all retirement savings all in vanguard

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lucky222
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Joined: Fri Jan 18, 2013 8:47 am

all retirement savings all in vanguard

Post by lucky222 »

Dear all.
always appreciate others ideas and help.
recently i have been wondering is it safe to keep all your retirement at vanguard brokerage account and mutual if is beyond fdic insured.
would you be concern?
looking to retirement (hopefully) in 5 years.

thanks advance for your input!

regards,
Lucky222
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David Jay
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Re: all retirement savings all in vanguard

Post by David Jay »

lucky222 wrote: Tue Jun 08, 2021 12:47 pm Dear all.
always appreciate others ideas and help.
recently i have been wondering is it safe to keep all your retirement at vanguard brokerage account and mutual if is beyond fdic insured.
would you be concern?
looking to retirement (hopefully) in 5 years.

thanks advance for your input!

regards,
Lucky222
I have virtually all of my retirement portfolio in Vanguard. I would not be afraid of holding my retirement assets in any major, low cost brokerage, including Fidelity or Schwab.

Keep in mind that, per SEC regulations, assets are not held by the brokerage but by a 3rd party custodian (typically a bank). If Vanguard, for some unforeseeable reason, closed it's doors tomorrow, all of the assets under management would still exist. It would take a few months to straighten everything out (probably a good reason to have 6 months expenses in your local bank or credit union), but you would receive your assets.
Last edited by David Jay on Tue Jun 08, 2021 12:54 pm, edited 1 time in total.
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Toons
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Re: all retirement savings all in vanguard

Post by Toons »

Personally I would not be concerned
Been Investing with them since 1997
Consisitently
"Sleep Well"

:mrgreen:
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Topic Author
lucky222
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Re: all retirement savings all in vanguard

Post by lucky222 »

Thanks for the input

But even if it is own by the bank
There is still a fdic limit?

Just wondering should I open other account beside vanguard to spread out the asset.

Regards
SevenBridgesRoad
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Re: all retirement savings all in vanguard

Post by SevenBridgesRoad »

We are retired and have 99% of our money at Vanguard. Safe and simple.

One tail risk we were most concerned about is a major Vanguard computer failure lasting more than a few days. We mitigate that risk by keeping three months of expenses at our local credit union. We figure even a major technical problem at VG will be corrected well within three months. We already sleep well, and this provides us even a few more minutes of great sleep each night.
MishkaWorries
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Re: all retirement savings all in vanguard

Post by MishkaWorries »

Not sure what you are asking? FDIC only insures bank accounts up to $250,000 per account. SIPC insures brokerage accounts up to $500,000 total at one brokerage. If you're over $500,000 in one brokerage house then it might be wise to split between different brokers.
We plan. G-d laughs.
Tattarrattat
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Re: all retirement savings all in vanguard

Post by Tattarrattat »

Does anyone think that someone with 5 million in assets is opening 10 brokerage accounts? Or 10 million in assets, 20 accounts? Does a billionaire open 2000 accounts? It's FDIC/SIPC account insurance anxiety. You don't need more than one account at any of the big brokerages.
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ruralavalon
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Re: all retirement savings all in vanguard

Post by ruralavalon »

lucky222 wrote: Tue Jun 08, 2021 12:47 pm Dear all.
always appreciate others ideas and help.
recently i have been wondering is it safe to keep all your retirement at vanguard brokerage account and mutual if is beyond fdic insured.
would you be concern?
looking to retirement (hopefully) in 5 years.

thanks advance for your input!

regards,
Lucky222
Yes it is safe.

All of our investing accounts (joint taxable account, two Roth IRAs, and my rollover IRA) are at Vanguard, and we use only Vanguard index funds. We use a bank with a branch near our home for all banking functions (joint checking account, debit cards, credit cards).

