Brokerage Account (or alternative) recommendations

billiburrows · November 2015

Recently we sold a home that we purchased as a foreclosure and fixed up. We used a large chunk of the money to put 20% down on our current home but we still have a substantial amount that we need to put somewhere. When we cashed the check our bank saw the sum and wanted to meet with us to discuss investing the money in their brokerage account. If i'm understanding it correctly they help pick the allocation of assets and get 1.4% for doing this. Although its a small percentage it comes out to be a lot of money (in my opinion). I was wondering if this is pretty typical or if there are other options that maybe don't have fees? i think we know what our portfolio based on our age is supposed to look like so it would just be a matter of picking specific assets.

or is there a better way/place than a brokerage account to invest?

we already have 401K. we don't do a Roth but i suppose we could (although i know that has a low limit per year). i like that brokerage account is liquid and able to easily get out without restrictions if needed.

lbonga1 · November 2015

I personally wouldn't go through a broker. They're nice if you don't know much about investing, but I don't think it's hard to learn about. If you're not looking for something specifically for retirement but is simple, you could go with something like a Vanguard LifeStrategy Fund. They have 4 different options based on how long you'll be investing the money for and what your risk tolerance is (changes the stock/bond ratio). The fee ranges from only 0.14-0.17%, plus $20/year which can easily be removed by having over $10k in the fund or signing up for electronic statements.

Maxing out a Roth is also a good option because it's a tax-advantaged account. In this case, that means the money you invest will grow tax-free, and you won't have to pay taxes on it when you start making withdrawals. If you're ok with not having access to the money until retirement, I would suggest maxing the Roth first.

smerka · November 2015

1.4% is fairly high. I am a Vanguard girl so I would rcommend them. Their customer service is available by phone and I have always been pleased. They do have offices in the Phoenix area if you live there and want to sit down face to face with someone. Others here like Fidelity and they have low cost funds too.

MommyLiberty5013 · November 2015

I wanted to also highlight the difference between a broker and a brokerage account. The former would be a person who works for you (that you pay a fee to) who handles your investments over time and moves them around as s/he sees fit to achieve the best possible result for you. The brokerage account would be the account or location in which your funds are held. There are many investment companies you can use, that actually offer self-directed brokerage accounts. Vanguard is one of them. In fact, you get up to 25 free trades. Basically, you open a money market with them. It acts as a holding pen for your funds until you decide where you want to put them (in Vanguard accounts or in other places). You get to buy/sell using your brokerage account up to 25 times without any transaction fees. Vanguard also has people who can assist you in determining where to put money. But, if you want to have them manage it over time, then that's where the broker fees come in. I assume other companies handle this in the exact same or similar ways. I am also pretty sure that you can take online assessment for free to help determine the best sort of investments for your situation - the assessment would them make recommendations based on your own answers on where you should put your money.

hoffse · November 2015

Yeah go with a place like Vanguard, Fidelity, or Schwab and just manage it yourself. Most of these places run deals with x number of free trades. Even if you are paying for trades the fees at these places are very low.

I have 4 or 5 money market accounts with Fidelity that I fund or empty depending on what I'm saving for. Money market accounts have a slightly higher interest rate than a standard savings/checking account (and when the Fed finally raises interest rates MM accounts will also start paying out more). They also don't have the limits on withdrawals like savings accounts have. These are the accounts you can invest through. So I have a couple of money market accounts with taxable investments in them, a couple with cash, and a couple that have nothing in them right now.

We use Fidelity for our taxable investments and ROTH accounts because we have a branch locally, and I like them. They also recently updated their online platform, and it's really nice. All of my accounts and all of my H's accounts appear on my home screen when I login, so I can see everything at once.

I have a 401(k) through Vanguard, and they are great too. I've also used Schwab in the past, but switched to Fidelity when we moved.

Point is, all of these companies do a great job with low fees and will work to keep your business.

kyrgyzstan · November 2015

If it's more than 50,000 you can use the personal financial advising services at Vanguard. It's .3% per year, which for 50k is $150. I just started the process, but I really trust them. That fee is low, and their fund fees are the best in the industry.

vlagrl29 · November 2015

kyrgyzstan said:

If it's more than 50,000 you can use the personal financial advising services at Vanguard. It's .3% per year, which for 50k is $150. I just started the process, but I really trust them. That fee is low, and their fund fees are the best in the industry.

Thats interesting. Do they basically tell you how to invest your money based on your risk tolerance? I wonder if Fidelity would do this. That's who I'm with - I have 2 IRAs with them.

cbee817 · November 2015

vlagrl29 said:

kyrgyzstan said:

If it's more than 50,000 you can use the personal financial advising services at Vanguard. It's .3% per year, which for 50k is $150. I just started the process, but I really trust them. That fee is low, and their fund fees are the best in the industry.

