Having ALL one's Eggs in one Basket, VG or FIDO?

[BrianB]

Back to the OP's question - Is it OK to have all your assets in Fidelity.

We've been with Fidelity for over a decade and have 99% of our assets with them. Fidelity is not a bank, although they offer many banking services. We do keep a checking account with a traditional bank for two reasons:

1. You cannot deposit cash or money orders at Fidelity. We sold some household items and were paid in cash. The only way to get this into Fidelity was to deposit it into our bank account, then write a check or do an EFT to Fidelity. We chose to write a check and deposit it at Fidelity because:

2. We use our bank ATM cards for many store purchases and the checking account is the source for several automatic payments. With the number of security breaches happening every day we don't want our major assets at risk. We do one-way only transfers from Fidelity to the bank every three months so it limits the number of potential hacking points for our Fidelity accounts.

Overall we would rate Fidelity as 9.5 out of 10 stars.

 

[dtbach]

I doubt a major disaster would/could take out VG or Fido but I split my money between them as each offers strengths in some areas. I'm about 55/40/5 between Fido/VG and local CU.



I like VG for index funds, Primecap fund and annuities. Fido is great for managed funds and stock research. Local CU for checking, savings.


No real good or bad answer. It's up to you.

 

[audreyh1]

We are considering re-aligning all our retirement assets to a single institution. We currently have them spread out over 3 Credit Unions and Vanguard. I am considering Consolidating them all to Fidelity, as they also offer banking services.

Obviously it is quite a lot of money and FDIC or NCUA becomes a bit moot until one purchases insurable investments through them.

I was wondering if anyone else does this, or does the smart money supporting spreading it about for security?

Thanks in advance for you comments, opinions and advice as usual

I'm sure I'll always have at least a bank checking and at least one online high yield savings account in addition to our brokerage accounts. I don't want to be in a situation where access to any one institution is blocked for a while and I can't pay my bills or transfer funds between accounts.

Plus we have a couple of safe deposit boxes at a local bank and probably always will.

As long as we are traveling overseas we will have some extra credit cards and extra bank account with no international ATM fees.

 

[ShokWaveRider]

I'm sure I'll always have at least a bank checking and at least one online high yield savings account in addition to our brokerage accounts. I don't want to be in a situation where access to any one institution is blocked for a while and I can't pay my bills or transfer funds between accounts.

Plus we have a couple of safe deposit boxes at a local bank and probably always will.

We are currently using VG VMMXX for the high yield savings/mm. CU is for day to day stuff. We transfer from VG to local CU as needed.

These are not what I consider our retirement assets as they are being used on a yearly, monthly, daily basis as needed.

What I meant was for the main bulk of our assets 2 IRA style and 2 unqualified maturing CDS. These are the untouchables so to speak, at least for another 5 years. These represent about 90% of our stash the other 10% is for 3 - 4 years living and emergency stuff.

 

[audreyh1]

We are currently using VG VMMXX for the high yield savings/mm. CU is for day to day stuff. We transfer from VG to local CU as needed.

These are not what I consider our retirement assets as they are being used on a yearly, monthly, daily basis as needed.

What I meant was for the main bulk of our assets 2 IRA style and 2 unqualified maturing CDS. These are the untouchables so to speak, at least for another 5 years. These represent about 90% of our stash the other 10% is for 3 - 4 years living and emergency stuff.

Yes, I have cash in money market as well. But I want at least a year's worth of spending and checking in an independent institution - a bank or credit union. So I'll always have at least one checking and high yield savings account outside Fidelity. I don't want to be blocked from the ability to pay my bills due to a problem accessing my funds at my brokerage. Rare, but that can happen.

 

[FANOFJESUS]

I love a simple idea. I have not figured out a way to get down to one place.
Fidelity and Vanguard are both great. A local credit union added would be good. How about credit cards do you just go with the Fidelity credit card?

 

[mrfeh]

I love a simple idea. I have not figured out a way to get down to one place.
Fidelity and Vanguard are both great. A local credit union added would be good. How about credit cards do you just go with the Fidelity credit card?

Fido's 2% on every purchase can't be beat, unless you want to play the sector purchase games (X% on groceries, Y% on travel, etc).

 

[FANOFJESUS]

Fido's 2% on every purchase can't be beat, unless you want to play the sector purchase games (X% on groceries, Y% on travel, etc).

That would go against the simple rule. LOL

 

[gwraigty]

I love a simple idea. I have not figured out a way to get down to one place.
Fidelity and Vanguard are both great. A local credit union added would be good. How about credit cards do you just go with the Fidelity credit card?

It's good to have multiple credit cards in case one gets hit with fraud, just as I prefer not to have all our funds at one institution, for a few of the reasons others have mentioned above.

