Do you keep all your eggs in one basket?

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spartanap
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Do you keep all your eggs in one basket?

Post by spartanap »

Our retirement portfolio is in the low seven figures with about 60% at Vanguard in tIRAs and Roths and about 30% in a 403b at American Century. I want to move out of AC to reduce costs. Moving it to Vanguard would certainly reduce cost and simplify our portfolio at the same time. I know it's safe, but I'm having trouble having that much of our life's savings in one place. Has anyone else struggled with this issue? Am I worrying for no reason? Advice? Thanks for your responses.
J295
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Re: Do you keep all your eggs in one basket?

Post by J295 »

We have accounts at Fidelity, Vanguard, and the firm 401K provider. Works just fine for us.
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Rob5TCP
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Re: Do you keep all your eggs in one basket?

Post by Rob5TCP »

I keep all of my equities at Vanguard. For Bonds, I have IBonds and Cd's which I get better rates outside of Vanguard. On the site, they have this about insurance.
If you have concerns, I would call Vanguard. My equities are only 35% of my portfolio, so they are under $500,000.

From Vanguard:
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.

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.
cromwell
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Re: Do you keep all your eggs in one basket?

Post by cromwell »

I keep all mutual funds at vanguard.I believe the issue of safety has been explored on this site in the past and for me it's just more convenient.I believe Mr Bogle has most if not all his assets there and he is a pretty cautious guy.
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Re: Do you keep all your eggs in one basket?

Post by DoWahDaddy »

There is clearly risk of having a substantial portion of your wealth at one fund family. The risks are numerous, however remote one may calculate the odds of adverse affect on one's portfolio to be. I find diversifying away from vanguard is easiest when using broad based index funds which tend to have immaterial cost differences. Also some fund families offer products you may want in your portfolio that vanguard just doesn't offer. I agree with your concerns at that asset size.
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Re: Do you keep all your eggs in one basket?

Post by robertalpert »

With the exception of one non-vanguard fund (not available at Vanguard), we consolidated all other assets to Vanguard and over time was able to simplify our portfolio design. It's one of our better decisions.
emdeefive
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Re: Do you keep all your eggs in one basket?

Post by emdeefive »

Rob5TCP wrote: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.
An aggregate limit of $250 million seems really low, if they mean all of Vanguard customers in aggregate. Just on this forum there's at least once a month a "Please review my $25mn portfolio" thread, and it'll only take 10 of those customers to hit the policy limit.
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Re: Do you keep all your eggs in one basket?

Post by IPer »

Yeah, I wouldn't, why not check out Schwab or Fidelity? Eggs in one basket might give indigestion.
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Re: Do you keep all your eggs in one basket?

Post by Leeraar »

spartanap wrote:Our retirement portfolio is in the low seven figures with about 60% at Vanguard in tIRAs and Roths and about 30% in a 403b at American Century. I want to move out of AC to reduce costs. Moving it to Vanguard would certainly reduce cost and simplify our portfolio at the same time. I know it's safe, but I'm having trouble having that much of our life's savings in one place. Has anyone else struggled with this issue? Am I worrying for no reason? Advice? Thanks for your responses.
Don't worry about it. Your money at Vanguard (or Schwab, or Fidelity, or ...) is held by a custodian. The company can manage your money, but beyond advisor fees they cannot access it. Vanguard (or whatever company) can fail, your money is safe.

Unless your advisor is Madoff ...

L.
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flyingaway
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Re: Do you keep all your eggs in one basket?

Post by flyingaway »

When I opened my taxable accounts, I opened one at Fidelity and at Vanguard at the same time and put in the same amount of money. Initially I wanted to test their performance. But I performed different operations at the two accounts so the results have been different. However, right now, I like to have my eggs at two baskets.
ccieemeritus
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Re: Do you keep all your eggs in one basket?

Post by ccieemeritus »

No. I don't keep my eggs in one basket.

Once an account exceeds $500k I stop depositing new money there. For example when my Schwab taxable account hit that threshold I opened a vanguard taxable account. I still exceed the SIPC coverage as accounts grow, but not by a huge extent.

