How do you separate VP from PP

[AgAuMoney]

I'm choosing between SCHWAB / SCOTTRADE / TDAMERITRADE
I think the most important is the which one is more SOLID.
?

Then that should have been what you asked the first time instead of chastising people for not answering the question you did not ask.

I don't think there is a large difference between them in regards to safety.  All three have large supplemental insurance policies, last I checked, to protect you against their mistakes.

Schwab was larger than Scottrade last I checked, and they have a lot more features if you are a professional managing money for clients.

TD Ameritrade used to be known as TD Waterhouse and before that it was just Waterhouse.  I was a Waterhouse customer before I went to Scottrade.  TD is Toronto Dominion, so when they purchased Waterhouse it became the U.S. operation of a large Canadian bank.  To me that made it less desirable, but maybe you think that makes it more solid?

Scottrade was enough for me for several years, but now my permanent portfolio and the largest part of my investable assets are at ShareBuilder (owned by Capital One, a large U.S. bank).  ShareBuilder has a larger insurance policy than Scottrade.

[rocketdog]

Separate VP and PP accounts are MUCH easier (for both measurement and discipline purposes) in the long run, even if it means having several extra accounts.  It has the effect of constantly injecting reality into your market actions and reactions.  I rigorously separated my portfolios by accounts 10 years ago and can't imagine going back to depending on a spreadsheet.  Avoid like the plague any situation that will tempt you to subconsiously cheat or engage in creative accounting.  When it comes to investing, especially with an allocation strategy like the PP, human nature will turn you into your own worst enemy very quickly.

For me, having the PP and VP in the same account is actually an advantage, because part of my strategy involves gradually shifting funds from the VP to the PP on a predetermined schedule between now and retirement.  If I had them in different accounts that would make it more difficult (and in some respects, impossible), but I hear your point and I agree with it for most people who lack that kind of discipline. 

[rocketdog]

but keeping all your savings at the same broker its not good

better to have more broker's diversification

because of bankrupt risk

I personally don't feel there's a lot of risk to my assets if a broker goes bankrupt.  With an SPIC insured broker, your funds are still your funds, and the broker cannot access them to pay their creditors (up to $500K per account).  Even customers of Lehman Brothers didn't lose any money when they went belly-up.  At worst there will be a delay in getting your funds returned to you.  I personally don't lose sleep over it.  Maybe if I had all my money at "Joe's Brokerage House" I would, but I have it all at large institutions with long track records.  If it makes you feel better, and if you need immediate access to the funds on demand, then by all means hedge your bets and open multiple accounts. 

One other thought: many brokers give you better prices and added features as your portfolio grows in size.  So dividing it up between too many brokers will prevent you from enjoying those benefits.  It's all about trade-offs and your comfort level. 

Read more here:

http://money.cnn.com/2008/09/15/pf/brok ... .moneymag/

http://www.finra.org/Investors/ProtectY ... es/P116996

[Pointedstick]

I personally don't feel there's a lot of risk to my assets if a broker goes bankrupt.  With an SPIC insured broker, your funds are still your funds, and the broker cannot access them to pay their creditors (up to $500K per account).

Isn't that what MF Global did?

Then again, MF Global isn't around anymore. And my sense is that they were mostly for heavily-leveraged high-net-worth individuals; not exactly the kind of big safe brokerage house that we're talking about here.

[smurff]

My understanding is that MFGlobal specialized in commodities trading, which is not covered by SIPC.  I think they had both SIPC and non-SIPC business, however, since customers did some common trading, too.  I don't recall whether they had any extra insurance to cover non-SIPC accounts.

[MachineGhost]

TD Ameritrade used to be known as TD Waterhouse and before that it was just Waterhouse.  I was a Waterhouse customer before I went to Scottrade.  TD is Toronto Dominion, so when they purchased Waterhouse it became the U.S. operation of a large Canadian bank.  To me that made it less desirable, but maybe you think that makes it more solid?

