One thing to add for risk management purposes I would not want to have all my assets at one firm. If your account gets hacked you could have your funds frozen for a while as they investigate what happened to it. For this reason I would want to have at least 2 separate institutions (say brokerage and bank account).
Another risk many people do not consider but which has bitten many, is having social security direct deposited into the same institution as the rest of your assets. If there is any kind of confusion or problem where the SSA thinks that fraud may have been committed, they can take and/or freeze your assets at the institution where you direct deposit and you are guilty until proven innocent. If you have everything at the single institution, you are in trouble. I recommend keeping most of your assets elsewhere, but have a checking account (and perhaps savings account with only a month or two of spending needs) in a separate institution, and have your SS check deposited to that checking account. My such account is at Chase Bank, and a regular monthly transfer is enough to waive the fees. A credit union is probaby better, if you have a convenient one nearby. Having a local institution makes it easier to deal face to face if you need a cashier's check for a large purchase, or to resolve the inevitable problems that seem to happen to everyone now and then.
I agree with using multiple banks. That was more clear during the 2008 crash. Past 10 years have been stable and slowly the risk of a single bank fades. And of course FDCI limits.
I keep one month expenses in hard Cash at home. Most 2 months of expenses in checking account (Capital One). 9 more months in HYSA (3% in Capital one). 4 more years of expenses in brokered CDs ladder, Treasury bonds and rest in Dividend ETFs in Schwab.
You NEED a "brick and mortar bank" if you ever need to get a "Medallion Signature Guaranty." In my area, unless you have an account at the bank, they will most likely NOT provide this service. One reason you might need this service is because of certain brokerage account changes requirements, and also Treasury Direct requires it, if you try to change bank accounts. (I Bond Purchases, treasuries, etc.) GREAT Video Bob.
FYI - Treasury Direct no longer requires this. You can add and change banks on line only. Not often said about anything related to the Treasury Direct site, but it was actually very easy and quick for me to add additional bank accounts.
@@aina07however you have forgotten your password and you want to reset or change your password...GOOD LUCK. Their Email request for assistance results in a return email telling you to call them. I have waited on hold over 60 minutes twice, and still not gotten through. Treasury Direct is an abomination.
I like keeping it simple and I'm fine with the options at Vanguard. We have a checking account at a local brick and mortar credit union and we minimize what we need to keep in checking to pay bills. We then transfer excess money to Vanguard to keep it invested in various types of funds. We have a few credit cards to earn cash back and points while never paying interest. Works great for us and is simple rather than spreading things out with multiple brokerages.
Question for Rob and others. I am recently retired and handle my own finances. I'm looking for some financial planning software to backcheck my decisions and to look at all of my investments comprehensively. Would u recommend New Retirement or Personal Capital? Thank you, Rob, for all the great information.
Really helpful and well-timed for me! I recently sold my house and have been studying how to manage the proceeds I didn't immediately need. Turns out I'm not far off from your suggestions but you gave me a couple of ideas to look at. Many thanks!
I'm also a big fan of Personal Capital, usually, but I have to say that their biggest weakness is keeping their aggregator working/linking with financial/investment institutions. They seem to have much more problems than say Mint (or Yodlee). When everything is linking, they are the best, but when things go down, it can take weeks, months, or never, for them to restore links. That can become a big problem when the break occurs with your main bank (like right now, Ally Bank is no longer updating and it has been down since Nov 21st) or your main investment firm (like it was a couple of years ago when the link broke for Vanguard). And because you don't pay for the Personal Capital app, you don't really have any room to complain when the aggregator misfires.
I will 2nd this comment regarding Personal Capital! I've had my account at Fidelity stop synching and several others too. It actually caused a sizable gap in my net worth for about 6 months. Many attempts to reach them were followed by generic "don't call us, we'll call you... we're working on it" messages. And when they did finally fix it, they never told me... it just started working again. What can you expect for free I suppose.
I have been sitting on the fence about moving my banking to Fidelity (where all my retirement accounts are). I think it is more of a mental thing right now. I might just set it up and put funds in it so that if my traditional bank pisses me off I can quickly move over. It has been over 5 years since I have actually had to go into a physical bank.
I think you need at least 2 credit cards maybe 3. Plenty of times your card will get stolen, hacked etc. So while a new card is being sent to you you should have at least 1 backup to switch stuff onto and it might make sense to have 1 credit card that is only used for auto payments and nothing else., it's probably less likely to get hacked or stolen. I tell you it's a real hassle once or twice a year to re establish auto payment programs just because your card got stolen. Plus having one card for just subscriptions or auto pays for utilities etc sort of gives you a very fast idea just what your auto payment output is each month or so.