Wiki article, Vanguard safety.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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goingup
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Re: all retirement savings all in vanguard

Post by goingup »

MishkaWorries wrote: Tue Jun 08, 2021 1:07 pm Not sure what you are asking? FDIC only insures bank accounts up to $250,000 per account. SIPC insures brokerage accounts up to $500,000 total at one brokerage. If you're over $500,000 in one brokerage house then it might be wise to split between different brokers.
I don't think most investors worry about holding more than $500K at a single brokerage. I've never heard it suggested as a concern.

People have more than one brokerage for many different reasons. Fear of being locked out, fear of being hacked, incentivized to open accounts at other brokers, obtaining different products.

Taylor has long posted this list of reasons to keep a single broker, specifically Vanguard, but it applies to other brokerages too:

Benefits of having all investments in one company:
1. One familiar statement.
2. Less paperwork.
3. Easier tax preparation.
4. Avoidance of low-balance and other small fees.
5. It's much easier to learn only one company's policies, fees, regulations, etc.
6. With larger holdings it may be possible to qualify for lower costs and premium services (Voyager, Admiral, Flagship).
7. Rebalancing and exchanges are easier.
8. Eliminates 3rd party brokerage.
9. A loyal customer is appreciated and usually treated better.
10. Less chance of errors.
11. Knowledge that Vanguard's fine reputation and low-costs are always working for us.
12. More free time for ourselves.
13. In event of death or disability, it will be much easier for others.
Makefile
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Re: all retirement savings all in vanguard

Post by Makefile »

goingup wrote: Tue Jun 08, 2021 2:21 pm
MishkaWorries wrote: Tue Jun 08, 2021 1:07 pm Not sure what you are asking? FDIC only insures bank accounts up to $250,000 per account. SIPC insures brokerage accounts up to $500,000 total at one brokerage. If you're over $500,000 in one brokerage house then it might be wise to split between different brokers.
I don't think most investors worry about holding more than $500K at a single brokerage. I've never heard it suggested as a concern.
Unlike FDIC, opening multiple brokerage accounts doesn't increase your SIPC coverage anyway, so it wouldn't help. (wrong)

I believe it goes back to the 1960s. When you own a stock, it can either be directly with a physical certificate or transfer agent like Computershare, or "in street name" through a brokerage account. When you hold directly, your ownership is recorded directly with the company's transfer agent so you can't "lose" your shares. With street name, the transfer agent considers the brokerage the owner, and the brokerage tracks the actual owner. So what happens if the brokerage customers collectively "own" more shares than the brokerage can produce certificates for? Apparently this happened frequently in the 1960s, and it's why some of the elderly still insist on owning their stocks through physical certificates today.

I've always been assured that through computerization this isn't an issue today. The SIPC doesn't cover Bernie Madoff situations anyway.
MishkaWorries
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Re: all retirement savings all in vanguard

Post by MishkaWorries »

goingup wrote: Tue Jun 08, 2021 2:21 pm
MishkaWorries wrote: Tue Jun 08, 2021 1:07 pm Not sure what you are asking? FDIC only insures bank accounts up to $250,000 per account. SIPC insures brokerage accounts up to $500,000 total at one brokerage. If you're over $500,000 in one brokerage house then it might be wise to split between different brokers.
I don't think most investors worry
Check my nic :P

When we sold our rentals I was torn about whether to stick it all in one account or to have different accounts. I decided to do different banks. It's probably overkill but I remember what happened in Cyprus when the EU seized about 50% of all funds over the insured amount of 100,000 euros. It seems like a little bit of the extra work to protect against an unlikely event.
We plan. G-d laughs.
tomsense76
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Re: all retirement savings all in vanguard

Post by tomsense76 »