 

[swakyaby]

Regarding having all your assets at one financial institution, here’s another true story from my family. My father had a Keogh retirement account at Fidelity worth about $800K at the time he passed in 2002. A Keogh is a retirement plan that self-employed people sometimes utilized at the time because it allowed higher pre-tax contributions than a traditional IRA. But it required a lot of rules to follow and paperwork to be filed each year, so it became unpopular after Sep-IRAs became available to the self-employed. After my father passed, Fidelity put a hold on the account when my mother attempted to transfer the funds into her traditional IRA after showing proof of his passing and proof she was his widow and proof she was the named beneficiary. Despite numerous phone calls, Fidelity reps told her the Keogh must go through probate. Her estate attorney also contacted Fidelity and was politely told the same thing, that since my father did not change the Keogh ownership to my mother before his passing (can one really do that?), the account now had to go through probate, with the time and expense that involved. The attorney decided to attempt to appeal to the sympathy of Fidelity rather than demands, and sent a sad letter to Fidelity describing my mother’s desperate financial condition (a little exaggerated, I think) and the hardship it would create for her to wait for the probate process. Initially, a stone wall. Then, a second letter from the attorney resulted in someone higher up in Fidelity to relent, and they eventually allowed transfer of my father’s Keogh account to my mother’s traditional IRA. This transfer occurred about 10 months after his passing.

So, while this is a special case, I do think sometimes the unexpected happens, and you can have significant amounts of funds locked up at one institution.

 

[deserat]

However, I believe that in most or all cases, using a CC at an ATM is a "cash advance" on which you pay the rapacious interest from day one. That is why we use the debit cards. As I said, we use CCs for other purchases, meals, etc. We also carry two CCs just like we carry two debit cards. We also NEVER permit our CCs to be charged in dollars, only in the local currency. This is a common ripoff.

Whatever floats your boat. In our case, we don't get foreign cash before we leave because of the inconvenience and fees. We routinely hit the ATMs at our arrival airport for a few hundred bucks in local funds. We've been doing this for years and every year there are more ATMs and fewer issues. Even third world countries, like Vietnam and Myanmar this January, we do not have problems. We try to use up the foreign cash before departure because we don't want to pay exchange fees coming home and the bank will only take bills, not silver.

+100 on this - I hit the first ATM and then get enough cash to cover my incidentals and some walking around money. Hotels, some of my meals, rental cars and other transportation are on a CC that has no foreign transaction fees. The cash makes a difference in being able to handle most issues as well. I usually have an idea of what I might be spending and keep the cash to that. It also can put the brakes on Tchotski-itis sometimes ;-

To the non-moderator pleading against off-track threads: I keep my money across several institutions right now - I may consolidate, however, I do worry about having all my eggs in one basket. I have been stranded several times with no access to a CC or my accounts and have been grateful I've had other options. The only thing that would lead me to consolidate is some premier or tier level supposedly giving me better rates/service/etc. However, I have been noticing over the years, those affinity programs are losing their appeal and the value to amassing one's points/money/whatever with one vendor is quickly decreasing such that it makes not much difference in the long run. So, right now, I opt for diversification

 

[Spock]

That is good to know and makes sense. Given that there has yet to be a bail-in in a developed country where depositors have been hurt I'm not planning to worry about it ... nada.

Cyprus depositors took a haircut over 100Ke in 2013.
I get conflicting info as to if Greece depositors took haircuts or not... can't believe how long they are taking to remove the band-aid... one... hair... at... a... time..

Are bail-ins a common practice on Vulcan?

Logic dictates that we don't run with unstable debt/risk loads.
Logic also strongly suggests you guys are in for a doozie of a reset.

What was the source for the $247 trillion... given that the total assets of the 15 largest banks are less than $15 trillion it is very hard for me to believe the $247 trillion number... even if it is just notional (that's plausible I guess but totally irrlevant but a journalist wouldn't know that)....

Pretty sure its notional. Latest doc I found shows its "down to" $175T

the total US government debt is only $22 trillion.

Due to creative accounting yes... add in 62T of IOUs held by SS, Medicare, and GSE's that congress keeps off the books and you are starting to talk about some real money there.

 

[pb4uski]

.... Due to creative accounting yes... add in 62T of IOUs held by SS, Medicare, and GSE's that congress keeps off the books and you are starting to talk about some real money there.

It's not creative accounintg at all... there is no liability... no obligating event has occurred. If Congress fails to act then at certain points in time the trust funds will run dry and benefits will be scaled back to what tax revenues will provide for...... Medicare benefits will be reduced by ~12% increasing to 19% and then back to 12% and SS benefits will be reduced by 23% and then later 27%.

