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-   -   "All your eggs in one basket?" (http://www.early-retirement.org/forums/f28/all-your-eggs-in-one-basket-41302.html)

Midpack 12-19-2008 08:25 AM

"All your eggs in one basket?"
 
With the Madoff scandal and the related Vanguard thread question:

Only if you are in the FIRE camp (say more than 50% of your net worth are liquid assets). And please exclude any 401k/403b's as another institution for this poll since it's not a choice for participants.

Please don't vote if you're in the SIRE camp (more than 50% of actual/projected retirement income expected to come from pensions/retiree health care etc) - but congrats.

TromboneAl 12-19-2008 10:32 AM

http://www.early-retirement.org/foru...tml#post491503

Gotadimple 12-19-2008 11:24 AM

In theory, Midpack, the poll will show mostly 3 institutions, assuming 1) broker, 2) bank/credit union, and 3)for those buying Treasuries, TIPS, or CD's.

I think there is a fundamental different between Madoff and Fidelity or Merrill (et al), in the first case unregulated and in the second case regulated and closely monitored by the public press.

-- Rita

mickeyd 12-19-2008 11:57 AM

Quote:

(say more than 50% of your net worth are liquid assets).
Isn't that a pretty steep % in liquid assets, even for those already retired? I'm semi-retired, but only have about 5-10% in MMF.

W2R 12-19-2008 12:04 PM

I will retire in less than a year, with over 50% of my retirement income coming from investments. So, I voted.

I didn't include my local bank, since I do not plan to keep money there except small amounts temporarily, for spending. It might as well be my purse (good thing, too, because the interest rates are abysmal).

All my investments are with Vanguard.

You said not to include our 401K (the TSP, for me), so I didn't. I am really glad it is not in Vanguard as well. I could survive without the Vanguard income, but not extravagantly as it represents over half my expected income.

audreyh1 12-19-2008 12:16 PM

90% + might be at one brokerage (Fidelity), but more than half of my mutual funds are outside Fidelity and Fidelity acts as the "supermarket".

I recently moved more cash to my bank to have more under FDIC protection plus have a buffer in case there was some disruption in transfers between financial institutions due to crazy market events.

Audrey

Gumby 12-19-2008 12:20 PM

2 different banks, 2 different brokerage accounts and 3 different mutual fund companies.

Independent 12-19-2008 12:29 PM

Quote:

Originally Posted by Gotadimple (Post 761707)
In theory, Midpack, the poll will show mostly 3 institutions, assuming 1) broker, 2) bank/credit union, and 3)for those buying Treasuries, TIPS, or CD's.

I think there is a fundamental different between Madoff and Fidelity or Merrill (et al), in the first case unregulated and in the second case regulated and closely monitored by the public press.

-- Rita

I think you're right. In my case it's 1) Vanguard, 2) 1 bank and 2 credit unions, 3) I-Bonds

I also left some money in my former employer's "thrift" plan until the tax situation favored moving it. But Midpack ruled that out.

ejman 12-19-2008 12:44 PM

I have my money in more than 3 mutual fund familes, not so much because of fear of malfeasance but because (for actively managed funds) I'm concerned about "group think" whereby all managers at a certain firm tend to share their thoughts and approaches until eventually they all think more or less with the same worldview. Obviously this does not apply to index funds

Midpack 12-19-2008 02:59 PM

Other than my 401k, all my liquid assets are with Vanguard. I really don't want an account at Fido or elsewhere, but maybe I should. My 401k is about 25% of my investment AA (and when I retire I would probably roll all of it over to my VG Rollover IRA). And for the poster above, 50% doesn't seem steep to me and I was hoping to get folks like me to vote, over 80% of my net worth is liquid assets...

Thanks for the link TAl, I read thru it.

Alan 12-19-2008 03:39 PM

oops - the mouse went off in my hand and I voted. :duh:

I hadn't scrolled down to see who midpack wanted to vote.

I still have a year to go and expect to be SIRE.

However, 401(k) will be rolled to VG with my other IRA and joint investments with DW.

DW's IRA's (including her rolled over 401(k) after she RE'd) is with Fido

10% is with the guvmint (I-Bonds)

MM account with 1 bank

Midpack 12-19-2008 03:41 PM

Quote:

Originally Posted by Alan (Post 761832)
oops - the mouse went off in my hand and I voted. I hadn't scrolled down to see who midpack wanted to vote.

My fault, I should have somehow worded it into the poll question, but I couldn't figure out a concise way to stipulate...

chinaco 12-20-2008 04:37 AM

We have money split between 3. 2 of them are company 401ks....

When I ER we will roll our 401ks to a mutual fund company. I am considering splitting the assets across two companies. But there is a risk related to subadvisors. This can cut across multiple companies.

Here is a VG article on their structure. But they do not describe controls to protect against fraud. If the individual funds are managed by different people and subadvisors, a single fund may be insulated. But there may be some risk is a family of funds are putting too much money with a single subadvisor.

https://personal.vanguard.com/us/Van...242008_ALL.jsp


I would like to understand VG and Fido's controls better. If the primary entity is honest (corporation), the key is having controls that detect fraud early before things get to bad and making sure new controls are established as things change.

They should have external audits regularly. Do they have a solid internal audit program that performs rigorous and (unannounced) regular audits. Do they do the proper due diligence review of their subadvisors? And do they audit them regularly with their Internal Audit staff (not rely solely on the third-party auditor)... remember Enron (and Author Andersen) and situations like the recent rating agency debacle.

Some companies scrimp on internal audit because of the cost.

NW-Bound 12-20-2008 05:16 AM

One bank account, 3 MM accounts, 3 brokerage houses (6 accounts total for a couple), plus Treasury Direct for I bonds. I may be different from the typical member in that I have no VG or Fido account. Perhaps I did look into that, but found out that for active investors, my existing brokerages are lower cost (they say memory is the first, or was it the second, that goes?)

Rambler 12-20-2008 07:18 AM

I voted one account, because that is where my "working liquid assets" are, representing between 92-95% of our liquid assets. The other 5-7% is scattered across 9 accounts in 4 banks across two continents. These are my current accounts and emergency funds. Will consolidate over time.

R


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