They also bought out pioneering trail blazers Datek Securities when they were just Ameritrade.  They have a nasty habit of gobbling up boutique firms like that and pissing off the acquired customers.  It happened again a few years ago with thinkorswim.

Scottrade was enough for me for several years, but now my permanent portfolio and the largest part of my investable assets are at ShareBuilder (owned by Capital One, a large U.S. bank).  ShareBuilder has a larger insurance policy than Scottrade.

Do you find ShareBuilder particularly useful for your Dividend Growth Investing strategy?  What do you think of MotifInvesting?

[HB Reader]

As for separating PP from VP, I did just spreadsheet separation for several years.  It works.  It's a pain, mostly because sometimes it was hard for me to intuitively grasp the behavior of my PP vs VP.  I couldn't tell what each was doing nor remember what assets or percentage of each asset was PP without updating my spreadsheet. Updating that spreadsheet was a pain and I gave up being 100% correct because when dividends or interest were paid as cash, I had to track those back to their source and divide them proportionally to their allocation between portfolios, as well as dividing any gains on that cash and etc.

I'm sure I made mistakes because when money is flowing in from and out to various sources multiple times every week it is non-trivial to manually proportion both those dollars and the gains on them based upon the days it was present and in what form.  And in the early 2000's I was doing a lot of short-term tbills, so every week if there was at least $1000 I'd buy a tbill.  Actually not quite $1000.  And a few weeks or months later out would pop $1000.  Painful.

Now since 25 Feb 2011, while still maintaining some spreadsheet information, I have one account that is my PP with about 40% of my assets.  Everything else is VP.  A separate account is SO much easier to track and conceptualize/visualize/attribute.

With a separate account it is immediately obvious what is PP and what isn't.  Performance, money added to or removed from whether from additional investment dollars or dividends or whatever, every investment choice, etc. is all obviously PP or not PP.  No subconscious cheating (which humans notoriously do) because if it is in that account it is PP.  Not in that account, not PP.  The end.

I've had a very similar long term experience.  Separate VP and PP accounts are MUCH easier (for both measurement and discipline purposes) in the long run, even if it means having several extra accounts.  It has the effect of constantly injecting reality into your market actions and reactions.  I rigorously separated my portfolios by accounts 10 years ago and can't imagine going back to depending on a spreadsheet.  Avoid like the plague any situation that will tempt you to subconsiously cheat or engage in creative accounting.  When it comes to investing, especially with an allocation strategy like the PP, human nature will turn you into your own worst enemy very quickly.

but keeping all your savings at the same broker its not good

better to have more broker's diversification

because of bankrupt risk

I didn't say or mean you should have all your accounts with the same broker.  I meant you probably shouldn't commingle your Permanent Portfolio and Variable Portfolio investments in the same accounts.

We use multiple brokers for our Permanent Portfolio. 

[rocketdog]

I didn't say or mean you should have all your accounts with the same broker.  I meant you probably shouldn't commingle your Permanent Portfolio and Variable Portfolio investments in the same accounts.

We use multiple brokers for our Permanent Portfolio.

Then how do you shift funds from your VP to your PP?  Or do you have no intention of ever doing that? 

For me, I'm shifting 1% annually from my VP to my PP, so having them in the same account is a requisite.  Plus they're retirement accounts, so I can't transfer money between different retirement accounts even if I wanted to. 

[smurff]

You can have the brokerage firm transfer assets (stocks, bonds, mutual funds, etfs, cash) from one retirement account to another, as long as it is the same type of account.  They'll do this without selling the assets and incurring a taxable event.  For example, you can transfer from a Roth IRA at one firm to a Roth IRA at another, or you can transfer from Traditional IRA to Traditional IRA.  That's what I've done when transferring from my VP at Fidelity to my PP at TD Ameritrade.

I'm still in the accumulation stage, so there's no set amount that I transfer.  Just when I've had a great success with stock-picking.

[HB Reader]

I didn't say or mean you should have all your accounts with the same broker.  I meant you probably shouldn't commingle your Permanent Portfolio and Variable Portfolio investments in the same accounts.