There is no obligation unless and until a decision is made to make an affirmative committment to pay benefits in excess of what the trust fund and tax revenues will fund. IOW, your so-called IOUs are not legally enforcable, therefore they are not a liability.

 

[Sunset]

....

We have considered moving DW's work accounts to Schwab. They are all tax deferred so no tax hit but we don't like the idea of selling so much and then reinvesting after the transfer gap.

You don't have to sell anything, as you can specify to move the assets "IN KIND" , meaning they move the actual shares, etc.
In rare circumstances, there will be some that cannot move that way.
A friend move 25 different things to a new brokerage, and there were 2 that could not move IN KIND.
So she sold those and moved the money.

 

[Jollyquick]

We use VG for everything involving investing in mutual funds/ETFs with the exception of our TSP investments. For Banking services we use USAA. We’ve had both VG and USAA for over 30 years and they have always had superior performance and service.

Just re-read my comments and I sound like a commercial pitch! To be clear I Don’t work for either company...they DO work for me though ;-)

JQ

 

[hotwired]

I would agree. We would not even allow a debit card to even exist in our names

 

[donheff]

You don't have to sell anything, as you can specify to move the assets "IN KIND" , meaning they move the actual shares, etc.
In rare circumstances, there will be some that cannot move that way.
A friend move 25 different things to a new brokerage, and there were 2 that could not move IN KIND.
So she sold those and moved the money.

That's how I moved my funds to Vanguard from another brokerage years ago. Unfortunately, I can't do it with DW's accounts administered by Mass Mutual. In fact, that they won't accomodate such a simple request alone irritates me enough to move the funds.

 

[pb4uski]

We will soon be down to Vanguard, Fidelity and Discover Bank once the PenFed CDs mature and get transferred to Fidelity. In addition to that we have some local credit union account that we use to pay bills but they are minor.

 

[Chuckanut]

I would agree. We would not even allow a debit card to even exist in our names

At the advice of a friend, I scratched the last few numbers off my ATM/Debit card. It won't help if the card is stolen, but it may keep some thief from copying the numbers and using it online. I refuse to use a debit card for purchases. Alas, my bank won't give me a pure ATM only card (or a true chip-and-pin credit card, or decent interest on my savings and CDs). Somebody tell me again why I need them?

 

[Spock]

... I refuse to use a debit card for purchases. Alas, my bank won't give me a pure ATM only card (or a true chip-and-pin credit card, or decent interest on my savings and CDs). Somebody tell me again why I need them?

AMEN!
On thing I used to be able to do was to set my debit purchase limit on what is supposed to be my ATM-only card. The banker smiled and said "yes sir! how high a limit would you like?" She was dumbfounded when I told her "zero".
That was years ago... every time they re-issue a new card they keep resetting the debit limit to the ATM limit.
So... depending on your bank you might be able to have them set the debit limit to 0 or some tiny number so that it only works as an ATM card.

 

[Dtail]

Fidelity, Mass Mutual (401k), BOA and Ally. Ally funds BOA for monthly living expenses. Still like having a bricks and mortar bank, plus all my credit cards are there.

 

[FANOFJESUS]

Cut Cut Cut My family closed three accounts this year and got rid of two debit cards. Feels good. I could cut two more accounts but it would cost me about $100 a year in rewards. I still find it tempting to cut them. Would you close this two accounts?

 

[copyright1997reloaded]

Re-posting to this now oldish thread. While my position is to never have everything in one account, I am trying to help my ex who is thinking of retiring later this year. She has just spent some $ with a local firm who produced a report which basically convinced her that she has sufficient funds to retire. She asked me to look at the analysis, which I did. While I can argue with a few parts of it, she is likely OK primarily because of her LCOL lifestyle. She is going to meet with them in a couple weeks, where they will offer their services to her (% basis). I have (as gently as I can) tried to give her input on what a 1% or 1.25% management fee can have on her portfolios growth.

As further background, she gave me a sum of money to invest for her (because at the time she had next to none of her net worth in equities) after getting some inheritance money which was sitting in a bank getting next to nothing. Since I was already using Amertirade, the account is there and has done pretty well. I have it mostly invested in Vanguard ETF's (e.g. Total Mkt), but with some other sector funds. I $ cost averaged her in to these and the overall portfolio is up 56% from her initial see money. [It would have done even better but I was pretty conservative in terms of putting the money to work given her fear of equities.] Note that this money is in her name (not mine), but I have access to trade the account.

I was also able to convince her around the same time to use the inherited cash as a backdrop to her job earnings and to max out her employers 401k plan w/catch up, and to put all of it into broad based passive index funds (e.g. Total Stock Market). That has also done well (given the market over the last 6 years), and it is a factor on why she can likely retire. Even with that, she still has a big $ amount in CD's at a local institution (although I did get her to take advantage of the Nasa FCU 3.25% deal).

