Author Topic: Logistics of saving: multiple banks/brokerages?  (Read 330 times)

matt222

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Logistics of saving: multiple banks/brokerages?
« on: November 13, 2017, 09:50:14 PM »
Hi everyone,
I'm thrilled to have found this community and grateful in advance for your advice. I'm 25 years old, finished graduate school last year and am now several months into a corporate job making ~$200k per year. My total cost of living is about $2k per month. This is obviously a great opportunity to pay off my student loans quickly and also start saving. But I have some logistical questions about how Mustachians tend to structure their accounts.

I think I need (1) an emergency fund of cash, (2) to fully fund my 401(k), (3) a taxable investment account, and (4) a convenient checking account. My question is, is it normal to have these four things be in different places, e.g. (1) high-yield online bank savings account with Goldman Sachs, (2) Fidelity 401(k), (3) taxable Vanguard account, (4) brick-and-mortar bank? Is there any downside to doing this? And, is there a better way?

For more background, I have a Wells Fargo bank account that I've had for years, and I now have a Fidelity account because of my employer's 401(k). I am tentatively planning to add a savings account with Ally or Goldman Sachs (both offering 1.3% APY) for my emergency fund (will be $12-15k) and a Vanguard account to start making some taxable investments in addition to my 401(k) contributions.

I wanted to ask the experts here before taking on this level of complexity. Should I just do everything with Fidelity? Something altogether different?
 Again, thank you for any input!

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 1647
  • Location: Cleveland
Re: Logistics of saving: multiple banks/brokerages?
« Reply #1 on: November 14, 2017, 06:07:36 AM »
It's not unusual, though you could probably do a lot of it without leaving Fidelity. They offer "cash management," which is essentially a checking account (including FDIC insurance). I think ATM fees are reimbursed, which reduces the need for brick-and-mortar if you don't want to go that way. All our investments are there, they offer funds comparable to Vanguard. I'm not sure they have any cash accounts with interest that high, but they might (they also have a pretty easy CD brokerage system).

The first step is acknowledging you have a problem, right?

https://forum.mrmoneymustache.com/journals/digging-out-of-a-hole/

Sibley

  • Handlebar Stache
  • *****
  • Posts: 2117
  • Age: 32
  • Location: Chicago, IL
Re: Logistics of saving: multiple banks/brokerages?
« Reply #2 on: November 14, 2017, 08:09:00 AM »
I am a believer that your investments and cash (savings/checking) should be separate. You're stuck with fidelity because of work. You can keep your taxable at fidelity as well if you want, I think they've lowered their expenses on the index funds.

Personally, I use Chase (they made the most sense at the time) for checking and some savings, and have a savings account with Ally. I rarely go into the bank branch, but when I need to, it would be a real hassle to not have that option.

NoStacheOhio

  • Handlebar Stache
  • *****
  • Posts: 1647
  • Location: Cleveland
Re: Logistics of saving: multiple banks/brokerages?
« Reply #3 on: November 14, 2017, 08:59:12 AM »
I am a believer that your investments and cash (savings/checking) should be separate.

Why?
The first step is acknowledging you have a problem, right?

https://forum.mrmoneymustache.com/journals/digging-out-of-a-hole/

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2501
  • Age: 117
  • Location: The laboratory
  • Typical Ghoul Next Door
Re: Logistics of saving: multiple banks/brokerages?
« Reply #4 on: November 14, 2017, 09:41:38 AM »
As long as the financial institutions are FDIC insured (for savings) or SIPC insured (for investments) and you stay aware of the coverages and make adjustments in the event any one account might tip over into the "too much in one location for that institution to cover," there's no real reason to have multiple locations for your money/investments other than what is most convenient to you. In my case, Fido covers everything against theft/fraud/outside actions no matter how much I have with them (this is over and above the amounts automatically covered but limited with SIPC/FDIC).

I personally like having all my investment stuff in one place as I can log in and see everything and track it over the years easily, but places like Personal Capital or Mint also offer the ability to show aggregate accounts so that's not as strong a factor for having stuff all the same. SO as long as you are organized and are using specific institutions' accounts for this or that because they offer you the best deal for that particular account, there's not strong argument for having all in one location or scattered.

I have all my investment portfolio with Fido and its perfectly fine. They have great index investments that are in line with those at Vanguard. I have a savings account with another group because they offered a higher savings rate, and I have a brick and mortar bank for my checking account because I'm lazy and haven't gotten to the point of ditching it yet and there's no real incentive to do so at this time.