We use multiple brokers for our Permanent Portfolio.

Then how do you shift funds from your VP to your PP?  Or do you have no intention of ever doing that? 

For me, I'm shifting 1% annually from my VP to my PP, so having them in the same account is a requisite.  Plus they're retirement accounts, so I can't transfer money between different retirement accounts even if I wanted to.

I transfer them.  Generally speaking, IRA to IRA, or regular brokerage to regular brokerage.

Regular retirement accounts can present problems unique to each person, especially if they represent all or most of your investments.  We are retired.  My wife and I were fortunate to have pretty good choices (index funds) in our programs when we were working and we were able to save some (in IRAs and regular accounts) outside of the retirement program.  We kept my wife's retirement account intact after she retired, while I converted mine to an IRA.  This all gave us sufficient flexibility to use the PP strategy, although on occasion we had a couple more IRA accounts open than we would have cared to otherwise and we had to use some creative investment (not accounting) options, like zero coupon Treasuries in IRAs to achieve sufficient volatility for our bond investments.

If all or most of your investments are inside of a traditional retirement account(s) and you don't have the flexibility to adjust investments outside in IRAs or regular accounts, obviously you have to work with what you've got and make some (maybe uncomfortable) choices.  A spreadsheet solution to dividing the two portfolios may then be your best current solution, but I would look for any reasonable opportunity to separate the portfolios (whether through moving some of the money during a job change, or saving more outside the retirement plan) in the future.

You might also want to reconsider how badly you need a VP.  Obviously, no one always has the perfect conditions to do everything just the way they want all of the time, any more than they ever have all the money they want.  I have always had a VP, but ultimately more for entertainment (when I honestly looked at it) than for stability and total return.         

[rocketdog]

You can have the brokerage firm transfer assets (stocks, bonds, mutual funds, etfs, cash) from one retirement account to another, as long as it is the same type of account. 

Unfortunately, my accounts are all different:  401K, IRA Rollover, and Roth IRA. 

[smurff]

You can have the brokerage firm transfer assets (stocks, bonds, mutual funds, etfs, cash) from one retirement account to another, as long as it is the same type of account. 

Unfortunately, my accounts are all different:  401K, IRA Rollover, and Roth IRA. 

Yes, that's a different situation.

Like HB Reader, most of mine is in a PP, and the VP is primarily to fulfill any lingering fantasy that I  can successfully pick stocks, beat the market, or win big in an electronic casino I know is dominated by HFT superbots.  HB Reader calls that "entertainment."  That's a good term for what I do with my VP.

Because of that, there is not much transfer from VP  to PP, except in years when I've had some great entertainment. Right now it's 100% stock, and so far this year I'm really, really enjoying myself.

But I like the idea of simplifying life, and that includes simplifying the metrics. Hence different accounts for variable vs. permanent. I know the numbers I need to know at a glance, and it eliminates accidents related to mental gymnastics.

Converting and transferring  traditional IRA (same as a rollover IRA) assets into Roth IRA assets involve taxes, but it is possible to make micro transfers and use timing to keep the tax hit to a minimum.  Roth IRA contributions can also be recharacterized so they can transfer into a traditional IRA. That may involve amended tax returns to get the tax benefit, depending on your situation. MediumTex is the resident expert in these matters.

You could also open up a new brokerage account just for VP, and transfer some of the  assets from one of the IRA accounts into it.  This works well if you intend your VP to smaller than your PP, especially if it is to be for entertainment or play money.

Since you are probably still in the accumulation phase, I'd be selective about where (VP account or PP) I put new money. 

[rocketdog]

Like HB Reader, most of mine is in a PP, and the VP is primarily to fulfill any lingering fantasy that I  can successfully pick stocks, beat the market, or win big in an electronic casino I know is dominated by HFT superbots.  HB Reader calls that "entertainment."  That's a good term for what I do with my VP.

Because of that, there is not much transfer from VP  to PP, except in years when I've had some great entertainment. Right now it's 100% stock, and so far this year I'm really, really enjoying myself.

