All One's Eggs in One Basket?
All One's Eggs in One Basket?
Is it wise to have all one's life savings with one firm like Vanguard, or Fidelity, etc. Or is there an advantage to splitting between two or three companies to reduce the risk of unforeseen issues? One's life savings isn't insured by the government.
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Re: All One's Eggs in One Basket?
I see nothing wrong with putting all of your money in Vanguard or Fidelity. However, I wouldn't put all of my money in Madoff Investment Securities.
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Re: All One's Eggs in One Basket?
Based on past threads on this topic, you will likely get responses on both sides of the fence. Some use one brokerage for simplicity. Some use two brokerages in the event one account is temporarily locked due to a fraud issue, etc. I use two brokerages.
Re: All One's Eggs in One Basket?
I use multiple major brokerages as peace of mind to hedge against unforeseen issues at any one brokerage. I'm particularly wary of computer security issues these days. It is true that I would most likely get my money back in such a case, but I'd rather have only a part of my portfolio affected even if it is temporary. It does complicate the accounting, but not by much, and is a worthwhile tradeoff in my view.
Re: All One's Eggs in One Basket?
+1 for multiple accounts. The headache at tax time passes in a few days. The peace of mind during events like we saw a few weeks ago lasts all year round.nakatomi wrote: ↑Tue Feb 23, 2021 11:28 pm I use multiple major brokerages as peace of mind to hedge against unforeseen issues at any one brokerage. I'm particularly wary of computer security issues these days. It is true that I would most likely get my money back in such a case, but I'd rather have only a part of my portfolio affected even if it is temporary. It does complicate the accounting, but not by much, and is a worthwhile tradeoff in my view.
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Re: All One's Eggs in One Basket?
I prefer multiple firms for reasons already shared by others. Should a firm run into a significant problem, like a cyberattack, it is good to have a backup plan.
Re: All One's Eggs in One Basket?
I use multiple firms…
"I started with nothing and I still have most of it left."
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Re: All One's Eggs in One Basket?
I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
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Re: All One's Eggs in One Basket?
I have a few. Each one serves a particular purpose. So it's not about fear of brokerage risk. Though can see why people would want a few for this reason.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
Re: All One's Eggs in One Basket?
For funds that are in non-tax advantaged accounts, there are potential tax pitfalls that could result from this strategy. For example, if you have a three fund portfolio at Vanguard in a non-tax advantaged account and you want to move some of the money to Fidelity, you will likely take a big tax hit. Ther are ways to prevent this, with maybe the simplest and easiest just being to open a second account an start funding it now. And don't fund it by selling from an existing non-tax advantaged account--rather when you have income you are able to invest, just put it in the new account at the second firm.anon_investor wrote: ↑Wed Feb 24, 2021 12:04 am I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
Re: All One's Eggs in One Basket?
In this regard, I prefer simplicity.
DW and my IRA's are at Fidelity
Taxable account at Fidelity
Deferred comp is at Fidelity
HSA is (mostly) at Fidelity, with the remainder at HealthEquity but I do periodic trustee to trustee transfers to Fidelity
Current 401K is at Vanguard, but I'm over 59.5 and I'll do a rollover once per year to Fidelity while I'm still at this employer and a complete rollover once I'm no longer working at this employer.
Ibonds at TreasuryDirect.
Cash at my Credit Union.
Yeah, I get the security reasons for spreading across baskets. But I have cash at my credit union and credit cards with pretty high limits which hopefully can see me through any short/medium term glitch that might happen at Fidelity. And if there's an issue also with either of those I can always dip into my Ibonds, but I'd prefer not to.
DW and my IRA's are at Fidelity
Taxable account at Fidelity
Deferred comp is at Fidelity
HSA is (mostly) at Fidelity, with the remainder at HealthEquity but I do periodic trustee to trustee transfers to Fidelity
Current 401K is at Vanguard, but I'm over 59.5 and I'll do a rollover once per year to Fidelity while I'm still at this employer and a complete rollover once I'm no longer working at this employer.
Ibonds at TreasuryDirect.
Cash at my Credit Union.
Yeah, I get the security reasons for spreading across baskets. But I have cash at my credit union and credit cards with pretty high limits which hopefully can see me through any short/medium term glitch that might happen at Fidelity. And if there's an issue also with either of those I can always dip into my Ibonds, but I'd prefer not to.
Re: All One's Eggs in One Basket?
