Gyroscopic Investing

Do you guys think it's worth opening an extra brokerage account to avoid paying expense fees and commissions?

More specifically, I have a treasury only money market fund that I really like with American Century.  I want to add some money to my stock and bond positions, outside of my retirement accounts.  The simple option is to use American Century, but their stock index fund has an expense of .48% and their bond window commission is $45. 

I could open another account with Charles Schwab and use their stock index fund and their bond window is free...but then, with all my retirement assets, I'd have 4 accounts, plus my gold broker. 

What would you guys do?

For what it's worth, I've got 4 brokerages, accounts at 2 banks, and TreasuryDirect to juggle.  I use a spreadsheet and a password manager like LastPass to keep track of all the different high-grade passwords I use for each one.  I'm pretty used to it by now and don't mind it too much.  Mostly I worry about leaving enough breadcrumbs for my family to figure all of this out if I get hit by a meteor or whatever.  (The solution I'm leaning toward for this problem is to simply live forever.)

The benefits of low-cost indexing and free Treasury trades at Schwab or Fidelity would make me inclined to go for it if I were you.  Another option is to use ETFs like VTI and TLT if American Century offers such trades at a reasonable cost.

I might open a Vanguard account just to have access to their low cost funds and ETFs.

Fidelity's free treasury trades also seem to be a nice draw.

As far as how many are too many, as long as you can list them from memory, you are probably okay.

It is, however, a very good idea to make sure your loved ones know about all of them as well.  If you were to get hit by a meteor, this would make things much easier.

Adam1226 wrote: Do you guys think it's worth opening an extra brokerage account to avoid paying expense fees and commissions?

The cost/benefit analysis depends on how much money you will save and how onerous you find this kind of legwork to be.  You could work out an hourly wage for this activity and decide whether that sounds like a good usage of your time.

Personally I enjoy this kind of comparison shopping when setting things up initially, but find revisiting these decisions to be annoying.  So I won't move things around unless there's a substantial amount of money to be saved.

IMO the ideal number of brokerages is two.  I like to keep things simple, but having everything at one institution seems like a bad idea.  Two brokerages is the simplest arrangement that still has institutional diversification.

One way to make this an easier question to answer for yourself is to see if you're already diversifying relatively well, or able to, through 401(k), IRA, and (gasp) FDIC savings accounts, HSA, Treasury Direct I-bonds, etc.

If you already have natural outlets to diversify (as I do) it helps to avoid the headache of opening up a whole new account from scratch that's doing what another one of your accounts can do (1 IRA at Fidelity and 1 at Vanguard).

I definitely, at some point, want to make sure my ETF (gold especially, but stocks/bonds too) exposure is mitigated a bit by mutual funds or actual bonds.

moda0306 wrote: One way to make this an easier question to answer for yourself is to see if you're already diversifying relatively well, or able to, through 401(k), IRA, and (gasp) FDIC savings accounts, HSA, Treasury Direct I-bonds, etc.

I do this, but everything is in tax sheltered accounts.  I'd like to save some money in non-retirement accounts, so that I could actually use some of it on occasion. 

I have the Thrift Savings Plan and a Vanguard IRA.  I also hold GTU in a normal Vanguard brokerage, and some physical gold. 

I definitely, at some point, want to make sure my ETF (gold especially, but stocks/bonds too) exposure is mitigated a bit by mutual funds or actual bonds.

This is kind of what I'm trying to do, but I don't want to complicate things too much...probably just making a mountain out of a mole hill.  Six one way, half a dozen the other.

Adam,

Remember, you can remove funds from your Roth IRA without taxation or penalty, so if you're NOT maxing out your roth IRA to keep more liquid funds, you might want to rethink that strategy.

I'm not advising getting in the habit of constantly liquidating your retirement accounts, but that unused annual contributions imply that it's money you didn't deem necessary for retirement anyway.

Keep in mind, though, only the principal of your roth is distributable tax/penalty free before retirement.

How do you do to rebalance when the PP is divided between multiple accounts?

regards

escafandro wrote: How do you do to rebalance when the PP is divided between multiple accounts?

regards

If you hit a rebalancing band you just sell whatever is in some of your accounts and buy a little bit of the lagging asset.  Pretty soon you end up with a little bit of everything in all your accounts.

Nice, elegant solution.
Sometimes it's hard to get out of binary thinking.
thanks