIPC will see to it that securities held for you in the ''Street,'' or broker's, name are returned to you. That also goes for any cash you have on account with the broker at the time of the failure. But this protection has limits -- $500,000 in cash and securities per account and no more than $100,000 in cash. You also get some protection against fraud. Let's say you paid a smooth-talking broker $10,000 to buy stock but he used the money for a down payment on his Mercedes. If you have a written confirmation or a monthly statement showing the stock in your account, SIPC will buy the shares in the open market and return them to you. Mutual funds -- even those underwritten and managed by a brokerage house -- are separate entities, and their securities are kept by custodians, usually banks. A fund's directors or trustees -- 40% of whom are normally independent of the brokerage house -- would simply appoint a new manager, and the fund would carry on as usual.

Q. My wife and I are both 31 years old and have a sizable amount of money in our Individual Retirement Accounts. Our portfolios contain stocks, bond funds and certificates of deposit. Historically, stocks outperform bonds and CDs over a long period of time, so wouldn't we be better off putting all of our money into quality stocks for another 25 years? Steven R. Zwaller Pocatello, Idaho A. Your strategy would probably work out fine. Since 1926, the compound rate of return for big-company stocks has averaged about 10% a year, for government bonds 4% to 5% and for Treasury bills and cash accounts 3% to 4%. For your benign-neglect method of investing to work, however, you would have to tough out periods when stocks are low. For example, if you had put 100% of your stash in stocks in 1926, your holdings would have shrunk after the 1929 crash. True, they would have rebounded to outperform government bonds and T-bills by 1943 -- well within your 25-year horizon. But you have to ask yourself whether you would have the intestinal fortitude to stick with stocks during such a long slump. If you do, you have my blessing. Many people, however, would freak out and sell when their stocks were at the bottom. For a less nerve-racking ride to long-term growth, you would be better off to diversify your holdings.

Q. My folks have been in the business of harvesting clam shells from the Mississippi River for the past decade and have gathered a large collection of freshwater pearls of all shapes and sizes. They want to sell but are unable to find a buyer. Can you help? Randy Sheckler Fennimore, Wis. A. Freshwater pearls have been popular with two groups: the batik and macrame crowd, who cherished them for their ''natural'' look, and the unmoneyed for their low price. But because freshwaters never caught on with movers and shakers, who favored glitzy Rolex watches and gross gold chains, your pearls will not fetch as much as their saltwater cousins. You can expect a few dollars for little, shriveled ones to a few hundred for those that are fat, white and lustrous. A really gigantic round one of, say, 16 millimeters in diameter might sell for thousands of dollars. On the other hand, a thousand here and a thousand there and soon you're talking about real money. Of course, a dealer will want to see your pearls before buying and, lucky for you, there's one right in your state: M. Lang Co. (139 N. Main St., Oconomowoc, Wis. 53066; 414-567-0602). You might also write to Barbara Bush and ask her to dump that triple strand of fake saltwater pearls for the all-American variety. That would be: 1) patriotic on her part and, 2) profitable for you by making freshwaters stylish and spiffing up their prices.

Q. Early last fall I bought 1,500 shares of Scan-Graphics at 85 cents each. Recently the company made a reverse split of one for five. So my 1,500 shares shrank to 300, and my $1,275 account is now worth only $525. Obviously I liked this stock better before the split. It seems like thievery. Can you shed any light? Lisa Harris New York City A. One would think that your holdings would have been worth $1,275 after the split ($4.25 a share, or five times the 85 cents you paid). But investing would be no fun if it were that simple. In this case, two confusing events occurred almost simultaneously. Scan-Graphics, a $4 million Broomall, Pa. company that builds scanners and software for electronic imaging systems -- whatever they are -- went public in 1987. On Nov. 1, 1989, the stock sank to just over 56 cents. That's when the company conducted the reverse one-for- five split, boosting share values to $2.81 each. That was Confusing Event No. 1. Confusing Event No. 2 took place a few days later, when the most active brokerage firm trading the stock folded. Because penny stocks are principally traded by one brokerage house, the company's chances of finding new investors diminished, and share prices headed toward Guadeloupe; they went as low as $1.34 and now hover around $1.70. Your investment may not be a goner. The computer industry as a whole is rebounding. In the future, however, you should be wary of penny stocks. They bounce up and down like tennis balls, but all too often they come to rest on the ground.

Q. I need some guidance in determining net worth. When listing my assets (other than stocks and bonds), should I value them at what I paid or at what they might bring if the bottom should fall out and I had to sell? Listing them at purchase price could result in an inflated net worth. Robert B. Van Sciver Evergreen, Colo. A. When calculating your net worth -- your assets minus your debts -- use current market value, not the original price. Either way, you'll see a much rosier picture than if you were forced to sell in the midst of a deep recession. But don't be so negative. Right now, the bottom seems to be hanging around and not falling out. And your notion that listing assets at purchase price would necessarily inflate their value is true only if your possessions consist solely of things like stained couches with springs popping out. Many items -- houses, antiques and jewelry, for example -- appreciate in value. To determine the current market value of these big-ticket assets, get an appraiser. And the other stuff? You could go through classified ads to figure how much, say, your three-year-old Buick would sell for -- a tedious exercise. Or you could do what I do: make a good guess and spend the time left over sitting in the sun, reading a good mystery.