Question about vanguard vs keeping schwab for CDs and Money Market

[Prancing Llama]

I have a roth IRA at Schwab, and a brokerage. I've been happy with them. Now I'm investing my house down payment for the next year or two to keep it from devaluing.

I've calculated with the higher CD rates and higher money market rates on $60k I would make $153 more at vanguard but my investments also wouldnt be all in one place. That is somewhat important to me. Am i overthinking this? Would you just go for the bigger gain?

Thanks

[reeshau]

I don't think there is a lot of benefit to having a single place.  It's a single point of failure in light of a security breach.  While there is insurance and whatnot to eventually make you whole, that doesn't make things convenient during the event.  Tons and tons of them are just an excuse to forget something, but 2 or 3 can be smart, if you are doing that for a reason.  (features, perks, promotion rotation, etc.)

Given how much you want to deposit, even banks flush with deposits want conquest wins, and often offer $hundreds for new accounts or moving money.  Ally had a couple great ones, but they expired.  It could be the regionals / those threatened (including Schwab) may get promote-ey again to lure back some money from the biggest banks.

[secondcor521]

I would not introduce the complication of a second taxable account to save $153 over a year or two.  That's probably before taxes, and your taxes on that $153 are probably $20 or $25, so you're only talking about $125 or $130.  Over one year that's about $10 a month, over two years about $5 a month.  For me it would be easier to skip a Starbucks or a bag of Doritos or a fast food meal.

To get that, you need to open a Vanguard account, set up your transfer accounts, transfer money around, learn a new website, and deal with another tax form at tax time once or twice at least.

I respect the argument about security and account bonuses, but for me I don't see those as a significant issue.  It is very rare to begin with, I keep good security practices and there is SIPC insurance against fraud and theft.  As for account bonuses, the ones I've seen are usually for new customers and/or new money, and those are similarly not worth it for the hassle factor vs. financial benefit for me.

Also, CD and money market rates bounce around from week to week, day to day, and hour to hour.  It's possible that they day you checked, Vanguard was ahead by a bit.  If you check at a different time, Schwab may win.

For what it's worth, within my family we have accounts at both Vanguard and Schwab.  I like them both, but I don't like either of them enough to have accounts at both or bother switching from one to the other.

[MustacheAndaHalf]

As a customer, I prefer Schwab over Vanguard.  But you can check out some other threads about people switching to/from Vanguard to get a broader view:

https://forum.mrmoneymustache.com/investor-alley/vanguard-v-fidelity-for-brokerage-account/
https://forum.mrmoneymustache.com/investor-alley/switching-brokerages-betterment-to-vanguard-need-advice/

For CDs, make sure you're comparing CDs with the same characteristics.  If you have two CDs both paying 4%/year, the one compounding monthly will beat the one compounding semi-annually.  Also worth comparing the conditions and amount of penalty in the event of early withdrawal.

Have you checked CD rates with credit unions and banks?

[secondcor521]

For CDs, make sure you're comparing CDs with the same characteristics.  If you have two CDs both paying 4%/year, the one compounding monthly will beat the one compounding semi-annually.  Also worth comparing the conditions and amount of penalty in the event of early withdrawal.

My (limited) understanding is that CDs sold at Vanguard (and probably Schwab also) are brokered CDs which don't have EWPs; they're instead sold on a secondary market (where prices fluctuate as you would expect based on interest rate levels.

Brokered CDs can also be callable or non-callable, which is something important to read up about.

There are other nuances as well.

[Prancing Llama]

@MustacheAndaHalf Credit unions here are actually much lower than Schwab or Vanguard from what I see. Havent checked banks.

[BicycleB]

I personally like having 2 accounts. I traveled abroad last year and ran into access issues at Vanguard. Had Fidelity, not Schwab, but Fidelity access remained solid; have heard Schwab is good for travelers, has better service generally as previous poster indicated.

The more stable and perfectly organized your life, maybe the less risk you have. 2 accounts for me. ;)

[Financial.Velociraptor]

If the question is "does this make a difference to my retirement date?" the answer is a big NO.  Your savings rate is the biggest determining factor to your retirement date and not your rate of return (at any 'plausible' ROR).  A few basis points on the total portfolio is trivial compared to finding a way to sock more away.