MishkaWorries wrote: Tue Jun 08, 2021 1:07 pm Not sure what you are asking? FDIC only insures bank accounts up to $250,000 per account. SIPC insures brokerage accounts up to $500,000 total at one brokerage. If you're over $500,000 in one brokerage house then it might be wise to split between different brokers.
Most (particularly large) brokers carry additional insurance beyond SIPC. Lloyd's of London is a common provider. All brokers put this on their website, documents, etc. somewhere. Here's Vanguards:
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 Syndicates at Lloyd's of London for our brokerage clients. This additional insurance has the same customer eligibility requirements as SIPC. This coverage has an aggregate limit of $250 million for all claims of securities and cash and incorporates a per client coverage limit of $49.5 million for securities and $1.9 million for cash. This additional policy, provided by the Lloyd's of London Syndicates, is subject to its own terms and conditions. Coverage provided by SIPC and Lloyd's of London Syndicates does not protect against loss of market value of securities.
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tibbitts
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Re: all retirement savings all in vanguard

Post by tibbitts »

lucky222 wrote: Tue Jun 08, 2021 12:47 pm Dear all.
always appreciate others ideas and help.
recently i have been wondering is it safe to keep all your retirement at vanguard brokerage account and mutual if is beyond fdic insured.
would you be concern?
looking to retirement (hopefully) in 5 years.

thanks advance for your input!

regards,
Lucky222
FDIC insurance doesn't apply to Vanguard, and as far as I know SIPC does not apply to Vanguard mutual fund accounts, only to brokerage accounts. But coverage for mutual fund accounts isn't necessary in the sense that SIPC coverage only protects the brokerage "wrapper" in the case of a mutual fund. So it's insuring against a risk that doesn't occur with a plain mutual fund account. Or at least that's my understanding.

In any case I feel better having about half my savings at Vanguard and the rest distributed between several other institutions. The more institutions the greater the odds of a problem, but the less impact a problem would have.
MishkaWorries
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Re: all retirement savings all in vanguard

Post by MishkaWorries »

tomsense76 wrote: Tue Jun 08, 2021 4:03 pm
MishkaWorries wrote: Tue Jun 08, 2021 1:07 pm Not sure what you are asking? FDIC only insures bank accounts up to $250,000 per account. SIPC insures brokerage accounts up to $500,000 total at one brokerage. If you're over $500,000 in one brokerage house then it might be wise to split between different brokers.
Most (particularly large) brokers carry additional insurance beyond SIPC. Lloyd's of London is a common provider. All brokers put this on their website, documents, etc. somewhere. Here's Vanguards:
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 Syndicates at Lloyd's of London for our brokerage clients. This additional insurance has the same customer eligibility requirements as SIPC. This coverage has an aggregate limit of $250 million for all claims of securities and cash and incorporates a per client coverage limit of $49.5 million for securities and $1.9 million for cash. This additional policy, provided by the Lloyd's of London Syndicates, is subject to its own terms and conditions. Coverage provided by SIPC and Lloyd's of London Syndicates does not protect against loss of market value of securities.
That's really cool!
We plan. G-d laughs.
AlwaysLearningMore
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Re: all retirement savings all in vanguard

Post by AlwaysLearningMore »

goingup wrote: Tue Jun 08, 2021 2:21 pm
Benefits of having all investments in one company:

9. A loyal customer is appreciated and usually treated better.
Vanguard in 2021? :confused
Retirement is best when you have a lot to live on, and a lot to live for.
AlwaysLearningMore
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Re: all retirement savings all in vanguard

Post by AlwaysLearningMore »

FWIW, I choose to keep a separate account at another large brokerage firm.

Vanguard's IT "hiccups" help inform maintaining that approach.
Retirement is best when you have a lot to live on, and a lot to live for.
BigJohn
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Re: all retirement savings all in vanguard

Post by BigJohn »

SevenBridgesRoad wrote: Tue Jun 08, 2021 1:03 pm We are retired and have 99% of our money at Vanguard. Safe and simple.

