Do ER Member Have all their "Eggs" in One Basket?

[Totoro]

On the 3rd of june, nine institutions brought to me:

• Two brokers-a-trading
• Three local banks for high yield savings
• One local bank for personal checking account
• One local bank for business account
• One bank in home country

.. and a pension account, tax-free!

 

[mpeirce]

I was thinking about why we have our various accounts and mostly it's because of happenstance.

My largest IRA is with Schwab. Why? Because that's where my last employer had my 401(k).

My last employer's stock plan (options, restricted shares, and ESPP) was at eTrade. So those shares are still there. It's handy because all the historic pricing information is there. I see no reason to moved those shares.

DW's main 401(k) was at Fidelity. It's still there (as an IRA).

The only place we actually picked was Vanguard. It has the lion's share of our taxable investments because of their excellent low cost mutual funds.

Each company has provided good customer service on the few times I've needed it. Each of their websites seems fine for my needs.

I could see consolidating these accounts at some point. But I'm in no hurry. The downside to having multiple vendors is pretty darn low.

 

[NW-Bound]

Well, I sold all my socks and went all in with eggs.
They are all in one basket and I am eating them as fast as I can.

Are you in an egg eating contest? How are you doing, compared to Joe Chestnut who ate 141 eggs in 8 minutes? That's one egg every 3.4 seconds.

 

[kevink]

I've been a happy nearly-exclusive Vanguard and then Schwab investor (except for a local credit union account) for years but have been thinking that it's silly not to split things up more due to the threat of cybercrime. I'd be interested in hearing from anyone who is knowledgeable about this issue. Obviously there's a tremendous investment in protecting computer systems at these big firms but I guess the practical question is how much money one needs to keep elsewhere to insure access to cash in the event of an attack.

 

[MRG]

I've been a happy nearly-exclusive Vanguard and then Schwab investor (except for a local credit union account) for years but have been thinking that it's silly not to split things up more due to the threat of cybercrime. I'd be interested in hearing from anyone who is knowledgeable about this issue. Obviously there's a tremendous investment in protecting computer systems at these big firms but I guess the practical question is how much money one needs to keep elsewhere to insure access to cash in the event of an attack.

See my post #10 above. Cybercrime or DR, you can't go very wide or you're just fooling yourself.

 

[kevink]

See my post #10 above. Cybercrime or DR, you can't go very wide or you're just fooling yourself.

Thanks! I went back and read your post and it's still a bit opaque to me - undoubtedly due to the fact that I don't know the first thing about "DR (as in, I had to poke around on Google to deduce that you mean "Disaster Recovery").

In my case I guess one alternative would be to move a chunk of funds (most likely my IRA) from Schwab to Vanguard - which does achieve the split between two big firms you mention as well as (I assume) adequate geographical separation. Alternatively I've thought about just putting a chunk of cash (say 3-6 month's living expenses) in a CD at one of the online banks such as Synchrony or Capital One.

Since you know this world any insights much appreciated!

 

[MRG]

Thanks! I went back and read your post and it's still a bit opaque to me - undoubtedly due to the fact that I don't know the first thing about "DR (as in, I had to poke around on Google to deduce that you mean "Disaster Recovery").

In my case I guess one alternative would be to move a chunk of funds (most likely my IRA) from Schwab to Vanguard - which does achieve the split between two big firms you mention as well as (I assume) adequate geographical separation. Alternatively I've thought about just putting a chunk of cash (say 3-6 month's living expenses) in a CD at one of the online banks such as Synchrony or Capital One.

Since you know this world any insights much appreciated!

That's a great plan. Very similar to my own.

 

[REWahoo]

...undoubtedly due to the fact that I don't know the first thing about "DR (as in, I had to poke around on Google to deduce that you mean "Disaster Recovery").

+1

For the life of me I couldn't figure out what the Dominican Republic had to do with this subject.

