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I GOT CAUGHT UP IN some weird investment fads during the recent era of 0% interest rates. With cash investments and bonds yielding almost nothing, I instead sought to pad my investment returns by opening new brokerage accounts to snag promotion cash, and by dabbling in digital currencies and newfangled alternative investments.
Result? I ended up with far too many financial accounts—and it became a burden to keep track of everything. Just a year ago, I had investments in obscure real estate deals, individual pieces of art, bottles of wine, stablecoins and other relics of the speculative pandemic-era mania. What’s more, after leaving both my fulltime job and my teaching position at the University of North Florida, there were old retirement accounts and a health savings account (HSA) that I was lazy about rolling over.
I craved a less complicated financial life. Simplicity is bliss, as many HumbleDollar writers have noted, and I’m now firmly in that camp. Here are six key benefits I’m enjoying now that almost all of my investments are in one safe place:
1. Getting my weekends back. As my number of accounts grew, keeping tabs on everything became cumbersome. A proud bean counter, I’ve routinely updated my personal finance spreadsheet since I was a freshman at Florida State University in 2007. But what used to take 10 minutes on a Saturday morning turned into something that felt like a chore. By the middle of 2022, logging into all those unique accounts to tally my net worth took north of 45 minutes. I sought to slim down that process starting at the end of last year.
2. Less wasted mental energy. Helping my future self by streamlining my finances now became mission critical. With all those taxable investment accounts, completing my 1040 tax return became brutal, especially when coupled with the headaches that come with filing taxes for a small business. I also felt oddly stressed by the disarray in my financial life—and there were far too many emails from all those investment sites.
3. Greater financial serenity. Not only do I now have fewer logins to remember, portals to navigate and websites to bookmark, but also I’ve cut down on the number of funds I own. Today, I’m mostly left with just a few different index funds across a traditional IRA, Roth IRA, solo 401(k) and HSA. Unfortunately, I still have some niche low-cost-basis exchange-traded funds (ETFs) in my taxable account that I’m reluctant to sell because that would trigger a big tax bill. The good news: At least these funds have low annual expenses.
4. Lower costs. The brokerage firm I came home to offers some 0% expense ratio index-mutual funds. I use those to keep more of whatever the markets deliver. Other companies, while offering high-quality, dirt-cheap ETFs, don’t have that little bonus of zero-cost investment funds.
5. Easier tax filing. Seasoned investors have probably figured out that my new investment home is Fidelity Investments. While I’ll still receive an uncomfortably large number of 1099 tax forms early next year, my tax life starting in 2025 should be much simpler—which is exactly how I want it to be. No more fumbling around other customer-unfriendly sites, sifting through complicated K-1 tax forms and worrying about whether some newbie financial firm has messed things up.
6. Simpler for my heirs. Six months ago, had I passed away, my family would have faced a frustrating mess trying to figure out all the accounts I had and how to access them. But now, it’s all right there in one place. Beneficiaries are listed on my retirement accounts, while my taxable accounts are titled as transfer on death. I also have confidence that a Fidelity rep will guide my family when my time comes—hopefully not for another several decades.
Simplifying my financial life, by transferring assets from roughly a dozen places to Fidelity, has been a strangely transformative experience. Not only has it smoothed my financial journey, but also it’s saved me time, brought peace of mind, potentially reduced costs, made for straightforward tax management and enhanced my estate planning. The cherry on top: Fidelity offered me a generous $700 bonus to move my other accounts there—and you know I couldn’t pass that up.
Mike Zaccardi is a freelance writer for financial advisors and investment firms. He’s a CFA® charterholder and Chartered Market Technician®, and has passed the coursework for the Certified Financial Planner program. Follow Mike on Twitter @MikeZaccardi, connect with him via LinkedIn, email him at MikeCZaccardi@gmail.com and check out his earlier articles.
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Regarding the Concentration of assets at one brokerage, Fidelity has coverage with Lloyds “in excess of SIPC” up to 1 Billion per aggregate customer. It’s only 1.9 Million for cash (250K for SIPC cash) however so watch out there. I’m hoping to have to worry about this soon. 🙂
Neither SIPC nor the Excess cover Fraud however. They only cover if Fidelity goes under.
Great piece! That said, there are at least a couple of reasons to spread retirement/investment accounts across at least two reputable brokerage companies. Firstly, if you are lucky enough that your account values exceed SIPC Insurance limits, then doing so mitigates the risk of your brokerage company failing. Secondly, this mitigates the risk that access to your funds could be disrupted by a cyber attack against your brokerage company. Sure, these are pretty unlikely risks, especially if you are with a large and established company like Vanguard or Fidelity. But unlikely is not impossible. The good news is that doing this need not make things overly complicated assuming your account comprises a straightforward mix of a few basic index funds. These and other large brokerages offer similar low-cost fund options (e.g., large cap, small cap, ex-US), so you can easily set up accounts with essentially parallel positions. Yes, this means two log-ins, two sets of tax docs, etc. But these may be minor inconveniences to mitigate unlikely but not impossible risks.