Thats interesting. Do they basically tell you how to invest your money based on your risk tolerance? I wonder if Fidelity would do this. That's who I'm with - I have 2 IRAs with them.

I have my 401K and Roth with Fidelity- they have a bunch of tools online to use once you log in. There's an analysis you can go through for when you want to retire and it lets you know if you're on track. You can add accounts too from other sources (for example, I have a pension through work so I added that monthly amount based on my employer's pension estimator). There are some bundled options too- I've been looking to move my Roth to the Fidelity Asset Manager 85% (FAMRX) - 85% in a mix of stocks, 15% in a mix of bonds. Riskiest option, but I have 25+ years. As I get older, I can move it to the 70%, 60%, 50%... all the way to 20%. If you search on Fidelity Mutual Funds, they are in the Target Risk group. My 401K is currently in the Target Date 2040 fund- it's nice because the mix changes as 2040 gets closer... I don't have to think about it.

kyrgyzstan · November 2015

vlagrl29 said:

kyrgyzstan said:

If it's more than 50,000 you can use the personal financial advising services at Vanguard. It's .3% per year, which for 50k is $150. I just started the process, but I really trust them. That fee is low, and their fund fees are the best in the industry.

Thats interesting. Do they basically tell you how to invest your money based on your risk tolerance? I wonder if Fidelity would do this. That's who I'm with - I have 2 IRAs with them.

Yes. She sent me a 30 page report with details about how my money will be invested in accordance with my two main goals (retirement and a down payment). It also includes attention to tax efficiency (i.e. tax loss harvesting). I'm not sure if Fidelity does something similar, but it wouldn't surprise me.

kyrgyzstan · November 2015

cbee817 said:

vlagrl29 said:

kyrgyzstan said:

If it's more than 50,000 you can use the personal financial advising services at Vanguard. It's .3% per year, which for 50k is $150. I just started the process, but I really trust them. That fee is low, and their fund fees are the best in the industry.

Thats interesting. Do they basically tell you how to invest your money based on your risk tolerance? I wonder if Fidelity would do this. That's who I'm with - I have 2 IRAs with them.

I have my 401K and Roth with Fidelity- they have a bunch of tools online to use once you log in. There's an analysis you can go through for when you want to retire and it lets you know if you're on track. You can add accounts too from other sources (for example, I have a pension through work so I added that monthly amount based on my employer's pension estimator). There are some bundled options too- I've been looking to move my Roth to the Fidelity Asset Manager 85% (FAMRX) - 85% in a mix of stocks, 15% in a mix of bonds. Riskiest option, but I have 25+ years. As I get older, I can move it to the 70%, 60%, 50%... all the way to 20%. If you search on Fidelity Mutual Funds, they are in the Target Risk group. My 401K is currently in the Target Date 2040 fund- it's nice because the mix changes as 2040 gets closer... I don't have to think about it.

The difference is that this is actively managed for things like tax efficiency and no redundancy. I had a target date fund and I think they're great for solo, casual investors, but I know I can make more. Vanguard has online selection tools as well, but this is a real person managing my portfolio for very little money. A little more than $300/year is worth it to me.

vlagrl29 · November 2015

kyrgyzstan said:

vlagrl29 said:

kyrgyzstan said:

If it's more than 50,000 you can use the personal financial advising services at Vanguard. It's .3% per year, which for 50k is $150. I just started the process, but I really trust them. That fee is low, and their fund fees are the best in the industry.

Thats interesting. Do they basically tell you how to invest your money based on your risk tolerance? I wonder if Fidelity would do this. That's who I'm with - I have 2 IRAs with them.

I have my 401K and Roth with Fidelity- they have a bunch of tools online to use once you log in. There's an analysis you can go through for when you want to retire and it lets you know if you're on track. You can add accounts too from other sources (for example, I have a pension through work so I added that monthly amount based on my employer's pension estimator). There are some bundled options too- I've been looking to move my Roth to the Fidelity Asset Manager 85% (FAMRX) - 85% in a mix of stocks, 15% in a mix of bonds. Riskiest option, but I have 25+ years. As I get older, I can move it to the 70%, 60%, 50%... all the way to 20%. If you search on Fidelity Mutual Funds, they are in the Target Risk group. My 401K is currently in the Target Date 2040 fund- it's nice because the mix changes as 2040 gets closer... I don't have to think about it.
The difference is that this is actively managed for things like tax efficiency and no redundancy. I had a target date fund and I think they're great for solo, casual investors, but I know I can make more. Vanguard has online selection tools as well, but this is a real person managing my portfolio for very little money. A little more than $300/year is worth it to me.

can you do the investing yourself instead of the person. I would like to hear what someone would say to me about how to invest my money - what stocks to buy etc and then do that work myself

Brokerage Account (or alternative) recommendations

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