How much is too much in a Fidelity or VG account?

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throwaway37837812
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How much is too much in a Fidelity or VG account?

Post by throwaway37837812 » Sun Apr 15, 2018 7:03 pm

Hi esteemed bogleheads -

After saving one paycheck at a time for a long time, I have a nice windfall coming my way and expect it will push my Fidelity balance to approximately $4.5-$6m now (and hopefully more with growth!).

Is this too much to leave in a Fidelity account? What is their average account balance?

I imagine sales people may be annoying, but I can handle that - I truly enjoy investing my own money and will mostly be in a mix of index funds an treasurys.

Just wondering if it's too risky or there is something I'm not thinking about?

Regards

Silk McCue
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Re: How much is too much in a Fidelity or VG account?

Post by Silk McCue » Sun Apr 15, 2018 7:26 pm

Please check out this link on our site for managiing windfalls. It is an excellent place to start. Be careful and be wise.

https://www.bogleheads.org/wiki/Managing_a_windfall

Cheers

throwaway37837812
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Re: How much is too much in a Fidelity or VG account?

Post by throwaway37837812 » Sun Apr 15, 2018 7:32 pm

Silk McCue wrote:
Sun Apr 15, 2018 7:26 pm
Please check out this link on our site for managiing windfalls. It is an excellent place to start. Be careful and be wise.

https://www.bogleheads.org/wiki/Managing_a_windfall

Cheers
Thank you - have read this and had it bookmarked for many years!

Jack FFR1846
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Re: How much is too much in a Fidelity or VG account?

Post by Jack FFR1846 » Sun Apr 15, 2018 7:33 pm

Seeing classes of funds in Fidelity with minimums of $100M give me faith that a few million are probably not a problem.
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JamesSFO
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Re: How much is too much in a Fidelity or VG account?

Post by JamesSFO » Sun Apr 15, 2018 7:34 pm

Unlike savings accounts with FDIC insurance there isn't the same type of guarantee in brokerage accounts (SIPC coverage isn't really quite the same, it protects against "loss" of the securities, e.g. a VG or Fido employee somehow manages to remove securities from your account).

I personally have nearly 90% with VG but do keep 10% with Fido so that if something catastrophic happened with Vanguard for a while (e.g. 1 week long denial of service) I could get money from the other.

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Re: How much is too much in a Fidelity or VG account?

Post by Grt2bOutdoors » Sun Apr 15, 2018 7:41 pm

throwaway37837812 wrote:
Sun Apr 15, 2018 7:03 pm
Hi esteemed bogleheads -

After saving one paycheck at a time for a long time, I have a nice windfall coming my way and expect it will push my Fidelity balance to approximately $4.5-$6m now (and hopefully more with growth!).

Is this too much to leave in a Fidelity account? What is their average account balance?

I imagine sales people may be annoying, but I can handle that - I truly enjoy investing my own money and will mostly be in a mix of index funds an treasurys.

Just wondering if it's too risky or there is something I'm not thinking about?

Regards
Your funds are held in custody-segregated from Fidelity or Vanguard’s own monies and corporate obligations. Seeing that large institutional investors with billions leave money invested at these firms, the risk you need to be concerned with relates to your own accounts asset allocation.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: How much is too much in a Fidelity or VG account?

Post by MikeG62 » Sun Apr 15, 2018 7:54 pm

throwaway37837812 wrote:
Sun Apr 15, 2018 7:03 pm
Hi esteemed bogleheads -

After saving one paycheck at a time for a long time, I have a nice windfall coming my way and expect it will push my Fidelity balance to approximately $4.5-$6m now (and hopefully more with growth!).

Is this too much to leave in a Fidelity account? What is their average account balance?

Regards
I truly would not worry about this. You are not investing “in” Fidelity, but “through” Fidelity (with Fidelity simply being the vehicle (broker) through which you are acquiring the individual index funds and treasuries). This is not like having money in the bank in excess of FDIC insurance limits and the bank goes under or investing in a single stock with the company subsequently going out of business. If something happens to Fidelity, you still own the individual index funds or treasuries. While you may not have immediate access to the assets, eventually you would.
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Re: How much is too much in a Fidelity or VG account?

