I lately discovered a handwritten word from early 2024 that outlined my targets to “SIMPLIFY!” my portfolio. The general thought was to make issues simpler for my partner to handle in case one thing occurred to me. Regardless that I nonetheless have a rat’s nest of accounts total, I wished a streamlined “Core” group of accounts that held 99% of my portfolio. Right here’s the present state of the funding aspect of my private finance stack.
Vanguard. Vanguard nonetheless holds nearly all of my funding portfolio, whereas on the similar time has the least quantity of transaction exercise. The concept is to let it simply develop, but additionally to keep away from the necessity to take care of customer support. Vanguard has the most effective money sweep for those who don’t use computerized dividend reinvestment. I additionally wish to give the brand new CEO a little bit of time to see how issues go.
In 2024, I did convert all my mutual funds into ETFs, so they’re simply moveable if I do wish to transfer belongings. As well as, maybe the marginally decrease ETF expense ratios will make a distinction.
Constancy. Constancy holds the 2nd-largest complete stability, and is the place I maintain my high-touch accounts. My Constancy Money Administration Account (CMA) handles most of my month-to-month cashflows (direct deposit in; BillPay out). My Solo 401k with the guide contributions and skill to purchase particular person TIPS/Treasuries. My self-directed account with particular person inventory holdings. Sooner or later, I plan on opening any custodial accounts for youths there.
TreasuryDirect (Bought all Financial savings Bonds!). A significant cause to promote was to attain simplification and not be reliant on the customer support of TreasuryDirect, principally in for property planning eventualities. As well as, their coverage states that if my account is hacked, they preserve zero legal responsibility for any losses. I’ll miss the extra efficient tax-deferred house of financial savings bonds, nevertheless it simply wasn’t definitely worth the extra trouble. I simply don’t see issues enhancing there sooner or later, it feels extra like gradual decay. This was my third largest stability.
Many of those financial savings bonds had mounted charges within the 0% to 1%; only some have been at larger mounted charges. The proceeds have been reinvested into long-term TIPS (purchased/held at Constancy) with actual yields of two% to 2.6%. Lastly, it labored out as a result of the capital beneficial properties from this sale have been offset from capital losses harvested from promoting a bond fund beforehand when charges rose. (I did an ETF swap to reap the tax losses whereas sustaining the same bond holding with out incurring a wash sale.)
Robinhood (setback!). In an surprising setback for simplification, I ended up transferring my Vanguard IRAs to Robinhood in 2024 attributable to their 3% switch promo. When the 5-year maintain ends, my plan is to maneuver them to Constancy except there may be one other profitable provide. This was a brand new brokerage account to trace, however I simply couldn’t flip down an extra ~$18,000 in Roth IRA balances.
Utah My529. Because of some huge early contributions and a really aggressive asset allocation, that is now my subsequent largest funding account, though theoretically it needs to be fully obliterated inside 12 years or so when the schooling payments hit. I consolidated 529 plans a number of years in the past; it may be loads of paperwork nevertheless it’s good to have all the things at one place. Utah appears to be on prime of the sport for 529 plans.
Financial institution of America/Merrill Edge to US Financial institution swap? I maintain $100,000 in brokerage belongings at Merrill Edge with a purpose to qualify for the Financial institution of America Most popular Rewards Tier which basically will get me a flat 2.625% money again on all my purchases. Nonetheless, in 2024, US Financial institution debuted their Neatly bank card that gives as much as 4% money again, additionally for those who maintain $100,000 in asset at their brokerage arm.
Ought to I arrange one more new account at US Financial institution to take benefit? Ought to I then shut down BofA/Merrill Edge to offset? The issue is that I’m not satisfied that US Financial institution will maintain the 4% money again for very lengthy. US Financial institution has a historical past of rolling out new merchandise after which shutting them down abruptly. Alternatively, additionally they have a historical past of generally holding the present perks for grandfathered clients. So possibly it’s finest to get in early? Simplification vs. optimization. I didn’t take any motion in 2024.
Actually, because the now-Fifth largest stability, the BofA/Merrill Edge is the account that I ought to most likely eliminate subsequent, nevertheless it’s been so dependable with minimal hassles. I don’t wish to mess with what works.
401k Custodians (consolidated with direct 401k-to-401k transfers). These are pre-tax accounts, so I didn’t wish to go 401k-to-IRA since then I’d have Pre-tax IRAs which might complicate my Backdoor Roth IRA conversions. This makes one much less place I’ve to trace my investments. Finally, if/when our marginal tax brackets are decrease, I’d plan to transform a few of these accounts to Roth IRAs.
Last rating: Two accounts closed (TreasuryDirect and 401k), one account opened (Robinhood).