That said, ill never put money in a brokerage I consider unethical (if a brokerage manages 401k's with only high ER options, then I consider it unethical).
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Re: Do you keep all your eggs in one basket?

Post by AlohaJoe »

I don't keep all my eggs in one basket. That's why my assets are in three different countries, in three different currencies.

Why do you draw your irrational-fear-line at single custodians and not single currencies or single nations, if we're talking about black swan long tail risks? :twisted:
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Re: Do you keep all your eggs in one basket?

Post by carolinaman »

Although your money is probably safe at Vanguard, you still may find it worthwhile to keep some of your money at a different firm. I have split my investments between Vanguard and Fidelity. There are advantages to each. Fidelity has a much better website and provides some services not matched by Vanguard, such as face to face meetings with advisers if that is important to you.
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jfn111
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Re: Do you keep all your eggs in one basket?

Post by jfn111 »

Mine is split, about 80% Fidelity and 20% Schwab.
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Re: Do you keep all your eggs in one basket?

Post by Dandy »

I have almost all assets at VG. I do have a tiny bit of worry when you hear about large companies being hacked or when last week my credit card company called my about an unauthorized transaction and they had to send me a new credit card.

I do check my account regularly and have upgraded my password strength.

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nedsaid
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Re: Do you keep all your eggs in one basket?

Post by nedsaid »

Some smart aleck once said that if you wanted one statement, just staple them together! There is just something in me that doesn't want all my money in one firm. If you have a similar concern, having money at two or three is just fine.
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poker27
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Re: Do you keep all your eggs in one basket?

Post by poker27 »

What is the risk of having all of your funds at one institution? That is may go belly up? Ponzi scheme? I guess anything is possible.
Topic Author
spartanap
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Re: Do you keep all your eggs in one basket?

Post by spartanap »

Thanks for the replies. I guess my biggest fear (or maybe more like paranoia) is not the strength of the company but more in the area of the account being compromised (hacked). Based on the feedback, I'm leaning towards Fidelity or Schwab for AC accounts. Thanks again.
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investorguy1
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Re: Do you keep all your eggs in one basket?

Post by investorguy1 »

I keep all my eggs in one fridge.

I think Vanguard has an option that you could have a code text messaged to your phone and you enter it when you log in for some added safety.
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ruralavalon
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Re: Do you keep all your eggs in one basket?

Post by ruralavalon »

All of our accounts are at Vanguard, all our mutual funds are Vanguard funds, our only other investments are Treasury bonds. We are perfectly comfortable with this.
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tetractys
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Re: Do you keep all your eggs in one basket?

Post by tetractys »

Actually, each fund is a separate corporate entity, with Vanguard only being the distributer, so to say. So it's not comparable to keeping all your eggs in one basket at all. -- Tet
dozer183e
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Re: Do you keep all your eggs in one basket?

Post by dozer183e »

Investerguy wrote:I keep all my eggs in one fridge.
What happens when the power goes out? :)

I was also thinking of an different analogy and can't seem to find one that quite fits. I shop for eggs with several baskets, but from one supermarket?

I think this is just the wrong analogy for this question. I am also one of those of the opinion that Vanguard is not a basket, the investment options are the baskets. Therefore I don't think it is necessary to spread funds across several brokers.

Cheers
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Re: Do you keep all your eggs in one basket?

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obgyn65
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Re: Do you keep all your eggs in one basket?

Post by obgyn65 »

No. I use more than 5 banks in two different countries. All my CDs and munis are with edward jones, spread across dozens more banks.
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topper1296
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Re: Do you keep all your eggs in one basket?

Post by topper1296 »

I view keeping all of your eggs with just one company as responsible as keeping all of your eggs in just one asset class.
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Re: Do you keep all your eggs in one basket?