No matter where you have your money, make sure to use protections like two factor authentication and strong passwords. You have to judge the benefits for yourself of multiple institutions because it does add complexity to your life. I personally think the chances are very low something would happen to any of the established players like Vanguard, Fidelity, Schwab, etc.
Due to our situation (401k and brokerage) we do have multiple accounts. Down the road, I'll probably consolidate to one institution for simplicity sake.
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Re: All One's Eggs in One Basket?
2 is 1 and 1 is none
I think it's always a good idea to have a backup, especially when it costs nothing to open an account at a major brokerage firm
I think it's always a good idea to have a backup, especially when it costs nothing to open an account at a major brokerage firm
Last edited by bugleheadd on Wed Feb 24, 2021 6:55 am, edited 1 time in total.
- anon_investor
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Re: All One's Eggs in One Basket?
There is no taxable event created by moving securities in-kind from one brokerage to another.Finridge wrote: ↑Wed Feb 24, 2021 2:44 amFor funds that are in non-tax advantaged accounts, there are potential tax pitfalls that could result from this strategy. For example, if you have a three fund portfolio at Vanguard in a non-tax advantaged account and you want to move some of the money to Fidelity, you will likely take a big tax hit. Ther are ways to prevent this, with maybe the simplest and easiest just being to open a second account an start funding it now. And don't fund it by selling from an existing non-tax advantaged account--rather when you have income you are able to invest, just put it in the new account at the second firm.anon_investor wrote: ↑Wed Feb 24, 2021 12:04 am I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
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Re: All One's Eggs in One Basket?
I have my eggs in several baskets, but I will probably consolidate down to one bank and one brokerage when I reach my late 80s. Either way is fine from a safety standpoint.
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Re: All One's Eggs in One Basket?
4 figures at a local brick and mortar bank, 5 figures in an online CD, the rest at Vanguard. I could substitute Fidelity or Schwab or a few others and feel just as safe.
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Re: All One's Eggs in One Basket?
It's a personal decision...I would think if you were with a major fund company you'd be ok.
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Re: All One's Eggs in One Basket?
All at one major brokerage (e.g. Vanguard, Fidelity, Schwab) at is likely better than multiple at smaller ones (e.g. M1 finance or Robin Hood).tennisplyr wrote: ↑Wed Feb 24, 2021 7:09 am It's a personal decision...I would think if you were with a major fund company you'd be ok.
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Re: All One's Eggs in One Basket?
No easy answers. However, you do need to include two considerations in the mix.
1) You must distinguish between two situations. One is a firm that is taking your money now and giving you a promise about something they say they will do in the future. An airline ticket is an example. You pay for it now, but your flight actually doesn't exist until the day of the flight. If the airline goes out of business in the interim, they cannot keep their promise. The other is a firm that is holding your assets for you. If you have shares of an ETF or anything else, held in your name at Vanguard or Fidelity or wherever, those shares do not vanish if the firm becomes unable to do business. (And the shares of stock within the ETF do not vanish if the ETF itself needs to be liquidated). Certainly, you can worry about fraud, record keeping, or nasty administrative delays in getting to it if the firm isn't operating. But dozens and dozens of brokerages have gone out of business, and I've never noticed any big headlines about problems. Usually they and their clients are acquired by some other broker. The risks "my broker going bankrupt" are very different from the risks of "my fitness center going bankrupt."
2) You need to make a realistic appraisal of the risks of complexity in your financial affairs. It is very easy to suppose that there aren't any because you're competent, clearheaded, and have a spreadsheet. But, anyone who has tried to locate the assets of deceased person can tell you that it can be a difficult process.
There is also the risk of "losing the picture." And if you take the easy route of using some consolidation service, Mint or arranging Vanguard to automatically track and include your non-Vanguard investments, you are taking a security risk and possibly violating terms of service when you disclose your account passwords to another firm. People assume that risk is negligible, but why? Because the aggregating firms make it sound negligible and they have a "why this is safe" link, and lots of people do it. Probably not sound reasons.
I once helped someone who was in perfectly good cognitive shape but terminally ill make a list of his financial assets for the benefit of their spouse. This person was sharp, just not very interested in finance. Over the course of a lifetime it is awfully easy to slowly acquire a clutter of things like $15,000 in some 401(k) you decided not to close, CDs that never matured because you were getting ready for vacation when the notice of maturity came and it was easier to just pitch it in a shoebox and let it roll over, and things like that. I kept asking him "so is that everything now?" And he kept saying things like "Yes, that's it, that's everything. Oh, except for that bank IRA I inherited from my mom..."
