I realized that with so many accounts, I wasn't checking all of them regularly. More importantly, or more egregiously, I have been allowing money to sit idle. Having a cash position intentionally while you wait for a good stock to buy is one thing, but letting money take a vacation in the form of cash is not good.
So, I've decided to consolidate my financial accounts into as few as possible in an attempt to 1) simplify my financial life and 2) increase my performance/usage. While there are many good financial services companies out there, I've chosen the following two companies because they offer the features that I want while sacrificing the least.
- Bank of America
- Checking account -- On this account I've setup direct deposit on all paychecks, automatic payments for utilities and monthly bills, and
- Visa
- Rollover IRA -- Consolidated all 401ks and pensions from previous employers. This replaced accounts that had been at Fidelity or with employers
- E*Trade
- Taxable investment account -- Previously this account was with Scottrade, so I have had to sacrifice $7 trades for $12.95, but given the buy and hold nature of my investing, while it's unpalatable, I'm willing to accept it in the name of simplification.
- Roth IRA accounts -- Previously these two accounts were with Scottrade as well.
- Online savings accounts -- One account for Jessica and myself, and another account for our daughter. Previously these were at ING Direct, but the 5.05% is much more appealing than the 4.50%.
- Coverdell Education Savings account -- This is a new account, but my goal is that as our daughter's savings account accumulates, and I find a good stock or mutual fund to invest in, I'll then move the money here to save for her education.
- Discover -- I love the secure, single-use online number that Discover can create for online shopping. Plus the 1% cashback is nice. For now, I'll keep.
- HSA Bank -- This is a Health Savings Account that I'll keep open.
- Mortgage -- I'll keep where it's at. I rarely look at this account online, since the payment is made automatically from my checking account.
- Auto loan-- Same as the mortgage, so I'll keep. This will end within 12 months, so not worth the effort.
- School loan -- Same as the mortgage, so I'll keep.
4 comments:
I will not dispute the benefits of being able to check all accounts with 1 login; however, I think I would be limiting myself at this point if I tried to do the same thing. For my Roth's I am interested in investing in some of Vanguards or Fidelities Target Retirement Funds or Index Funds. I view this as a temporary and somewhat safe move until I've done more research on how I want to invest. For the next year at least I will probably open my Roth with Vanguard, invest in one of their funds, and avoid the additional fee's if I tried to invest in their funds from an E-Trade acount. Just did a search and I am not sure you even have access to all their funds from E-Trade. After I get more research done I could then move this Roth around to the next best place.
What are your thoughts on this?
For me, when I had investments spread across different financial companies, I found that some of my investments were going unwatched. It also became too big of a hassle at this stage in my life (multiple jobs, 14 month old toddler, etc.) to be downloading statements from all these different companies.
My only recommendation would be to watch your expenses on the Vanguard and Fidelity target funds. In case you're interested, E*Trade does offer the American Century target funds as NTFs (no transaction fees), and they have expense ratios under 1%.
What was your reasoning for choosing the Coverdell Education Savings account over one of the 529 plans?
I decided on the Coverdell ESA over the 529 plan for three reasons:
1) The Coverdell ESA can be used for elementary and secondary education whereas the 529 cannot.
2) I can invest in anything I want with a Coverdell ESA whereas the 529 plan is more restricted (you can choose from a handful of mutual funds for the Missouri 529).
3) I can open the Coverdell ESA via E*Trade, so I don't have to have yet another login name/account.
On the flip side, the 529 plan is worth a look. I may decide in the future to contribute to the Missouri 529 plan now that I live in a Missouri which has state income tax (unlike Texas where I previously lived). However, the state income tax deduction is limited to $8,000 for individuals and $16,000 for families in Missouri.
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