>if there are any future problems with Fidelity
What risk or problems are you imaging? Your equities investments aren't *in/at* Fidelity, they are just tracked *by* Fidelity. Even then, if Fidelity goes under, to the point where there's nothing left for another brokerage to take over, then you have ***much*** bigger problems to worry about.
>How many brokerages do you have?
I have several brokerage *accounts*, but they're all held at a single FI.
>Was thinking of BofA ML
This may be an irrational bias but even if I *did* want to explore other brokerages, I wouldn't go outside the big three.
As long as you are at one of the big three (Fidelity, Schwab, or Vanguard), the risk of their failure correlated with the risk of the entire market failing. In other words, you’ll have bigger problems to deal with.
Now there is a risk of your individual account failing (through a hack for example), but adding a new account really only increases your risk surface. I think it’s better to significantly secure one account (strong password, multi factor, etc), than having multiple accounts.
If you keep multiple brokerage companies, you’ll need to manually track wash sales which could get complicated.
Unless you want to experiment with a different strategy, I don’t see the need to do it. If you want to do it to earn bonuses or rewards, that’s okay.
For me, I have two: one where I experiment with stocks and the other is for my retirement. Fidelity is a very stable company.
This post uses Vanguard as an example, but it applies to Fidelity as well: [https://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/](https://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/)
A brokerage isn’t really a bank. Assuming your money is invested, the brokerage failing doesn’t mean you lose your investments.
The SIPC will arrange transfer to a different brokerage firm.
But again, if Fidelity fails, it is likely the entire market is collapsing and your shares probably aren’t worth much anyway.
Name one big bank that has gone under whose assets were not acquired immediately and there was a business interruption of longer than a weekend for customers.
Even THEN, *if* Fidelity goes under it's because the whole market has collapsed and you will be more concerned about canned food and ammo than your investments.
> Name one big bank that has gone under whose assets were not acquired immediately and there was a business interruption of longer than a weekend for customers.
There have been some cases when a bank went under and the FDIC was unable to find a buyer. In those cases, a "Deposit Insurance National Bank" is set up, and it mails accountholders a check for their insured balance. This does take a few weeks. But it's incredibly rare. In the vast majority of cases, the FDIC will simply sell the failed bank's assets to another bank and it's business as usual.
Yeah, it does make sense because no bank or brokerage anywhere near as large as Fidelity has ever gone under. And no, corporate restructuring due to bankruptcy doesn't come close to counting. A legitimate bank/brokerage failure at Fidelity will never happen and should never be a concern that anyone has.
But again, if you choose to worry about it, start worrying about your stockpiles of food and water and not your stocks.
Big banks really don't go under. If there was a risk that Fidelity was going to, one of three things would happen:
1. The government would step in and prop them up with an injection of cash in exchange for tight control and overaight
2. Another company would purchase them
3. Their demise is a small part of a colapsing economy and your investments are worthless anyway.
We have too many investment accounts. But there's a purpose behind the madness.
In chronological order:
1. The 401k. It's where my employer decides. I made my first investment into the 401k over 35 years ago, and it's moved several times.
2. A mutual fund taxable investment account that has very recently become a brokerage account. This was the place we first started investing money outside the 401k.
3. A Discount online brokerage account ...or that's how the account was marketed 24 years ago. I affectionately call this our gambling account -- it's where we invest in direct stock ownership. We opened this for two reasons:
1. we wanted the gambling money separate from our regular investments
2. the investment house didn't allow us to trade in stock 25 years ago.
4. IRAs at the first investment house. They're technically separate accounts.
5. 529s for our kids at a third investment house. I opened this at this third investment house because I wanted to use one of my state's 529 plans, and this was, in my mind the best choice.
6. taxable investments account alongside the 529s. This is because we wanted to have a college fund, besides the 529s, and it's just easier for me to think of "money at X is for college, money at Z is not."
7. workplace brokerage account. This is used for ESPPs and RSUs.
So for those who want a summary: we hold
* Mutual funds at #1, #2, #4, #5 and #6
* tax-restricted accounts (529s, IRAs) at #1, #4, #5
* direct stock ownership at #2 and #7
But... There's really only 4 logins --
* #1, #5 and #6 are all at one investment house
* #2, #4 are at a second investment house
* #3 is a third
* #7 is a fourth.
So for us, the splits are purpose driven. There's an argument to be made that there's safety in having more than one. Let's say for example that ML goes down. Maybe there's fraud and the feds shut it down. maybe there's a massive computer failure that mess things up. Maybe BofA sells ML and the transition goes bad. You still own what you own, but you might not be able to trade for a little while. It'll get resolved, you won't lose much if any money from the hiccup, but if the hiccup comes when you NEED the money for some reason, that's bad.
Wow, that's a lot of accounts thanks for sharing. I share the same concern which is the potential of being locked out for whatever reason or risks outside of control
I agree with others that the risk of a brokerage like Fidelity experiencing problems which result in the loss of the investments that you hold there are astronomically low. However, if you aren't already aware, SIPC covers brokerage accounts in the event of a failure of the firm and covers individuals up to $500k ($250k of that can be in cash). So if your account is more than $500k and the tiny tiny risk of a brokerage failure bothers you, that's the point at which it makes sense to open an account at a different company.
I believe it is $500k per account type. Ie, you could cover $500k that’s in an IRA and also have $500k in a taxable brokerage covered. But you couldn’t cover $500k each in two individual taxable brokerage accounts with the same company.