 

[audreyh1]

We used to have very little outside Fidelity, just some IBonds and a bank checking account. Then 2008/2010 happened, and mutual fund interest rates went below 0.1%, meanwhile MM funds were riskier than expected, and the Fed backed them for about 18 months, and then worked on new requirements to lower the risks and make them more transparent.

So then it was looking for yield. High Yield Savings accounts were created with 2010 regulation, and several online funds became available that paid much, much better rates than the MM funds. At the same time bank and credit union CDs became available that paid much better rates than MM funds and many bond funds, and at the same time were FDIC and NCUA backed.

So over several years money started moving out of our brokerage accounts to various high yield savings accounts and bank CDs and credit union CDs.

The process has just now begun to reverse, with T-bills and notes finally offering yields to beat high yield savings and direct bank/credit union CDs. Plus new issue CDs via the brokerage are competitive.

Oh, there has also been a bit of a proliferation of credit cards due to certain great offers, and a couple of checking and savings accounts due to same. Also the great search for the Chip and PIN card for use overseas caused more proliferation. The checking accounts are convenient for auto-paying credit card bills, so will probably hang on to them.

 

[Nature Lover]

Like most, not all in one basket:

Local Credit Union (for regular banking - checking and MMA),
Schwab (Investments - Taxable and IRA),
Fidelity (Investments - Taxable, Inherited IRAs: tIRA and micro Roth),
Treasury Direct (ibonds).

 

[kcowan]

I have been wondering what the OP was looking for? Is it about spreading risk? If so, then the question is not aimed at that. They need to know who has fiduciary responsibility over your stash. If I had all my holdings at Vanguard, I would have much more risk than what I have now. OTOH would I really be concerned?

My bank accounts in Mexico probably carry more risk but small amounts. My discount brokerage accounts hold individual equities which would survive the failure of the institution. If they were margined then I would carry more risk.

 

[MRG]

+1

For the life of me I couldn't figure out what the Dominican Republic had to do with this subject.

Point made and taken. Thanks.

 

[jazz4cash]

I have been wondering what the OP was looking for? Is it about spreading risk? If so, then the question is not aimed at that. They need to know who has fiduciary responsibility over your stash. If I had all my holdings at Vanguard, I would have much more risk than what I have now. OTOH would I really be concerned?

My bank accounts in Mexico probably carry more risk but small amounts. My discount brokerage accounts hold individual equities which would survive the failure of the institution. If they were margined then I would carry more risk.

I have been wondering also. Hopefully OP will weigh in. It seems the responses address an array of concerns including cyber attack/fraud/estate planning/etc. In the event of a cyber attack/fraud/ data center disaster of non FDIC covered accounts at a major firm, is there concern that assets would vaporize, or is it just avoiding the risk/inconvenience of waiting to be made whole?

We have 30% in FDIC accounts and the rest is held by 3 providers.

 

[ShokWaveRider]

Purely basic curiosity. We have all our nest egg with PenFed right now and DW's 427b. Jut opened a new Vanguard account for loose cash. Unfortunately this was >$200k. So in our mind we are spreading it about a little. I was just curious as to what others were doing. Especially as VG, Fido and Schwab are basically uninsured (No FDIC unless CD are purchased through them).

 

[Skyward1]

That question sounds vaguely familiar...

http://www.early-retirement.org/forums/f28/all-eggs-in-the-vanguard-basket-80854.html
http://www.early-retirement.org/forums/f28/how-many-brokerages-banks-do-you-use-63052.html
http://www.early-retirement.org/forums/f28/how-many-separate-bank-brokerage-accounts-78680.html
http://www.early-retirement.org/for...ts-in-one-place-or-spread-them-out-81490.html

Maybe this question hasn't yet been fully explored. Could be an opportunity for a poll.

Maybe a couple of moderators could be designated to post multiple similar threads at the beginning of 95% of the new threads and just lock them. That would eliminate a lot of duplication.