Post by sperry8 » Sun Apr 15, 2018 8:01 pm

Although I agree and appreciate the answers herein, I too keep ~15% of my assets with Fidelity as a "risk diversification tool". I simply transferred them in-kind and they just sit there. It costs me $0. In the future should something occur that delays my Vanguard access, I will appreciate having both accounts. I see no downside to keeping both open (other than 2 incoming tax forms annually that I must collect and hand to my accountant).
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Re: How much is too much in a Fidelity or VG account?

Post by Nekrotok » Sun Apr 15, 2018 8:58 pm

Jack FFR1846 wrote:
Sun Apr 15, 2018 7:33 pm
Seeing classes of funds in Fidelity with minimums of $100M give me faith that a few million are probably not a problem.
Yes, I'm hoping for the day when I can upgrade to fsktx and vitsx! OP, you got nothing to worry about.

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Re: How much is too much in a Fidelity or VG account?

Post by Sandtrap » Sun Apr 15, 2018 10:29 pm

At 5 mil + in Vanguard you will be eligible for "Flagship Select" status.
https://investor.vanguard.com/wealth-management/
But, as a "Boglehead", you will likely not need their services anyway.
However, there are reduced or zero fees for a number of items.

As Vanguard is presently at $ 5.1 TRILLION in Assets Under Management (just shy of a "Gazillion").
There's not much to worry about. $5-6 million is far less than a drop in that bucket.

If it makes you more comfortable, keep your Tier 1 in Fidelity and the rest in Vanguard.

aloha
j :D

mhalley
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Re: How much is too much in a Fidelity or VG account?

Post by mhalley » Mon Apr 16, 2018 11:29 am

I like having my money in multiple brokerages in case of the possibility of account takeover. Most likely if something did happen, the money would eventually be recovered, but I sleep better at night knowing that one hack won’t put ALL of my money at risk.

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Re: How much is too much in a Fidelity or VG account?

Post by CurlyDave » Mon Apr 16, 2018 11:40 am

mhalley wrote:
Mon Apr 16, 2018 11:29 am
I like having my money in multiple brokerages in case of the possibility of account takeover. Most likely if something did happen, the money would eventually be recovered, but I sleep better at night knowing that one hack won’t put ALL of my money at risk.
While I agree that multiple brokerages is best, a kind of a half-way measure is multiple accounts at the same brokerage. They add up to enough that customer service pays attention when I call, which would probably not be the case if split between two brokerage houses, and a simple hack will not put all of my assets out of reach.

If I had as much as the OP, I would put enough to get top tier customer service in a separate brokerage and just let it sit in case of emergency or a massive computer failure.

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AAA
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Re: How much is too much in a Fidelity or VG account?

Post by AAA » Fri Apr 20, 2018 9:28 am

MikeG62 wrote:
Sun Apr 15, 2018 7:54 pm
I truly would not worry about this. You are not investing “in” Fidelity, but “through” Fidelity (with Fidelity simply being the vehicle (broker) through which you are acquiring the individual index funds and treasuries). This is not like having money in the bank in excess of FDIC insurance limits and the bank goes under or investing in a single stock with the company subsequently going out of business. If something happens to Fidelity, you still own the individual index funds or treasuries. While you may not have immediate access to the assets, eventually you would.
I'm currently thinking about brokerage diversification so this thread is very relevant. As to your comment, what if that "something" that happens to Fidelity is that for whatever reason - employee fraud, computer virus, software bug, etc - they no longer have a record of which funds I own through them?

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goingup
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Re: How much is too much in a Fidelity or VG account?

Post by goingup » Fri Apr 20, 2018 10:00 am

One broker and one bank for us. There's no "too much" at places like Vanguard, Fidelity, Schwab. Consolidation and simplicity are more valued than redundancy by me.