So if you have more than one brokerage account, constantly ask yourself "is this brokerage account sparking joy in me" and...
1) You must distinguish between two situations. One is a firm that is taking your money now and giving you a promise about something they say they will do in the future. An airline ticket is an example. You pay for it now, but your flight actually doesn't exist until the day of the flight. If the airline goes out of business in the interim, they cannot keep their promise. The other is a firm that is holding your assets for you. If you have shares of an ETF or anything else, held in your name at Vanguard or Fidelity or wherever, those shares do not vanish if the firm becomes unable to do business. (And the shares of stock within the ETF do not vanish if the ETF itself needs to be liquidated). Certainly, you can worry about fraud, record keeping, or nasty administrative delays in getting to it if the firm isn't operating. But dozens and dozens of brokerages have gone out of business, and I've never noticed any big headlines about problems. Usually they and their clients are acquired by some other broker. The risks "my broker going bankrupt" are very different from the risks of "my fitness center going bankrupt."
2) You need to make a realistic appraisal of the risks of complexity in your financial affairs. It is very easy to suppose that there aren't any because you're competent, clearheaded, and have a spreadsheet. But, anyone who has tried to locate the assets of deceased person can tell you that it can be a difficult process.
There is also the risk of "losing the picture." And if you take the easy route of using some consolidation service, Mint or arranging Vanguard to automatically track and include your non-Vanguard investments, you are taking a security risk and possibly violating terms of service when you disclose your account passwords to another firm. People assume that risk is negligible, but why? Because the aggregating firms make it sound negligible and they have a "why this is safe" link, and lots of people do it. Probably not sound reasons.
I once helped someone who was in perfectly good cognitive shape but terminally ill make a list of his financial assets for the benefit of their spouse. This person was sharp, just not very interested in finance. Over the course of a lifetime it is awfully easy to slowly acquire a clutter of things like $15,000 in some 401(k) you decided not to close, CDs that never matured because you were getting ready for vacation when the notice of maturity came and it was easier to just pitch it in a shoebox and let it roll over, and things like that. I kept asking him "so is that everything now?" And he kept saying things like "Yes, that's it, that's everything. Oh, except for that bank IRA I inherited from my mom..."
So if you have more than one brokerage account, constantly ask yourself "is this brokerage account sparking joy in me" and...
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: All One's Eggs in One Basket?
We use more than one financial firm, and will continue to do so.anon_investor wrote: ↑Wed Feb 24, 2021 6:53 amThere is no taxable event created by moving securities in-kind from one brokerage to another.Finridge wrote: ↑Wed Feb 24, 2021 2:44 amFor funds that are in non-tax advantaged accounts, there are potential tax pitfalls that could result from this strategy. For example, if you have a three fund portfolio at Vanguard in a non-tax advantaged account and you want to move some of the money to Fidelity, you will likely take a big tax hit. Ther are ways to prevent this, with maybe the simplest and easiest just being to open a second account an start funding it now. And don't fund it by selling from an existing non-tax advantaged account--rather when you have income you are able to invest, just put it in the new account at the second firm.anon_investor wrote: ↑Wed Feb 24, 2021 12:04 am I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
In part, this isn't voluntary due in part to our holdings: We have 403b accounts at TIAA, so those cannot be moved at all until after separation from Employer. However, even then, we each have holdings in TIAA Traditional Annuity and smaller amounts in TREA (TIAA's real estate account [not a REIT]), and those cannot be held elsewhere.
We currently have small IRAs at Vanguard, and a larger account at Schwab.
We'll probably focus primarily on accounts at TIAA and Schwab in the future, because we just want some "back up" in the event of some sort of temporary access glitch at one firm.
anon_investor is correct that there isn't any taxable event created by moving holdings "in kind" from one firm to another. (Whether there are any other types of fees is a separate question.)
But if one's concern is about costs for later buying/selling holdings at one account (e.g., if one transfers Vanguard mutual funds to Fidelity or Schwab, where there are, currently, transaction fees), then one could simply transfer "in kind" and then do any additional future buying in similar mutual funds that do not have any transaction fee at the new firm. Just let the transferred "in kind" holdings sit there. Usually, there are no fees for automatic reinvesting of dividends/etc., but double check that. If there are any such fees, then just turn off auto reinvesting, and then use any such incoming cash to invest as you see fit.