I frequently have no idea what I'm talking about. Like now.

FIREd as of: March 6th, 2015!

Ting is awesome! Get $25 if you use my referral code: https://z0p1rd31m89.ting.com/

boarder42

  • Walrus Stache
  • *******
  • Posts: 5837
Re: Logistics of saving: multiple banks/brokerages?
« Reply #5 on: November 14, 2017, 10:06:45 AM »
As long as the financial institutions are FDIC insured (for savings) or SIPC insured (for investments) and you stay aware of the coverages and make adjustments in the event any one account might tip over into the "too much in one location for that institution to cover," there's no real reason to have multiple locations for your money/investments other than what is most convenient to you. In my case, Fido covers everything against theft/fraud/outside actions no matter how much I have with them (this is over and above the amounts automatically covered but limited with SIPC/FDIC).

I personally like having all my investment stuff in one place as I can log in and see everything and track it over the years easily, but places like Personal Capital or Mint also offer the ability to show aggregate accounts so that's not as strong a factor for having stuff all the same. SO as long as you are organized and are using specific institutions' accounts for this or that because they offer you the best deal for that particular account, there's not strong argument for having all in one location or scattered.

I have all my investment portfolio with Fido and its perfectly fine. They have great index investments that are in line with those at Vanguard. I have a savings account with another group because they offered a higher savings rate, and I have a brick and mortar bank for my checking account because I'm lazy and haven't gotten to the point of ditching it yet and there's no real incentive to do so at this time.

SIPC only goes up to 500k so are you putting your money when you retire in multiple locations to stay under this limit?
Best super bonuses on Credit cards right now - ask me how to Mfg spend to meet the sign up bonus

1. Delta Gold 60k miles Ends 1/31/2018
2. Delta Platinum - 70k miles - Ends 1/31/2018

Delta Business Gold - Ends 1/31/2018

Top Cash Back

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2501
  • Age: 117
  • Location: The laboratory
  • Typical Ghoul Next Door
Re: Logistics of saving: multiple banks/brokerages?
« Reply #6 on: November 14, 2017, 10:14:43 AM »
As long as the financial institutions are FDIC insured (for savings) or SIPC insured (for investments) and you stay aware of the coverages and make adjustments in the event any one account might tip over into the "too much in one location for that institution to cover," there's no real reason to have multiple locations for your money/investments other than what is most convenient to you. In my case, Fido covers everything against theft/fraud/outside actions no matter how much I have with them (this is over and above the amounts automatically covered but limited with SIPC/FDIC).

I personally like having all my investment stuff in one place as I can log in and see everything and track it over the years easily, but places like Personal Capital or Mint also offer the ability to show aggregate accounts so that's not as strong a factor for having stuff all the same. SO as long as you are organized and are using specific institutions' accounts for this or that because they offer you the best deal for that particular account, there's not strong argument for having all in one location or scattered.

I have all my investment portfolio with Fido and its perfectly fine. They have great index investments that are in line with those at Vanguard. I have a savings account with another group because they offered a higher savings rate, and I have a brick and mortar bank for my checking account because I'm lazy and haven't gotten to the point of ditching it yet and there's no real incentive to do so at this time.

SIPC only goes up to 500k so are you putting your money when you retire in multiple locations to stay under this limit?

SIPC is indeed up to 500K, which is why I said to stay aware of the coverages and make adjustments (as per my first sentence), but Fido offers additional "excess of SIPC" coverage up to $1 billion in Fido accounts:
https://www.fidelity.com/why-fidelity/safeguarding-your-accounts

So SIPC covers the first $500K, Fido covers the rest up to $1 billion. As I doubt that I'll reach 1 billion in investments, I am not too concerned with the eggs/basket scenario. :)
I frequently have no idea what I'm talking about. Like now.

FIREd as of: March 6th, 2015!