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Re: How much is too much in a Fidelity or VG account?

Post by MikeG62 » Fri Apr 20, 2018 10:31 am

AAA wrote:
Fri Apr 20, 2018 9:28 am
MikeG62 wrote:
Sun Apr 15, 2018 7:54 pm
I truly would not worry about this. You are not investing “in” Fidelity, but “through” Fidelity (with Fidelity simply being the vehicle (broker) through which you are acquiring the individual index funds and treasuries). This is not like having money in the bank in excess of FDIC insurance limits and the bank goes under or investing in a single stock with the company subsequently going out of business. If something happens to Fidelity, you still own the individual index funds or treasuries. While you may not have immediate access to the assets, eventually you would.
I'm currently thinking about brokerage diversification so this thread is very relevant. As to your comment, what if that "something" that happens to Fidelity is that for whatever reason - employee fraud, computer virus, software bug, etc - they no longer have a record of which funds I own through them?
Ok, I'll bite.

Companies like Fidelity have very robust disaster recovery plans in place. Id' expect this to include among other things multiple backup's as well as offsite location(s) that can be brought up relatively quickly to operate in place of their traditional IT center(s).

Failing all that, how about going back to your most recent monthly statement(s)?
Real Knowledge Comes Only From Experience

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AAA
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Re: How much is too much in a Fidelity or VG account?

Post by AAA » Fri Apr 20, 2018 10:49 am

MikeG62 wrote:
Fri Apr 20, 2018 10:31 am

Ok, I'll bite.

Companies like Fidelity have very robust disaster recovery plans in place. Id' expect this to include among other things multiple backup's as well as offsite location(s) that can be brought up relatively quickly to operate in place of their traditional IT center(s).

Failing all that, how about going back to your most recent monthly statement(s)?
I'll bite too - since a monthly statement can be forged, do you think a company like Fidelity would reimburse someone based on a pdf file that they submit. And even if such a procedure were in place, it seems it would take a very long time before everything was back to normal at the firm.

Of course all these scenarios are very unlikely, but as one's assets grow and they are all at one firm, the consequence of a problem also grows.

I check monthly statements online but don't save them. Maybe I should. :wink:

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Re: How much is too much in a Fidelity or VG account?

Post by RAchip » Fri Apr 20, 2018 10:55 am

Vanguard sends you a text when there is any transaction on your account. If there were to be any unauthorized transaction you get a txt and can call and stop it.

I wouldn't hesitate to hold any amount of money at Vanguard.

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Re: How much is too much in a Fidelity or VG account?

Post by bertilak » Fri Apr 20, 2018 11:05 am

AAA wrote:
Fri Apr 20, 2018 10:49 am
MikeG62 wrote:
Fri Apr 20, 2018 10:31 am
I check monthly statements online but don't save them. Maybe I should. :wink:
I download and save the PDFs every month. Yes, it is a bit of a pain. The pain comes because Vanguard downloads all get the same file name so I have to rename each file. This involves coming up with and sticking to a naming convention as well as being careful not to misname anything.

The PDFs are backed up in three ways. The backups are all automated and therefore pain-free:
  1. CrashPlan backups to a local hard drive on my router.
  2. CrashPlan cloud.
  3. OneDrive cloud.
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Re: How much is too much in a Fidelity or VG account?

Post by MikeG62 » Fri Apr 20, 2018 12:09 pm

AAA wrote:
Fri Apr 20, 2018 10:49 am
MikeG62 wrote:
Fri Apr 20, 2018 10:31 am

Ok, I'll bite.

Companies like Fidelity have very robust disaster recovery plans in place. Id' expect this to include among other things multiple backup's as well as offsite location(s) that can be brought up relatively quickly to operate in place of their traditional IT center(s).

Failing all that, how about going back to your most recent monthly statement(s)?
I'll bite too - since a monthly statement can be forged, do you think a company like Fidelity would reimburse someone based on a pdf file that they submit. And even if such a procedure were in place, it seems it would take a very long time before everything was back to normal at the firm.

