Author Topic: Investment platform diversification  (Read 1601 times)

derenner

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Investment platform diversification
« on: November 10, 2020, 07:08:33 AM »
Hello stachers. Long time follower first time poster.

As a card carrying member of the stache clan in the UK I have the majority of liquid net worth in Vanguard LifeStrategy funds invested via Vanguard's own platform offering (vanguardinvestor.co.uk).

I am wondering how much time others have put to diversifying the platforms with which they invest, for example, spreading their money invested across different platforms, for example I am considering opening a second investment account with Fidelity UK.

My main reason for diversification is redundancy of market access and security, but I am interested to know how others have thought about this.

For context, these are all for investments outside of the usual tax sheltered offerings in the UK (of which I have maxed out annually).



reeshau

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Re: Investment platform diversification
« Reply #1 on: November 10, 2020, 08:59:39 AM »

RWD

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YttriumNitrate

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Re: Investment platform diversification
« Reply #3 on: November 10, 2020, 10:34:41 AM »
Diversifying across platforms is unnecessary.
I would change that to "diversifying across platforms is unnecessary so long as your platform is sufficiently large."

Vanguard's about as big as they get, so I wouldn't be concerned about having everything in there.

Retire-Canada

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Re: Investment platform diversification
« Reply #4 on: November 10, 2020, 11:43:23 AM »
My main reason for diversification is redundancy of market access and security, but I am interested to know how others have thought about this.

I have all my investments with one brokerage firm in Canada. I do have ~6 months in cash at my bank and another ~6 months worth of spending as a line of credit at my bank. If there were to be a problem with my brokerage firm I figure that buys me enough time to see it resolved.

maizefolk

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Re: Investment platform diversification
« Reply #5 on: November 10, 2020, 11:46:47 AM »
My main reason for diversification is redundancy of market access and security, but I am interested to know how others have thought about this.

I have all my investments with one brokerage firm in Canada. I do have ~6 months in cash at my bank and another ~6 months worth of spending as a line of credit at my bank. If there were to be a problem with my brokerage firm I figure that buys me enough time to see it resolved.

To echo what RC said (and what was discussed in the other thread reeshau linked to), there is an argument to be made that you might end up locked out of your accounts at a single institution for a period of time. Much less of an argument to be made that you might actually lose your investments (see the links RWD posted).

My non retirement investments are with a single company. My bank accounts are with two others. I figure that's plenty of insurance against the risk I might temporary lose access to any one account and find myself short of cash.

derenner

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Re: Investment platform diversification
« Reply #6 on: November 11, 2020, 12:27:00 PM »
Thanks for the reply all.

I think the refinement about access to capital is a useful way to think about things additionally. I spent some time thinking about that, and while I'm in the accumulation phase of life it shouldn't be a huge deal to be locked out of an individual account. From a security perspective, I still like having some diversification so I will be setting up a second investment account.

Once into the draw down phase of life one thing I've realised is that it is useful to retain my UK "offset mortgage", as that becomes a very quick line of credit should I need capital and for some reason not be able to withdraw from my investment account.

YttriumNitrate

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Re: Investment platform diversification
« Reply #7 on: January 28, 2021, 03:36:03 PM »
Diversifying across platforms is unnecessary.
I would change that to "diversifying across platforms is unnecessary so long as your platform is sufficiently large."
Vanguard's about as big as they get, so I wouldn't be concerned about having everything in there.

In light of certain brokerages recently restricting the ability of the users to buy (but not sell) certain equities, I'm changing my answer and now believe there is value in platform diversification.

scottish

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Re: Investment platform diversification
« Reply #8 on: January 28, 2021, 07:47:28 PM »
Diversifying across platforms is unnecessary.
I would change that to "diversifying across platforms is unnecessary so long as your platform is sufficiently large."
Vanguard's about as big as they get, so I wouldn't be concerned about having everything in there.

In light of certain brokerages recently restricting the ability of the users to buy (but not sell) certain equities, I'm changing my answer and now believe there is value in platform diversification.

That's why it's called risk mitigation.    If you knew what was going to go wrong you could have addressed it directly!   :-)

FLBiker

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Re: Investment platform diversification
« Reply #9 on: January 29, 2021, 05:42:21 AM »
We're really diverse, but not really by choice.  We have some at Vanguard, Fidelity, TIAA, Nationwide and Questrade, plus bank accounts at 5 banks.  For us, this complexity comes from two things 1) we have some work accounts that we can't move (403b and 457b) until we quit and 2) we recently moved from the US to Canada.  Once the dust settles -- once we both leave our jobs and settle into Canada, I suspect we'll still have a couple brokerage accounts (maybe 3 instead of 5) and a few bank accounts (because we'll have both USD and CAD accounts).  Generally, I favor simplicity, but our crossborder situation requires at least some diversity.