Ting is awesome! Get $25 if you use my referral code: https://z0p1rd31m89.ting.com/

MDM

  • Walrus Stache
  • *******
  • Posts: 7113
Re: Logistics of saving: multiple banks/brokerages?
« Reply #7 on: November 14, 2017, 10:55:33 AM »
I think I need (1) an emergency fund of cash, (2) to fully fund my 401(k), (3) a taxable investment account, and (4) a convenient checking account. My question is, is it normal to have these four things be in different places, e.g. (1) high-yield online bank savings account with Goldman Sachs, (2) Fidelity 401(k), (3) taxable Vanguard account, (4) brick-and-mortar bank? Is there any downside to doing this? And, is there a better way?
Better is in the eye of the beholder.  What you describe is not at all unreasonable.

boarder42

  • Walrus Stache
  • *******
  • Posts: 5837
Re: Logistics of saving: multiple banks/brokerages?
« Reply #8 on: November 14, 2017, 11:50:04 AM »
Yeah here is vanguard's limits for reference

Securities in your brokerage account are held in custody by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation. Vanguard Marketing Corporation is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at sipc.org External site.
To offer greater protection and security, Vanguard Marketing Corporation has secured additional coverage from certain insurers at Lloyd's of London and London Company Insurers for eligible customers with an aggregate limit of $250 million, incorporating a customer limit of $49.5 million for securities and $1.75 million for cash. Coverage provided by SIPC and certain Lloyd's of London and London Company Insurers does not protect against loss of market value of securities. The policy provided by certain Lloyd's of London and London Company Insurers is subject to its own terms and conditions.
Best super bonuses on Credit cards right now - ask me how to Mfg spend to meet the sign up bonus

1. Delta Gold 60k miles Ends 1/31/2018
2. Delta Platinum - 70k miles - Ends 1/31/2018

Delta Business Gold - Ends 1/31/2018

Top Cash Back

Jaayse

  • Stubble
  • **
  • Posts: 111
  • Age: 30
  • Location: Somewhere on the Ocean
Re: Logistics of saving: multiple banks/brokerages?
« Reply #9 on: November 14, 2017, 11:53:10 AM »
I have my money in a bunch of different places, mostly because of this:  https://www.doctorofcredit.com/best-bank-account-bonuses/

I have my main account at Navy Federal, which I have my mortgage through.  I have a few CDs there that I grab when they're on special, 5k at 5% is an example.  I have a brokerage account with Fidelity that my dad helped me set up when I was 22 and still have money in the S&P 500 index which is .035 expense ratio and a T-IRA there.  I opened an account with Vanguard after finding MMM and moved my international indexes here because the expense ratio was so much better (.11 vs 1.10) and bought some VTSAX.  I also have accounts with Chase and Capital One that have both provided me with 500$ for keeping my money in them for a short time, although I will keep the capital one 360 account with its 1.3% interest for my emergency fund.

I move my money where it will make the most for me and then consolidate when I close out accounts.  I could keep it simpler and some people prefer that, but there is nothing wrong with multiple accounts.
My Journal:  https://forum.mrmoneymustache.com/journals/the-journey-of-a-lifetime/
Earn 50,000 bonus points with Chase Sapphire Preferred ($4k spend in 3 months). I can be rewarded too if you apply here and are approved for the card. Learn more.
https://www.referyourchasecard.com/6/QCXVQ647S4
www.airbnb.com/c/justinec3400  -> Sign up for AirBnB here for 40$ on your account
Ibotta referral code:  ulyodxt

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2501
  • Age: 117
  • Location: The laboratory
  • Typical Ghoul Next Door
Re: Logistics of saving: multiple banks/brokerages?
« Reply #10 on: November 14, 2017, 11:54:29 AM »
Yeah here is vanguard's limits for reference

Securities in your brokerage account are held in custody by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation. Vanguard Marketing Corporation is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at sipc.org External site.
To offer greater protection and security, Vanguard Marketing Corporation has secured additional coverage from certain insurers at Lloyd's of London and London Company Insurers for eligible customers with an aggregate limit of $250 million, incorporating a customer limit of $49.5 million for securities and $1.75 million for cash. Coverage provided by SIPC and certain Lloyd's of London and London Company Insurers does not protect against loss of market value of securities. The policy provided by certain Lloyd's of London and London Company Insurers is subject to its own terms and conditions.

I figured they'd have great extra coverage as well; most larger, well regarded institutions will have similar. It really is just being sure to monitor the coverages/limits and stay informed, but the whole one place/several different places choice probably is just personal preference at this point. Get whatever account(s) makes sense/chase any bonuses out there you want, as there is no universal "better" choice.
I frequently have no idea what I'm talking about. Like now.

FIREd as of: March 6th, 2015!

Ting is awesome! Get $25 if you use my referral code: https://z0p1rd31m89.ting.com/