One tail risk we were most concerned about is a major Vanguard computer failure lasting more than a few days. We mitigate that risk by keeping three months of expenses at our local credit union. We figure even a major technical problem at VG will be corrected well within three months. We already sleep well, and this provides us even a few more minutes of great sleep each night.
This is consistent with my approach but I keep six months of expenses in my brick and mortar bank accounts. As we age, cognitive decline is a much more significant risk than a single brokered. This is why simplicity was one of my major objectives when I setup my retirement plan.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
Topic Author
lucky222
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Re: all retirement savings all in vanguard

Post by lucky222 »

Thanks for all the info

Just thinking
Would it be wise to divide up the total retirement $$ and put it into few mutual funds instead of all in 1.

My understanding each vanguard mutual fund has its own protection policy. So by diverse into different funds may help to decrease an unlikely risk of 1 fund goes bankrupt (I know is not possible but who know)
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Wiggums
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Re: all retirement savings all in vanguard

Post by Wiggums »

lucky222 wrote: Tue Jun 08, 2021 11:26 pm Thanks for all the info

Just thinking
Would it be wise to divide up the total retirement $$ and put it into few mutual funds instead of all in 1.

My understanding each vanguard mutual fund has its own protection policy. So by diverse into different funds may help to decrease an unlikely risk of 1 fund goes bankrupt (I know is not possible but who know)
What SPIC covers:
https://www.sipc.org/for-investors/what-sipc-protects

We split our money between two major brokers. We also have an online bank. Each platform has pros and cons. So leverage the best features from each.
gamboolman
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Re: all retirement savings all in vanguard

Post by gamboolman »

Lucky222,

This question has been asked alot and you will hear good argument for and against.

Remember the Index Funds at Vanguard are comprised of hundreds if not thousands of individual companies - not Vanguard.

Upon retirement this year on 1-Feb-21, we consolidated/moved all our megaoil corp monies to Vanguard to combine it with our Portfolio accounts we had already opened.

It is much simpler dealing only with Vanguard.

We have a Bank Account for paying bills.

We are not worried about Vanguard - but that is just us.

All the best

gamboolman....
bbees
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Re: all retirement savings all in vanguard

Post by bbees »

Same here, Reg IRA and Roth IRA with Vanguard.

Boy you attracted some of my favorite posters- David Kay, Toons, Ruralavalon and Tibbits. I always respect what these folks contribute. Amen
nhs76
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Re: all retirement savings all in vanguard

Post by nhs76 »

Okay, I'll be an outlier in this thread: I share your concern re: institutional concentration. Eggs, baskets. This one amount has to last our remaining lifetimes, and there are no do-overs to recover from catastrophic losses due to black swan events, man-made and natural disasters, hackers, etc. I mean, sure, all the recovery and restoration plans might work. They probably will. Almost certainly. Or...? On paper, anyway, the other posters in this thread are correct, and it'll probably work out for everyone to keep 90-100% with VG, but this approach helps us sleep better at night. YMMV.

We're also attempting to diversify geographically so that the second, third, and fourth institutions are not located in VG's backyard, nor all in NYC, etc.
Bama12
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Re: all retirement savings all in vanguard

Post by Bama12 »

100% Retirement is at Vanguard 401k and Roth.

I do have my play money with Schwab.
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Steelersfan
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Re: all retirement savings all in vanguard

Post by Steelersfan »

Emergency fund is at an online bank, everything else it at Vanguard.
tibbitts
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Re: all retirement savings all in vanguard

Post by tibbitts »

lucky222 wrote: Tue Jun 08, 2021 11:26 pm Thanks for all the info

Just thinking
Would it be wise to divide up the total retirement $$ and put it into few mutual funds instead of all in 1.

My understanding each vanguard mutual fund has its own protection policy. So by diverse into different funds may help to decrease an unlikely risk of 1 fund goes bankrupt (I know is not possible but who know)
I'm not sure what you mean by "protection policy" in this case, but that makes less sense to me than diversifying to another fund family.

Obviously in the case of an actively managed fund you can make a case for not having too much in any one fund, simply due to manager risk (of poor performance, rather than bankruptcy.)
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