Good article. Simplicity has its advantages, and they are legion. I’m older and have almost completed the “skinny down” process.
But I still insist on keeping a relationship with two firms at my core, not just one. Why? First, I can compare performance. Second, it would be a lot easier to consolidate from either one to the other. And third, I feel I have protected myself a bit against a large scale financial cyberjacking – the maximum damage could only affect half of my investments at most.
I go with index funds. Imagine the fear if a place like Fido got hacked. Thanks!
Yes, correct, yep, right on! How many times do we each need to hear this good advice before we ourselves take it?! In my own case it was too many years…we have reached the promised land though: from 13 accounts with three broker-dealer relationships and probably nigh onto 200 discreet investments to 5 accounts, one Vanguard relationship, and maybe 5 discreet investments. Nirvana.
Omg yes. It’s amazing how we just have to figure it out ourselves sometimes. At least that’s often the case for stubborn old self!
What about keeping brokerage accounts below the SIPC $500k minimum?
Should be such a tiny tiny risk considering we are the owners of the funds.. they aren’t being lent out (in most cases) like all that crypto nonsense over the last year.
Good job Mike. The simplified tax filing is especially important for your personal sanity and well-being. Taking on Master Limited Partnerships, S-corp filings, and other associated clutter with the K-1’s and 1099’s, can complicate your life considerably, and you better know what the heck you’re doing come tax time if you’re going to tackle this yourself. And even if you hire it out, you’re still going to have to make sure to have all your documents–and as that number grows, so too does the possibility of missing one or two here and there. Toss in the free-lancing and attendant Schedule C (or, for even more complexity, set yourself up as a pass-through entity!) with potential 1099’s, expense tracking, depreciation, and a whole host of other attendant tax nightmares, and you’ve got plenty to keep track of, without adding a bunch of “consolidated” brokerage statements to add unnecessarily to the mess.
It’s really hard to take Jack Bogle’s advice of “don’t do something, stand there!” in regards to your investments, when you are having to check and fret over them all the time (and especially at tax time!). In the vast majority of people’s lives, simpler really is better when it comes to investing. And it’s also usually good advice for a small business too, especially if you’re just starting on your own and/or aren’t sure of the ultimate direction you are going to take. It’s always easy enough to ramp up the complexity later, if that’s really beneficial.
Thanks! Yeah, taxes are still a headache with my s-corp small business. I’m working with a reputable CPA firm in town, though, so hopefully that makes things smooth next spring!
Your Jack Bogle quote was in reference to contact trading in reaction to movements in the markets. He was very much in favor of simplicity in creating one’s portfolio, thus his creation of index funds
Constant not contact
Good job, Mike. Thanks for a very honest article about your wandering from blissful simplicity, and your ultimate return.
Thank you, Edmund! I’m always happy and appreciative to share.
Good article, Mike. I’d be interested in knowing more about how you ultimately decided on Fidelity, and what other firms you considered.
Thanks, Andrew! Well, I had worked at Fidelity wayy back in the day for just a year fresh out of college as a phone rep. So they made us move everything there, and I had kept accounts open as I liked the ease of no costs of it all. Schwab, Vanguard also totally fine, but Vanguard has gotten a bit clunky lately imo.
Me too I bought $10 worth of Bitcoin in my PayPal account. Now it’s worth $6.56 and I’m not a CFA or CFP😎
Having all accounts under one roof has too many pluses to enumerate but a job well done
So true! The feeling of contentment with simplicity is hard to value. Glad I did it. Thanks, Kenneth!
Hi Mike – I’d be interested to know how your alternative investments did. Since the 2008/9 financial crisis, the financial services industry seems to have been pushing these (e.g. forestry in Georgia, mining in Montana etc) as a diversification strategy, but as you mention they generate complex K-1 tax forms resulting in higher annual tax filing expenses, thereby reducing the investment return.
They were all pretty fine. I made like 7% CAGR at Lending Club for about 7 years, was up 15% at Fundrise over 18 months, up 10%-ish with the physical art junk, actually lost 5% with the wine bottles, then earned about 10% in stablecoin interest (and pulled it out before the trouble began). Compared to a global stock market allocation, it was probably roughly even over the weighted-average holding period.. but lots of wasted mental energy and tracking and time! All in the past now!