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Re: All One's Eggs in One Basket?
Another great response, Nisiprius.
We are definitely reducing the number of accounts that we have. We have half our money at Vanguard. The other half will be at Fidelity when DW retires at the end of this year.
Before I retired, I was a security nerd. Account aggregators which store your logon id and password remotely are a horrible idea. Even if the aggregator pulls your balance from a read only channel, you have given up your logon credentials to a third party. The same logon credentials that work on the broker’s retail site. The same credentials that may work on other sites you use? Just a bad, bad, idea.
We are definitely reducing the number of accounts that we have. We have half our money at Vanguard. The other half will be at Fidelity when DW retires at the end of this year.
Before I retired, I was a security nerd. Account aggregators which store your logon id and password remotely are a horrible idea. Even if the aggregator pulls your balance from a read only channel, you have given up your logon credentials to a third party. The same logon credentials that work on the broker’s retail site. The same credentials that may work on other sites you use? Just a bad, bad, idea.
"I started with nothing and I still have most of it left."
- anon_investor
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Re: All One's Eggs in One Basket?
I never understood why people would willingly share their login credentials to account aggregators. I have a spreadsheets I created that automatically updates prices based on ticker, I only have to manually update the number of shares. I feel much safer with this, since there are no account numbers or login information in my spreadsheet, so if it is compromised no large security risk.Wiggums wrote: ↑Wed Feb 24, 2021 8:47 am Another great response, Nisiprius.
We are definitely reducing the number of accounts that we have. We have half our money at Vanguard. The other half will be at Fidelity when DW retires at the end of this year.
Before I retired, I was a security nerd. Account aggregators which store your logon id and password remotely are a horrible idea. Even if the aggregator pulls your balance from a read only channel, you have given up your logon credentials to a third party. The same logon credentials that work on the broker’s retail site. The same credentials that may work on other sites you use? Just a bad, bad, idea.
Re: All One's Eggs in One Basket?
Yes, it's very easy in excel. Once it's set up, you simply click on the data ribbon and then click refresh.anon_investor wrote: ↑Wed Feb 24, 2021 9:11 amI never understood why people would willingly share their login credentials to account aggregators. I have a spreadsheets I created that automatically updates prices based on ticker, I only have to manually update the number of shares. I feel much safer with this, since there are no account numbers or login information in my spreadsheet, so if it is compromised no large security risk.Wiggums wrote: ↑Wed Feb 24, 2021 8:47 am Another great response, Nisiprius.
We are definitely reducing the number of accounts that we have. We have half our money at Vanguard. The other half will be at Fidelity when DW retires at the end of this year.
Before I retired, I was a security nerd. Account aggregators which store your logon id and password remotely are a horrible idea. Even if the aggregator pulls your balance from a read only channel, you have given up your logon credentials to a third party. The same logon credentials that work on the broker’s retail site. The same credentials that may work on other sites you use? Just a bad, bad, idea.
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Re: All One's Eggs in One Basket?
I use Google Sheets, but again it has no personal information (no account numbers, no bank or brokerage names, just account type, etc.). If some one hacks my google sheet they can't do much with it.Orangutan wrote: ↑Wed Feb 24, 2021 9:38 amYes, it's very easy in excel. Once it's set up, you simply click on the data ribbon and then click refresh.anon_investor wrote: ↑Wed Feb 24, 2021 9:11 amI never understood why people would willingly share their login credentials to account aggregators. I have a spreadsheets I created that automatically updates prices based on ticker, I only have to manually update the number of shares. I feel much safer with this, since there are no account numbers or login information in my spreadsheet, so if it is compromised no large security risk.Wiggums wrote: ↑Wed Feb 24, 2021 8:47 am Another great response, Nisiprius.
We are definitely reducing the number of accounts that we have. We have half our money at Vanguard. The other half will be at Fidelity when DW retires at the end of this year.
Before I retired, I was a security nerd. Account aggregators which store your logon id and password remotely are a horrible idea. Even if the aggregator pulls your balance from a read only channel, you have given up your logon credentials to a third party. The same logon credentials that work on the broker’s retail site. The same credentials that may work on other sites you use? Just a bad, bad, idea.
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Re: All One's Eggs in One Basket?