Of course all these scenarios are very unlikely, but as one's assets grow and they are all at one firm, the consequence of a problem also grows.

I check monthly statements online but don't save them. Maybe I should. :wink:

Yes you should save copies of your monthly statements. I do so electronically (with a backup updated weekly).

Somehow if the scenario you paint comes to pass (Fidelity's systems go down in a way that they cannot be brought back up and "all" disaster recovery, redundant and backup systems fail as well), proving the statements you have downloaded are legitimate may well be the least of your worries.

Some risks are worth worrying about and other are not. This one falls in the latter camp for me.
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Re: How much is too much in a Fidelity or VG account?

Post by JoMoney » Fri Apr 20, 2018 12:14 pm

Mark Twain in Pudd'nhead Wilson's Calendar wrote:Behold, the fool saith, "Put not all thine eggs in the one basket"-- which is but a manner of saying, "Scatter your money and your attention"; but the wise man saith, "Put all your eggs in the one basket and--_watch that basket!_"
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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AAA
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Re: How much is too much in a Fidelity or VG account?

Post by AAA » Sat Apr 21, 2018 7:53 pm

Lets say the probability of a catastrophic brokerage failure wherein one loses everything is p, which is very small. If you divide your assets between two brokerages, the probability of both failing is p2, where p2 < p. But on the other hand the probability of one or the other brokerage failing is 2p, which is > p.

So if you divide your assets between two brokerages, you have less probability of losing everything, but more probability of losing something.

I defer to any statisticians out there to validate or debunk my conclusions.

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Re: How much is too much in a Fidelity or VG account?

Post by random_walker_77 » Sat Apr 21, 2018 9:58 pm

I'm less worried about losing money outright, so much as losing access for an extended period of time. Perhaps an account is frozen and it takes a few months to get things straightened out. I think some diversity is useful for liquidity's sake.

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Re: How much is too much in a Fidelity or VG account?

Post by stlutz » Sat Apr 21, 2018 10:48 pm

Companies like Fidelity have very robust disaster recovery plans in place. Id' expect this to include among other things multiple backup's as well as offsite location(s) that can be brought up relatively quickly to operate in place of their traditional IT center(s).
At least at my company, "failing over" between Production and DR is something we actually do as a regular matter of business. For example, a software upgrade will be made in one environment, we'll "failover" to that and "failback" if there is a problem.

For firms like this, "disaster recovery" is more than a plan in the event something happens--it's a part of normal business operations.

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Re: How much is too much in a Fidelity or VG account?

Post by AAA » Wed May 02, 2018 9:21 am

MikeG62 wrote:
Sun Apr 15, 2018 7:54 pm
I truly would not worry about this. You are not investing “in” Fidelity, but “through” Fidelity (with Fidelity simply being the vehicle (broker) through which you are acquiring the individual index funds and treasuries). This is not like having money in the bank in excess of FDIC insurance limits and the bank goes under or investing in a single stock with the company subsequently going out of business. If something happens to Fidelity, you still own the individual index funds or treasuries. While you may not have immediate access to the assets, eventually you would.
If you purchase a mutual fund or a brokered CD from, say, Fidelity, does the mutual fund or bank have you listed as an owner, or is all that information kept on record at Fidelity? If the latter, then the fact that you own these items and are not buying into Fidelity itself does not relieve one's apprehension over Fidelity experiencing a catastrophic disruption of its computer system in which one's record of ownership is lost.

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Re: How much is too much in a Fidelity or VG account?

Post by mehta » Wed May 02, 2018 9:37 am

random_walker_77 wrote:
Sat Apr 21, 2018 9:58 pm
I'm less worried about losing money outright, so much as losing access for an extended period of time. Perhaps an account is frozen and it takes a few months to get things straightened out. I think some diversity is useful for liquidity's sake.
Practical point. If you depend on the cash management features, a working account is a necessity at all times. Computer networks are not as robust as one assumes.
Incentives offered on moving a chunk to a competitor are not a reason by themselves but don’t hurt.

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