One of the recommendations of the adviser plan is to do Roth conversions of the money in her 401K. This does make sense assuming she is going to defer social security, at least to the extend of maxing out the 12% bracket each year.

The adviser also recommended the bucket approach. This also makes sense in that it might help her not look over the day to day ups and downs of an equity portfolio, knowing that this portion of her wealth isn't important in terms of asset draw down over any two or so year period.

She has stated that she is attracted to the managed (fee) adviser simply because she doesn't feel capable of doing it on her own, and that she would like to have things consolidated. On the other hand, she also knows that the management fee is money out of her pocket.

In our discussions, I mentioned that she can consolidate the now scattered accounts into one place. Given that this includes a large amount of cash which she would like to keep in cash (CD's, etc), I am trying to help her in terms of Vanguard vs. Fidelity vs. Schwab etc.

I am eliminating Ameritrade from consideration because they have no/limited cash management features. For myself, this isn't a big issues because I simply ACH or wire money in/out of my account. But for her, this would be too much to have to deal with on a constant basis.

Schwab and Fidelity also have a physical presence in the area, which is a big benefit. I don't think she does electronic payments on anything, so having a branch which she could go to is a big plus. So, I think that might eliminate Vanguard? In addition, I have accounts at both Schwab and Fido so I could help her navigate things more easily than with Vanguard (which I don't use).

What I could use some help with is other considerations. For example:
1) Checking tied to the account/ Debit card
2) Credit card possibilities tied to the account?
3) Cash management - assuming a decently large amount of $ and the desire to keep most of it in the same place.
4) Other factors - e.g. beneficiary set up
5) Ease of doing rollover piecemeal to a Roth (conversion) to optimize taxes
6)

I have mentioned VG, FIDO, Schwab, Ameritrade to her. She keeps asking me which one she should do...and I would like to give the best answer I can (and why that might be the best choice).

Thoughts? (Other than the obvious need to be careful given this is my ex. I do her taxes and have already discussed Ameritrade, so she does trust me to do the right thing...which I try my very best to do.)

 

[OldShooter]

... I have mentioned VG, FIDO, Schwab, Ameritrade to her. She keeps asking me which one she should do...and I would like to give the best answer I can (and why that might be the best choice). ...

Assuming she has enough money ($100k to $250K depending on the house) she can get a rep assigned to her account for free. In Schwab's case the rep will not make specific recommendations but will help her with going through the various Schwab buy lists and investment options. Probably all three are about the same with this.

In the end, particularly for a newish investor, it is all about the rep, not the house. I suggest that you help her put together a list of characteristics she' like to see. Maybe a woman rep? Enough experience to have seen the markets pre-2008, etc. Then contact the branch managers, explain her needs, and ask to meet with a couple of reps that seem to suit. Maybe you go with her? Interview 'em all and then decide.

If she wants to head toward managed account, all of the reps can discuss that option with her and have "house-approved" advisor lists.

Regarding banking, AFIK Schwab and Fido are pretty similar. TDA probably has more or less the same thing, too. I just don't know.

 

[gwraigty]

What I could use some help with is other considerations. For example:
1) Checking tied to the account/ Debit card
2) Credit card possibilities tied to the account?
3) Cash management - assuming a decently large amount of $ and the desire to keep most of it in the same place.
4) Other factors - e.g. beneficiary set up
5) Ease of doing rollover piecemeal to a Roth (conversion) to optimize taxes
6)

You're a good person to help her out so much.

1) Fidelity and Schwab have checking options. Fidelity has a Cash Management Account. You don't have to open a brokerage account to get this. Schwab has a High-Yield (not really) Investor Checking tied to their regular brokerage account. It's a separate account, but you can only have it if you open up the brokerage account. Both offerings are FDIC insured, online billpay, ATM/Debit card, free checks, unlimited ATM fee reimbursements, easy electronic transfers between accounts. I have the checking options and brokerage accounts at both Fidelity and Schwab.

2) Fidelity has a VISA. You can have the 2% cash back deposited directly into either the CMA or brokerage account automatically. Schwab has an American Express. The 1.5% cash back is deposited directly into the brokerage account. I have both of these credit cards.

3) It depends on the yield she's looking for and liquidity needs. Fidelity and Schwab have brokered CD's (no commission for new issues) from 3 months up through 10 or more years. For total liquidity, MMFs that are yielding around 2% or so.

4) IIRC, I set up beneficiaries online with no trouble. PDF forms are readily available for many needs. She could also give you authority to trade or whatever suits her needs at the time.