We have all of our investing accounts (joint taxable account, 2 Roth IRAs and my rollover IRA) at Vanguard and use only Vanguard index funds. I think that's more convenient.
For banking services (joint checking account, debit cards) we use a branch bank near our home, credit cards thru another bank.
Wiki article Vanguard safety. "Vanguard (and every other US-regulated mutual fund company) does not hold funds directly. Funds are held by 3rd party custodians."
Last edited by ruralavalon on Wed Feb 24, 2021 9:54 am, edited 1 time in total.
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Wiki article link: Bogleheads® investment philosophy
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Re: All One's Eggs in One Basket?
I use multiples but that's for my benefit not because of risk avoidance. I would use a single one of the big named ones if it covered all my bases.
Re: All One's Eggs in One Basket?
I have everything at one place (Fidelity). My employer uses them for 401K & HSA.
My IRAs are there and investment. It is just simplified to have one login view of my world. Plus tax forms are centralized.
My employer does ESPP and RSU at another firm, but as soon as anything vests, I move it to Fido for all subsequent transactions.
I like the same look-n-feel for all statements/confirmations.... plus I use DAF there.
My IRAs are there and investment. It is just simplified to have one login view of my world. Plus tax forms are centralized.
My employer does ESPP and RSU at another firm, but as soon as anything vests, I move it to Fido for all subsequent transactions.
I like the same look-n-feel for all statements/confirmations.... plus I use DAF there.
Re: All One's Eggs in One Basket?
This past week I put all my eggs in the Vanguard basket.
Previously, in addition to my Vanguard accounts, I had an IRA and a brokerage account at Fidelity.
I transferred in kind and the process was straight-forward.
I'm motivated by the desire to simplify the tracking of my investments. This will streamline the spreadsheet that I'm using.
It will also eliminate the process by which I was manually entering my "other accounts" info on Vanguard.
And, I too avoid any account tracking consolidation tools. I try and minimize points of failure for my login credentials.
-Framus
Who put all his eggs in one basket and is watching it very closely.
Previously, in addition to my Vanguard accounts, I had an IRA and a brokerage account at Fidelity.
I transferred in kind and the process was straight-forward.
I'm motivated by the desire to simplify the tracking of my investments. This will streamline the spreadsheet that I'm using.
It will also eliminate the process by which I was manually entering my "other accounts" info on Vanguard.
And, I too avoid any account tracking consolidation tools. I try and minimize points of failure for my login credentials.
-Framus
Who put all his eggs in one basket and is watching it very closely.
Re: All One's Eggs in One Basket?
I would not have any issues putting all my investments with just one company and would very much prefer it, actually. It simplifies everything, from being able to track my portfolio performance, initiate transactions, or doing my taxes. I can't because my 401k and IRAs are not with the same provider, and some custodians are better at some types of transactions I want to make.
But I would not worry about having all investment at one provider if you are talking about firms like Vanguard or Fidelity. The only thing I do is take occasional screenshots of my accounts, which I save with the statements I download, in the (unlikely) event there is some tech error on the back-end of the process and my account balances are all wrong. I have logged in once (or twice?) and saw some weird things with account balances. I think some folks here saw a zero balance for some time at one large brokerage. So that's the reason I take photographs as a "snapshot" moment-in-time evidence of what my portfolio with them looked like. A statement seems quite much easier to fake, if they no longer have the backups to prove that was what you had with them.
But I would not worry about having all investment at one provider if you are talking about firms like Vanguard or Fidelity. The only thing I do is take occasional screenshots of my accounts, which I save with the statements I download, in the (unlikely) event there is some tech error on the back-end of the process and my account balances are all wrong. I have logged in once (or twice?) and saw some weird things with account balances. I think some folks here saw a zero balance for some time at one large brokerage. So that's the reason I take photographs as a "snapshot" moment-in-time evidence of what my portfolio with them looked like. A statement seems quite much easier to fake, if they no longer have the backups to prove that was what you had with them.
Re: All One's Eggs in One Basket?
I diversify somewhat purely to protect against issues like one bank incorrectly thinking I'm dead, or lost password. I don't worry about the money vanishing, only temporarily losing access to it.
Re: All One's Eggs in One Basket?
One home for all of your money is just fine until it's not.
I spent the last 27 years of my career working for a well managed company that offered an online 24X7 service and I strongly believe that no matter how well managed the company and no matter how strong their controls they will have occasional issues with cyber attacks and/or hardware or software failures. These problems generally get resolved reasonably quickly but there is a risk that they could happen at a time that you need access to your money and it is so easy to mitigate that risk by using more than one investment firm.