Post by tibbitts »

spartanap wrote:Thanks for the replies. I guess my biggest fear (or maybe more like paranoia) is not the strength of the company but more in the area of the account being compromised (hacked). Based on the feedback, I'm leaning towards Fidelity or Schwab for AC accounts. Thanks again.
That's not an unreasonable fear, although I don't think it should be an overriding one. I have accounts at three companies, so I'm three times as exposed to accounts being compromised, but with each resulting in less (only slightly less in some cases) damage than if all my assets were in one account. However I'll likely have only just enough assets in total to live comfortably on, so the truth is that failure in any one account will result in failure of the entire plan. When you're in that position it becomes more of a challenge to weigh the risks. If you have almost no investments, one company is good. If you're covered even if you lose a substantial portion, but not all, of your investments, you can protect against that with multiple companies. If you're in the middle, there's no place to hide.
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nisiprius
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Re: Do you keep all your eggs in one basket?

Post by nisiprius »

About ten years ago, I had most of my eggs in three baskets: TIAA-CREF, Fidelity, and Vanguard. Plus miscellaneous bank accounts, and a meaningful stack of paper I bonds in the safe deposit box. I thought that was way too complicated, and I consolidated, first by converting my TIAA-CREF Traditional to lifetime payout contracts and moving the rest of Vanguard, then, about three or four years ago, moving my Fidelity holdings to Vanguard.

I see it as a balance of risks.

The chance of a truly black swan, "Firm XYZ collapses and in some completely unforeseen way, despite the SIPC and the Investment Company Act of 1940 and all, you lose all your money there," is pretty hard to evaluate. Because of those other miscellaneous holdings, the bank accounts and the I bonds, and because we are drawing Social Security and own some SPIAs, the total loss of our Vanguard accounts would be seriously awful but we'd still be able to meet our regular expenses and we'd still have a decent emergency fund.

A big advantage to having accounts at more than one firm is that you can constantly be comparing their offerings, websites, behavior, customer service, etc. and if someone at one firm says "Yes, we just added this nuisance fee but it's OK because everyone else is doing it too," you will know whether or not they are lying.

However, I believe there are real risks in complexity. They include: a) the risk that my heirs will not find all of my assets after I am deceased. b) the risk that my lifetime companion will be unable to understand what she's got after I am deceased, and may decide to use an advisor instead of doing it herself like I tell her she can, and may get a bad advisor; c) the risk that I'll make some non-trivial mistake because of not quite "having the picture." And there are also obvious costs, extra time spent fiddling with a spreadsheet just to get a consolidated view, extra time spent on taxes, extra risks if you decide to give Mint your Vanguard password or give Vanguard your Fidelity password, etc. etc.

And as Tibbitts says, more accounts limits your maximum "firm disaster black swan" loss, but increases the chances of being affected by one. (Charles A. Lindbergh went against the conventional wisdom when he chose to use a single-engine plane, because he felt that having three engines tripled the chances that one would fail, and he thought that the chances of completing a transatlantic flight with only two engines wasn't good).

It's a strange situation, because I'm skeptical enough not to blindly trust institutions just because they're big and famous... but realistically it's not possible to live your life without doing that. So I have everything at Vanguard, and yes, some of it is because of brand name loyalty and less likely to engage in shenanigans than some other firms; some of it is "they're so big and famous, what could go wrong"--dare I say "too big to fail?"

I will say this much--I've said it before--if you are a mutual fund investor, then it is probably less important to worry about mutual fund company "diversification" or brokerage firm "diversification" and more important to worry about custodial bank "diversification." That is, if you enjoy worrying, look at--I think it's the Statement of Additional Information--that tells you who the custodian is. In theory, there might be some point to splitting between a total stock market index fund that stashes its assets at JPMorgan Chase, and another that stashes its assets at, what are some of the others, BNY Mellon? State Street?

There might be some point to IT diversification. Some at a firm whose servers are (where?) and another at a firm whose servers are (where?)

Do I personally act on "custodial bank diversification" or "IT diversification?" No, I don't. All at Vanguard, and I think all the funds I own use JPMorgan Chase as the custodian.
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supernova
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Re: Do you keep all your eggs in one basket?

Post by supernova »

I can't imagine any case where you'd lose all your money at a firm unless the stock market collapses (in which case all firms have that problem). There is the identity theft/account compromising possibility, but I doubt even that is too likely with most security measures that are in place.
john94549
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Re: Do you keep all your eggs in one basket?

