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Spreading Money out for protection
Old 02-12-2014, 11:02 AM   #1
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Spreading Money out for protection

The recent invasion of computer systems by criminals at Target, Neiman Marcus and Michael's has got me thinking about how much risk I am taking keeping most of my funds at one investment house. Also, a few years ago, my local bank found skimmers on their cash machines that were used to steal customer account numbers and passwords.

What really concerns me more than the fact that these criminals are invading networks, is the fact that they seem to be able to spend weeks, sometime months, scoping out the computer system, looking for weaknesses to exploit, and then skimming customer information.

These events have me thinking that I need to spread out my retirement assets so that in the event the computer system of one financial group is compromised, all of my assets won't be taken, frozen, or otherwise be made somehow unavailable to me for an extended period of time.

Any thoughts? Is this a wise precaution? Or just paranoia settling in at a young age?
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Old 02-12-2014, 11:05 AM   #2
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Old 02-12-2014, 11:06 AM   #3
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This is a frequently discussed topic. A forum search should bring up several threads.
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Old 02-12-2014, 12:06 PM   #4
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This is a frequently discussed topic. A forum search should bring up several threads.
Could you refine that a wee bit? What words would ring up those threads?

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These events have me thinking that I need to spread out my retirement assets so that in the event the computer system of one financial group is compromised, all of my assets won't be taken, frozen, or otherwise be made somehow unavailable to me for an extended period of time.

Any thoughts? Is this a wise precaution? Or just paranoia settling in at a young age?
Yes, it sounds paranoid but who cares what it sounds like? I think the same way. I haven't taken any action yet though. I am not a mathematician
but someone I mentioned this to said splitting your money up actually increases your chances of getting hacked. You won't lose it all at once but you're more likely to lose a chunk of it. How do the math mavens here see it?

Also, how many packets of money would be sufficient to be safe? Two or three probably wouldn't be safe anyway. Can you afford to lose 1/2 or 1/3 of your stuff if they got only one brokerage account? Probably not. You'd need 10 or 20 accounts to be really safe. That would be hard to manage to understate it.
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Old 02-12-2014, 12:40 PM   #5
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Also, how many packets of money would be sufficient to be safe? Two or three probably wouldn't be safe anyway. Can you afford to lose 1/2 or 1/3 of your stuff if they got only one brokerage account? Probably not. You'd need 10 or 20 accounts to be really safe. That would be hard to manage to understate it.
Don't let the perfect be the enemy of the good. Also, there aren't 10 or 20 different brokerage companies where you could get low cost index funds. In our case, we have DH's IRA one place and my 401k is somewhere else and we like it that way.
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Old 02-12-2014, 12:41 PM   #6
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Could you refine that a wee bit? What words would ring up those threads?
"eggs in one basket" brings up multiple threads.
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Old 02-12-2014, 12:45 PM   #7
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Old 02-12-2014, 12:47 PM   #8
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Keep in mind there are third party systems that are involved in much of the financial services industry. You may move to a different brokerage or fund family, but that may not move your assets to different computer systems.
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Old 02-12-2014, 12:50 PM   #9
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Don't let the perfect be the enemy of the good.

AH, yes. But is it actually good? That's what the math mavens can deduce. Seems like you're just increasing odds of a break-in and losing so much money it wouldn't really keep you safe. You'd still be "busted" albeit with some money left. Is that justified? But I am not arguing the case. Like Is aid I think this was all the time. Shell game. Money in a mattress. More money stuffed inside the moose head hanging in the hallway of Grandma's house in Atlantic City
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Old 02-12-2014, 01:22 PM   #10
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Seems like you're just increasing odds of a break-in and losing so much money it wouldn't really keep you safe. You'd still be "busted" albeit with some money left. Is that justified? But I am not arguing the case. Like Is aid I think this was all the time. Shell game. Money in a mattress. More money stuffed inside the moose head hanging in the hallway of Grandma's house in Atlantic City
Some security experts think there are two types of companies: Those that have been violated and know it. And, those that have been violated and don't know it. That's probably pessimistic, but again, I point to how these criminals were able to spend weeks and in some cases months inside corporate IT systems looking for ways to steal accounts, personal information, etc.

As far as your Grandma's house goes, she can keep as many moose heads and shells stuffed with money as she likes.
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Old 02-12-2014, 01:44 PM   #11
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You have to balance any gained security vs convenience of having your funds in one investment house.
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Old 02-12-2014, 03:19 PM   #12
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I really do not know enough but I think easysufer has it right. As smart consumers, we could be asking financial institutions to make it a little harder on us and them to log in to our accounts e.g. two step verification would be one idea, so that the theft we are concerned about is made a little more difficult.
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