I spent the last 27 years of my career working for a well managed company that offered an online 24X7 service and I strongly believe that no matter how well managed the company and no matter how strong their controls they will have occasional issues with cyber attacks and/or hardware or software failures. These problems generally get resolved reasonably quickly but there is a risk that they could happen at a time that you need access to your money and it is so easy to mitigate that risk by using more than one investment firm.
Re: All One's Eggs in One Basket?
Current assets under management:
Vanguard. 6.7 T
Fidelity. 8.3 T
Schwab. 4.05 T
I would consider any one of these "too big to fail." But who knows for certain? Sot we keep our money in two firms, and use two number security system for both.
Vanguard. 6.7 T
Fidelity. 8.3 T
Schwab. 4.05 T
I would consider any one of these "too big to fail." But who knows for certain? Sot we keep our money in two firms, and use two number security system for both.
Re: All One's Eggs in One Basket?
A contrarian's viewpoint.......if you decide to place your eggs in 2 baskets, you double the chance that one of those 2 baskets will come crashing down. I prefer to keep all investments are in multiple accounts at one firm.
Re: All One's Eggs in One Basket?
I'd use one with no worries as long as it was a major broker.
I actually have relationships with five brokers, but there are reasons each.
Fidelity - my primary broker and the one I'd use if I were able to get to one
UBS- where I purchase my Muni bonds
Merrill Edge - to maintain Platinum Honors level status at BofA (for their premium rewards CC)
JPM - to take advantage of their $2,000 bonus offer
VG- for access to Admiral funds
I do not have multiple brokers because I am afraid one will go down.
I actually have relationships with five brokers, but there are reasons each.
Fidelity - my primary broker and the one I'd use if I were able to get to one
UBS- where I purchase my Muni bonds
Merrill Edge - to maintain Platinum Honors level status at BofA (for their premium rewards CC)
JPM - to take advantage of their $2,000 bonus offer
VG- for access to Admiral funds
I do not have multiple brokers because I am afraid one will go down.
Real Knowledge Comes Only From Experience
Re: All One's Eggs in One Basket?
Yes, and this will work if you have ETF shares that you can transfer to a new brokerage without selling. It will not work for normal mutual funds though. And also, depending on the circumstances, doing this may reduce or the benefits of diversifying your accounts... If you have 1,000 shares in a Vanguard EFT and you move half of them to Fidelity, you really haven't reduced your reliance on Vanguard because the underlying investment is still a Vanguard ETF--so you still have all your eggs in one basket.anon_investor wrote: ↑Wed Feb 24, 2021 6:53 amThere is no taxable event created by moving securities in-kind from one brokerage to another.Finridge wrote: ↑Wed Feb 24, 2021 2:44 amFor funds that are in non-tax advantaged accounts, there are potential tax pitfalls that could result from this strategy. For example, if you have a three fund portfolio at Vanguard in a non-tax advantaged account and you want to move some of the money to Fidelity, you will likely take a big tax hit. Ther are ways to prevent this, with maybe the simplest and easiest just being to open a second account an start funding it now. And don't fund it by selling from an existing non-tax advantaged account--rather when you have income you are able to invest, just put it in the new account at the second firm.anon_investor wrote: ↑Wed Feb 24, 2021 12:04 am I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
- ResearchMed
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Re: All One's Eggs in One Basket?
"Normal mutual funds" can be transferred "in kind", unless the receiving broker simply doesn't handle that fund or fund family. There may be a fee to sell or to add more, but that's a different issue.Finridge wrote: ↑Mon Mar 01, 2021 9:53 pmYes, and this will work if you have ETF shares that you can transfer to a new brokerage without selling. It will not work for normal mutual funds though. And also, depending on the circumstances, doing this may reduce or the benefits of diversifying your accounts... If you have 1,000 shares in a Vanguard EFT and you move half of them to Fidelity, you really haven't reduced your reliance on Vanguard because the underlying investment is still a Vanguard ETF--so you still have all your eggs in one basket.anon_investor wrote: ↑Wed Feb 24, 2021 6:53 amThere is no taxable event created by moving securities in-kind from one brokerage to another.Finridge wrote: ↑Wed Feb 24, 2021 2:44 amFor funds that are in non-tax advantaged accounts, there are potential tax pitfalls that could result from this strategy. For example, if you have a three fund portfolio at Vanguard in a non-tax advantaged account and you want to move some of the money to Fidelity, you will likely take a big tax hit. Ther are ways to prevent this, with maybe the simplest and easiest just being to open a second account an start funding it now. And don't fund it by selling from an existing non-tax advantaged account--rather when you have income you are able to invest, just put it in the new account at the second firm.anon_investor wrote: ↑Wed Feb 24, 2021 12:04 am I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
(Mutual funds can also be moved "in kind" from an IRA to a regular taxable account, but that has tax consequences.)