 

[bada bing]

Purely basic curiosity. We have all our nest egg with PenFed right now and DW's 427b. Jut opened a new Vanguard account for loose cash. Unfortunately this was >$200k. So in our mind we are spreading it about a little. I was just curious as to what others were doing. Especially as VG, Fido and Schwab are basically uninsured (No FDIC unless CD are purchased through them).

All the major brokerages are covered by SIPC, which insures any securities you keep at a brokerage. In some ways the insurance of the SIPC is better than the coverage on bank accounts by the FDIC. I think the idea that you gain some security by diversifying between brokerages isn't very well thought out. In anything less than a total system collapse, you are going to have access to your investments within a few days. If it is a total system collapse, your money is not your top worry.

I have multiple accounts at 2 brokerages - Schwab and Fidelity. Schwab was my choice and I have my taxable brokerage, solo401k and Roth IRA there. Fidelity was my employer's choice and I have my 401K, pension and mega-backdoor Roth there. When I retire in the next couple years I will consolidate down to one brokerage, Schwab, if things don't change in the next couple years.

 

[ShokWaveRider]

On a side note, how long does a typical transfer take from your On-line bank to your bricks and mortar Credit union? Seems like 3 days for me.

 

[Dtail]

All the major brokerages are covered by SIPC, which insures any securities you keep at a brokerage. In some ways the insurance of the SIPC is better than the coverage on bank accounts by the FDIC.

I think the idea that you gain some security by diversifying between brokerages isn't very well thought out. In anything less than a total system collapse, you are going to have access to your investments within a few days. If it is a total system collapse, your money is not your top worry.

I have multiple accounts at 2 brokerages - Schwab and Fidelity. Schwab was my choice and I have my taxable brokerage, solo401k and Roth IRA there. Fidelity was my employer's choice and I have my 401K, pension and mega-backdoor Roth there. When I retire in the next couple years I will consolidate down to one brokerage, Schwab, if things don't change in the next couple years.

I was wondering if the SIPC insurance covers cash(not securities) vs. the FDIC insurance of a bank? IOW, couldn't the MM held at Vanguard etc theoretically (break the bank?) be valued at below a $1 NAV, even though the chances are very slim?

 

[scrabbler1]

On a side note, how long does a typical transfer take from your On-line bank to your bricks and mortar Credit union? Seems like 3 days for me.

Online transfers from my brokerage house to my local bank take 2 business days.

 

[GravitySucks]

On a side note, how long does a typical transfer take from your On-line bank to your bricks and mortar Credit union? Seems like 3 days for me.

Same. Sometimes 2 days once 4 days.

 

[brett]

We consolidated with one firm. We view the risk as market risk, not agent risk.
Started off with 50 percent, moved to 100 percent with the same firm over a period of three years.

We keep most cash in a HISA with a seperate, deposit insured, on line bank.

 

[RetireAge50]

On a side note, how long does a typical transfer take from your On-line bank to your bricks and mortar Credit union? Seems like 3 days for me.

Amex Savings transfers are there the next day to my credit union.

Vanguard settlement account transfers also arrive next day.

 

[kgtest]

4 institutions. VG(IRA/Roth/Broker), Schwab(401k/IRA/Roth/Broker), MetLife(401K DW), Credit Union.



I have a broker account with 0 at TD Ameritrade and Fidelity for buying flexibility but haven't needed it.


I guess if you include wife's HSA and our kids 529 there are a couple more.

 

[jazz4cash]

On a side note, how long does a typical transfer take from your On-line bank to your bricks and mortar Credit union? Seems like 3 days for me.

Electronic transfers out of Fido, Ally, and GS Bank are quick and seamless but I dont
count on that unless I pay to expedite. Usually take a day or two but could take more. Moving funds to or from NFCU is an adventure to put it mildly. I just plan ahead and haven't had any urgent situations so far.

 

[mrc758]

I've noticed that many, like I, have multiple accounts across institutions. Does anyone have a good way to keep track of their investments? I use a MAC and really want something that evaluates allocations, returns, net etc. I have a friend that uses Quicken but I hear it's not as good with a MAC.
Thanks