Post by john94549 »

I diversify not only by asset class but also by the company holding same. Stated another way, I keep my eggs in many baskets.
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Re: Do you keep all your eggs in one basket?

Post by Dan999 »

I used to have all my assets at Vanguard. But I kept thinking what if something happened because of a computer hack on either Vanguard's computers or mine.
I just could not get past waking up someday and finding my account balance was 0.
So I now have half in Vanguard and half in Fidelity. At least I would not be totally wiped out. It would be terrible to lose half your assets or have them tied up for
weeks or months. So I sleep better now. I managed to use their funds with comparable expense ratios to Vanguard. Performance was comparable.

It is not too complicated to have 2 accounts instead of one especially if you are not actively trading and taking RMD now.

Subsequently, Vanguard came out with the login code texted to my phone when I log in. If they had that when I made my decision, I may not have moved half my funds.
I am very comfortable with the login passcode at Vanguard. It works great and is a real measure of security for me.
I only login in from one pc and have malware and antivirus programs.

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Toons
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Re: Do you keep all your eggs in one basket?

Post by Toons »

I wouldn't concern myself with having all my assets at either Vanguard or Fidelity,or T.Rowe Price or TIAA-Creef :happy
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WHL
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Re: Do you keep all your eggs in one basket?

Post by WHL »

I closed my EJ, Schwab, and Fidelity accounts when I fully joined a boglehead portfolio philosophy a couple of years ago. I already had the bulk of my funds at vanguard but wants to simplify.

Today, I have all IRA money at vanguard, our work 401k just changed to Wells Fargo (yuck), and I have some treasury direct i and ee bonds.
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Re: Do you keep all your eggs in one basket?

Post by NoRoboGuy »

nisiprius wrote:I will say this much--I've said it before--if you are a mutual fund investor, then it is probably less important to worry about mutual fund company "diversification" or brokerage firm "diversification" and more important to worry about custodial bank "diversification." That is, if you enjoy worrying, look at--I think it's the Statement of Additional Information--that tells you who the custodian is. In theory, there might be some point to splitting between a total stock market index fund that stashes its assets at JPMorgan Chase, and another that stashes its assets at, what are some of the others, BNY Mellon? State Street?
In the case of Vanguard, they use several different independent custodian banks.
Will Vanguard fund investments be in jeopardy if the fund’s custodian bank fails? U.S. banking laws generally
provide that “segregated” mutual fund assets held by a bank custodian aren’t subject to the liens or claims of
the custodian’s creditors or of the Federal Deposit Insurance Corporation (FDIC). To further mitigate risk, Vanguard
takes the precaution of using several different independent custodian banks. These banks include The Bank of
New York Mellon, Brown Brothers Harriman & Co., JPMorgan Chase Bank, and State Street Bank and Trust
Company.
Just blogged on this subject, and would just add that consolidating firms makes it simpler to rebalance and track my allocation. I also use a spreadsheet. As mentioned before, if you have a spouse, having one firm simplifies things once you are pushing up daisies!
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Re: Do you keep all your eggs in one basket?

Post by Dulocracy »

Wife has her 401k through some company or another I have never heard of. I have my 401k through a different company. Even so, we split our other assets between Vanguard and Fidelity, but most of the funds are at Vanguard. I do not fear a collapse and loss of money or hacking of the company as much as I fear that some world event or hacking will make my money unavailable right when I need it. For that reason, we keep most of our non-401k money at Vanguard, but still keep about 20% at Fidelity.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: Do you keep all your eggs in one basket?

Post by jdb »

We have everything, and I do mean everything, at Vanguard, other than bank checking account, our mutual funds, brokerage accounts, IRA's for me and spouse, trust accounts for adult children, 529 for grandchildren. And add to it each year. Our portfolio well diversified but all under Vanguard umbrella. We don't even have bug out bags or gold bullion hidden under mattress. Do I sleep well at night? Yes, life has many things to keep one up at night but do not believe Vanguard stewardship is one of them. And certainly makes record keeping easier. Good luck.
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Re: Do you keep all your eggs in one basket?

Post by ruralavalon »

Since retirement we have had all of our investments at Vanguard.
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