Also, IF the "eggs in one basket" concern is about temporary glitches and access to one's account, then having a Vanguard ETF or Mutual Fund at another brokerage shouldn't be a problem. If one is worried about the "what if Vanguard goes belly up and it turns out there isn't any coverage, etc.", then yes... that would be a problem.
Our concern and reason for using more than on brokerage firm is the former.
RM
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- anon_investor
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Re: All One's Eggs in One Basket?
+1, I am not afraid if Vanguard going belly up, only losing access temporarily. But since I don't live off my investments right now (still accumulation phase) I am okay with all my investments there. But I likely will end up with at least some investments at another brokerage (likely Fidelity since I plan to rollover my HSA there).ResearchMed wrote: ↑Mon Mar 01, 2021 10:04 pm"Normal mutual funds" can be transferred "in kind", unless the receiving broker simply doesn't handle that fund or fund family. There may be a fee to sell or to add more, but that's a different issue.Finridge wrote: ↑Mon Mar 01, 2021 9:53 pmYes, and this will work if you have ETF shares that you can transfer to a new brokerage without selling. It will not work for normal mutual funds though. And also, depending on the circumstances, doing this may reduce or the benefits of diversifying your accounts... If you have 1,000 shares in a Vanguard EFT and you move half of them to Fidelity, you really haven't reduced your reliance on Vanguard because the underlying investment is still a Vanguard ETF--so you still have all your eggs in one basket.anon_investor wrote: ↑Wed Feb 24, 2021 6:53 amThere is no taxable event created by moving securities in-kind from one brokerage to another.Finridge wrote: ↑Wed Feb 24, 2021 2:44 amFor funds that are in non-tax advantaged accounts, there are potential tax pitfalls that could result from this strategy. For example, if you have a three fund portfolio at Vanguard in a non-tax advantaged account and you want to move some of the money to Fidelity, you will likely take a big tax hit. Ther are ways to prevent this, with maybe the simplest and easiest just being to open a second account an start funding it now. And don't fund it by selling from an existing non-tax advantaged account--rather when you have income you are able to invest, just put it in the new account at the second firm.anon_investor wrote: ↑Wed Feb 24, 2021 12:04 am I only have 1, but I am still in the accumulation phase and not withdrawing from my investments. Once I retire and will rely on my investments for expenses, I plan to have 2. I am concerned about losing temporary access to one (e.g. technical issues, fraud lockout, cyber attack, etc.).
(Mutual funds can also be moved "in kind" from an IRA to a regular taxable account, but that has tax consequences.)
Also, IF the "eggs in one basket" concern is about temporary glitches and access to one's account, then having a Vanguard ETF or Mutual Fund at another brokerage shouldn't be a problem. If one is worried about the "what if Vanguard goes belly up and it turns out there isn't any coverage, etc.", then yes... that would be a problem.
Our concern and reason for using more than on brokerage firm is the former.
RM
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Re: All One's Eggs in One Basket?
Just for simplicity sakes I've always had all retirement accounts and taxable with one brokerage, Fidelity. We do have a checking account with a local bank just to have some personal contact if needed. I would be interested to know of anyone's personal experience with Vanguard or Fidelity where they could not access their funds because of a computer glitch, security issue, etc.
Re: All One's Eggs in One Basket?
I am not worried about a major broker like Fidelity or Vanguard failing, but your account could get hacked and locked.
Consequently, while I have most of my assets at 1 firm, I do have 3 brokerage accounts, 3 checking accounts, and 8 credit cards.
Consequently, while I have most of my assets at 1 firm, I do have 3 brokerage accounts, 3 checking accounts, and 8 credit cards.
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Re: All One's Eggs in One Basket?
Are you worried about two brokerages getting hacked and locked at the same time as the three banks? It seems unlikely that 5 institutions would get hacked simultaneously but the sixth would not. I am not arguing for one basket, but 6 seems like a lot- if that is your only reason for having them all.