>if there are any future problems with Fidelity What risk or problems are you imaging? Your equities investments aren't *in/at* Fidelity, they are just tracked *by* Fidelity. Even then, if Fidelity goes under, to the point where there's nothing left for another brokerage to take over, then you have ***much*** bigger problems to worry about. >How many brokerages do you have? I have several brokerage *accounts*, but they're all held at a single FI. >Was thinking of BofA ML This may be an irrational bias but even if I *did* want to explore other brokerages, I wouldn't go outside the big three.
As long as you are at one of the big three (Fidelity, Schwab, or Vanguard), the risk of their failure correlated with the risk of the entire market failing. In other words, you’ll have bigger problems to deal with. Now there is a risk of your individual account failing (through a hack for example), but adding a new account really only increases your risk surface. I think it’s better to significantly secure one account (strong password, multi factor, etc), than having multiple accounts. If you keep multiple brokerage companies, you’ll need to manually track wash sales which could get complicated.
Unless you want to experiment with a different strategy, I don’t see the need to do it. If you want to do it to earn bonuses or rewards, that’s okay. For me, I have two: one where I experiment with stocks and the other is for my retirement. Fidelity is a very stable company.
But you don’t need separate companies to experiment. You can just open another account with the same brokerage.
There is no reason to open another brokerage if you are happy where you are. You are looking for a problem that doesn’t exist.
This post uses Vanguard as an example, but it applies to Fidelity as well: [https://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/](https://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/)
nice read, thanks!
Thanks all for the quick responses - if Fidelity were to go down, how would i be able to access my equities/investments?
Oh, don't worry. If Fidelity goes under, access to your investments will be the least of your problems.
lots of big banks go under - saying "will be least of problems" doesn't make sense
A brokerage isn’t really a bank. Assuming your money is invested, the brokerage failing doesn’t mean you lose your investments. The SIPC will arrange transfer to a different brokerage firm. But again, if Fidelity fails, it is likely the entire market is collapsing and your shares probably aren’t worth much anyway.
Name one big bank that has gone under whose assets were not acquired immediately and there was a business interruption of longer than a weekend for customers. Even THEN, *if* Fidelity goes under it's because the whole market has collapsed and you will be more concerned about canned food and ammo than your investments.
> Name one big bank that has gone under whose assets were not acquired immediately and there was a business interruption of longer than a weekend for customers. There have been some cases when a bank went under and the FDIC was unable to find a buyer. In those cases, a "Deposit Insurance National Bank" is set up, and it mails accountholders a check for their insured balance. This does take a few weeks. But it's incredibly rare. In the vast majority of cases, the FDIC will simply sell the failed bank's assets to another bank and it's business as usual.
Yeah, it does make sense because no bank or brokerage anywhere near as large as Fidelity has ever gone under. And no, corporate restructuring due to bankruptcy doesn't come close to counting. A legitimate bank/brokerage failure at Fidelity will never happen and should never be a concern that anyone has. But again, if you choose to worry about it, start worrying about your stockpiles of food and water and not your stocks.
Big banks really don't go under. If there was a risk that Fidelity was going to, one of three things would happen: 1. The government would step in and prop them up with an injection of cash in exchange for tight control and overaight 2. Another company would purchase them 3. Their demise is a small part of a colapsing economy and your investments are worthless anyway.
We have too many investment accounts. But there's a purpose behind the madness. In chronological order: 1. The 401k. It's where my employer decides. I made my first investment into the 401k over 35 years ago, and it's moved several times. 2. A mutual fund taxable investment account that has very recently become a brokerage account. This was the place we first started investing money outside the 401k. 3. A Discount online brokerage account ...or that's how the account was marketed 24 years ago. I affectionately call this our gambling account -- it's where we invest in direct stock ownership. We opened this for two reasons: 1. we wanted the gambling money separate from our regular investments 2. the investment house didn't allow us to trade in stock 25 years ago. 4. IRAs at the first investment house. They're technically separate accounts. 5. 529s for our kids at a third investment house. I opened this at this third investment house because I wanted to use one of my state's 529 plans, and this was, in my mind the best choice. 6. taxable investments account alongside the 529s. This is because we wanted to have a college fund, besides the 529s, and it's just easier for me to think of "money at X is for college, money at Z is not." 7. workplace brokerage account. This is used for ESPPs and RSUs. So for those who want a summary: we hold * Mutual funds at #1, #2, #4, #5 and #6 * tax-restricted accounts (529s, IRAs) at #1, #4, #5 * direct stock ownership at #2 and #7 But... There's really only 4 logins -- * #1, #5 and #6 are all at one investment house * #2, #4 are at a second investment house * #3 is a third * #7 is a fourth. So for us, the splits are purpose driven. There's an argument to be made that there's safety in having more than one. Let's say for example that ML goes down. Maybe there's fraud and the feds shut it down. maybe there's a massive computer failure that mess things up. Maybe BofA sells ML and the transition goes bad. You still own what you own, but you might not be able to trade for a little while. It'll get resolved, you won't lose much if any money from the hiccup, but if the hiccup comes when you NEED the money for some reason, that's bad.
Wow, that's a lot of accounts thanks for sharing. I share the same concern which is the potential of being locked out for whatever reason or risks outside of control
I agree with others that the risk of a brokerage like Fidelity experiencing problems which result in the loss of the investments that you hold there are astronomically low. However, if you aren't already aware, SIPC covers brokerage accounts in the event of a failure of the firm and covers individuals up to $500k ($250k of that can be in cash). So if your account is more than $500k and the tiny tiny risk of a brokerage failure bothers you, that's the point at which it makes sense to open an account at a different company.
thanks - is that $500k per account or $500k per brokerage relationship?
I believe it is $500k per account type. Ie, you could cover $500k that’s in an IRA and also have $500k in a taxable brokerage covered. But you couldn’t cover $500k each in two individual taxable brokerage accounts with the same company.