100% stock?  You are a far braver soul than I!

Since you are probably still in the accumulation phase, I'd be selective about where (VP account or PP) I put new money.

All my new money goes into the 401K and Roth.  The 401K money goes directly into the funds I've selected (obviously), and the Roth money sits in the sweep account until I decide to pull the trigger on a purchase. 

That said, I recently decided to make both our Roth accounts 100% PP accounts.  They only account for around 10% of our retirement money, so I figure that will be a good experiment to see what a 100% PP account does.  I have our Rollover IRAs split between PP and VP.  As for our 401Ks, well, let's just say I've done the best I can with those accounts. 

[AgAuMoney]

Scottrade was enough for me for several years, but now my permanent portfolio and the largest part of my investable assets are at ShareBuilder (owned by Capital One, a large U.S. bank).  ShareBuilder has a larger insurance policy than Scottrade.

Do you find ShareBuilder particularly useful for your Dividend Growth Investing strategy?  What do you think of MotifInvesting?

I do.  The fractional share purchases were unique to my knowledge when I started at ShareBuilder.  And the free dividend reinvestment and overall low fees are handy as well.

I don't know anything about Motif, sorry.  It sounds quite a bit like Folio.  There is also another brokerage with services purportedly similar to a mix of ShareBuilder and Folio.  Right now I don't remember the name.  It is _____3 and right now after my day today the only terms I can think are network architecture related, and that is not correct.  Right now I'm happy with my mix of Scottrade and their local office, with ShareBuilder and their services.

[AgAuMoney]

True, but keep in mind many brokers charge a substantial fee for full or partial outgoing ACAT transfers.

Sometimes you can initiate the transfer from the receiving broker (a pull instead of a push) and avoid the fee.  Sometimes not.

If you are transferring cash then having check writing on the source account is nice, and if transferring from a taxable account into an IRA such should be easy enough.

For a couple of years Scottrade wanted to charge me a fee for incoming ACAT.  I paid it the first time because I was surprised and needed the transfer done.  I did warn them that I would have to switch to certificates, but they wouldn't budge.  So after that I brought them stock certificates because there was no fee for those, but each one cost a lot more for them to handle, especially done one at a time.  I did two or three deposits per year, and after a couple of years they told me they were dropping the incoming ACAT fee.  I sat on my last several stock certificates until recently, just in case. 

[frugal]

I'm choosing between SCHWAB / SCOTTRADE / TDAMERITRADE
I think the most important is the which one is more SOLID.
?

Then that should have been what you asked the first time instead of chastising people for not answering the question you did not ask.

I don't think there is a large difference between them in regards to safety.  All three have large supplemental insurance policies, last I checked, to protect you against their mistakes.

Schwab was larger than Scottrade last I checked, and they have a lot more features if you are a professional managing money for clients.

TD Ameritrade used to be known as TD Waterhouse and before that it was just Waterhouse.  I was a Waterhouse customer before I went to Scottrade.  TD is Toronto Dominion, so when they purchased Waterhouse it became the U.S. operation of a large Canadian bank.  To me that made it less desirable, but maybe you think that makes it more solid?

Scottrade was enough for me for several years, but now my permanent portfolio and the largest part of my investable assets are at ShareBuilder (owned by Capital One, a large U.S. bank).  ShareBuilder has a larger insurance policy than Scottrade.

no, I'm still searching and learning more about the possibilities, so I asked you US citizens

Sharebuilder is another new option, I will see their features and if I can open account there.

Regards

[Thomas Hoog]

3 sperate brokers;
one for the the VP
one for the PP portion of my wife
one for the PP portion of my one
managed through a spreadsheet

[frugal]

3 sperate brokers;
one for the the VP
one for the PP portion of my wife
one for the PP portion of my one
managed through a spreadsheet

that is a good division!

[Libertarian666]

3 sperate brokers;
one for the the VP
one for the PP portion of my wife
one for the PP portion of my one
managed through a spreadsheet

I didn't know you could divide a wife into PP and VP! I guess the PP concept is broader than even I thought.