Re: All One's Eggs in One Basket?
There is a lot of overlap between those institutions.lazynovice wrote: ↑Mon Mar 01, 2021 11:08 pmAre you worried about two brokerages getting hacked and locked at the same time as the three banks? It seems unlikely that 5 institutions would get hacked simultaneously but the sixth would not. I am not arguing for one basket, but 6 seems like a lot- if that is your only reason for having them all.
Merrill/BOA are Brokerage, Checking, and CC.
Schwab is Brokerage and Checking.
etc.
The surplus of CCs is because of diff categories, not just redundancy. 2 hotel cards, an airline card, Amazon card, etc.
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Re: All One's Eggs in One Basket?
When my wife retired, we transferred her Fidelity account to Vanguard which meant that all of our investment accounts were at Vanguard. Our investments were in Vanguard mutual funds, and we were happy with the mutual fund platform because of the comprehensive annual statements. After reading threads at this website about the problems some folks had with customer service at Vanguard and the possibility of a crash of their website, I began to doubt the wisdom of having all my eggs in the Vanguard basket. Consequently, when Chase created their YouInvest platform, I opened a taxable YouInvest brokerage account because we had accounts at Chase and would have 100 free trades per year. I liked the simplicity of being able to view our bank accounts and our brokerage account when I logged on at Chase as well as the ability to transfer money from one account to another with a couple of clicks. However, I hated their brokerage account statements. When Vanguard informed us that we would have to transition our mutual fund platform accounts to their brokerage account platform, we weren’t happy because Vanguard’s brokerage account statements were similar to the brokerage account statements we received from J P Morgan Chase. For simplicity, we have moved our Vanguard taxable assets to our Chase YouInvest brokerage account so that we only have to deal with one brokerage account statement. We plan to keep our retirement accounts at Vanguard, but have no plans to transition to the new brokerage account platform until forced to do so.
The simple answer to your question is that we are more comfortable having multiple brokerage accounts. We also have accounts at a few banks in addition to our Chase accounts.
DMW
The simple answer to your question is that we are more comfortable having multiple brokerage accounts. We also have accounts at a few banks in addition to our Chase accounts.
DMW
Re: All One's Eggs in One Basket?
We have a similar setup... Fidelity, and one local bank account. I like & use both their online billpay services. My local Fidelity rep, in a meeting 4 years ago, said to keep the brick-and-mortar bank open, for any need that comes up where you need a "teller", money-order, or safe-deposit box (which I use). I'd go Fidelity-only, if they had a local teller/safeBox. Fido provides free checks if/when I use them.razorbacker wrote: ↑Mon Mar 01, 2021 10:27 pm Just for simplicity sakes I've always had all retirement accounts and taxable with one brokerage, Fidelity. We do have a checking account with a local bank (BoA) just to have some personal contact if needed. I would be interested to know of anyone's personal experience with Vanguard or Fidelity where they could not access their funds because of a computer glitch, security issue, etc.
My question is ... my local bank is providing a free account, since I have direct-deposit payroll. But when I retire the direct deposit stops, as I'll have several gap years until SocialSecurity starts. I looked at the fine print on what could qualify as a DD. Then I'll be on the hunt for a "free" account somewhere (with a safe box).
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Re: All One's Eggs in One Basket?
6 one & half a dozen the other.....
For us, simplicity is best.
I just retired effective 1-Feb-21. We moved and consolidated all monies from megaoil Corporation to Vanguard.
We have our "Sleep Good At Night Monies", i.e., ~ 2 to 3 Years Net Expenses in the checking account at the Bank. All the rest is at Vanguard.
As others have rightly pointed out - no real strong basis for either approach....do what suits you, and allows you to sleep good at night.
gamboolman....
For us, simplicity is best.
I just retired effective 1-Feb-21. We moved and consolidated all monies from megaoil Corporation to Vanguard.
We have our "Sleep Good At Night Monies", i.e., ~ 2 to 3 Years Net Expenses in the checking account at the Bank. All the rest is at Vanguard.
As others have rightly pointed out - no real strong basis for either approach....do what suits you, and allows you to sleep good at night.
gamboolman....
- topper1296
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Re: All One's Eggs in One Basket?
Personally, I view keeping everything with just one firm as bad of an idea as keeping everything in just one asset class.