I gave my husb a new slim wallet with built in RFID protection. We also use a low limit CC for online buying and NEVER keep any banking info and limited personal info on our phones. We’re well aware by 2030 CBDCs will rolled out and global banking money system tokenized on blockchain. Big banks, CBs and big corps have put billions into it over last 20 yrs or more. AMZ admitted working on Ai for 60 yrs. EMs will prob switch by 2025. Pros and cons. Big change.
this can apply preretirement as well. use a checking/savings for your direct deposit and spending and payment accounts. if your bank doesn't have a local branch open another account that will have a local branch as well( i.e for financial documents that need a notary or medallions). consolidate your retirement accnts if you can when you change jobs to keep easier track. take out excess earning from each paycheck you don't need for your monthly expenses before spending( you can always adjust the pay yourself amnt later if too aggressive) and park it in a money market fund earning higher interest. from that money market fund draw money for aftertax investments whilst maintaining a balance for emergencies. pay large recurring bills ( home and car insurance, utilities etc..) with the CC with biggest rewards to get the points and pay off monthly. if you have CC debt don't bother investing till you pay it off.
I was thinking the same...why would retirement change anything other than inflow of one check? IMO I've a few people go a little nuts when they retire and make big changes almost like they though big changes were required. I retired 21 years ago at 45 but didn't realize I had retired until I was about 55. Thought the money would run out and I'd go back to work at some point...but the money never ran out. I loved my career as a software engineer so going back to work wasn't a fear. Just enjoyed the freedom of not going to a job everyday. Still wrote code everyday because I enjoy it.
@@MrWaterbugdesign i agree. retired at 55 from being a physician last yr at 55. i could easily go back even part time but then i remember why i quit in the first place. so far no big changes in my plan except implementing the roth conversions previosly planned in spite if the market gyrations..
Not sure why you don't recommend credit union for cash management. I like using credit union accounts for two reasons, all of the funds are controlled by local folks who you can see face to face and I can go to quarterly board meeting where I can voice any issues concerning my account.
Another factor in evaluating banks/brokerages is their functionality for designating a representative(s) to manage your cash when you become incapacitated. Institutions have varying abilities for this. A predetermined and clearly documented process to pay bills when you are unable to is important. Designating beneficiaries upon death for each account should also be dealt with. My brokerage accounts fully support this; my bank doesn’t. And of course ensure your web of accounts is fully understood by your spouse.
Thank you Rob for this awesome video! Which brick and mortar bank do you recommend with no fees (with low minimum checking balance) please? I notice some banks have $0 in monthly fees but they charge $25 or more on incoming/outgoing wires, which makes any monthly fees. Have you found a good brick and mortar that also has no wire fee?
Great video, Rob. I initially had everything at one place, but I found I needed a bit of a buffer to stop me from making rash trade decisions. So... checking/savings accounts are separate from brokerage accounts for me.
Thanks for the discussion. Have you looked into any of the M1 Finance "smart transfers" capabilities? I know they are creating a HYSA sometime soon. It looks like one would be able to create a "waterfall" process of transferring investment gains (dividends/cap gains) -> HYSA -> checking (M1) -> checking (brick/mortar). Curious on your thoughts on this. Thanks.
Most in Canada have/ being taken over by larger banks who don’t change the name to give illusion it’s still independent. Google some credit unions in US and who largest shareholders are. Maybe a surprise.
I’ve found that none of the Personal Cap and similar accounts will download all of my accounts. I need an app that will allow one to add transactions manually. As one gets older simplicity becomes ever more important, more so than returns.
excellent video! i plan on retiring soon and im thinking about moving everything over to either Schwab or Fidelity,, the one that has the best brick and mortar branch by me with competent advisors and personal help..sometimes its a pain in the butt to deal with issues over the phone and i prefer that personal service since i would probably be considered a high net worth individual and dont want any clown that thinks he's a wall street cowboy shrinking my net worth ..maybe do a video someday for upper tier brokerage/wealth management firms like JP Morgan,,Merrill Lynch,,UBS,,Morgan Stanley etc etc..
I have one retirement account and 2 brokerage accounts. I enjoy your videos and per your disclaimer, how can one enlist services of a registered/licensed advisor? I’m retiring in 6 months. I've read that they are better equipped to look for opportunities in bear markets anyway.
Yes there’s an inverse relation but the role they play in a portfolio is a more of a ballast for many. Also good index or ETF funds with mix of short, med and longer term bond weighting. Then just have to rebal annually unless large pump of dump. ✌️
Hey all, I couldn't find an answer to this question, so I thought I might give it a go here. I'm planning to diversify some of my funds into Vanguard Bond ETFs, but I couldn't understand how yield to maturity and coupon rate affect my returns. I do briefly know the differences but let's say, for VGSH, YTM is 4.6% per annum and coupon rate is 1.7% per annum. At the distribution date every month, will I be receiving only the coupon-rate dividends? If so, how can I be eligible for the 4.6% YTM p.a. return? Do I need to hold the ETF for 1-2 years to be eligible for that? And how does the calculation work? Would appreciate if someone could help me understand this. Thanks in advance!
In 57 years as a customer of PNC bank I have paid ZERO in fees, ever. I’m 62. Pnc, Good loan rates, bad cd rates, good points card. Backup accounts at local credit union. Zero fees Good cd rates, not as good loan rates, good cash back card. Mix and match.
At Fidelity, and other brokerage firms you are able to purchase "brokered CDs" from multiple banks via the brokerage, for example you could purchase 5 CDs for 250K each through the brokerage company so the 250K insurance is per bank and not the brokerage firm. I have found rates are even slightly better through the brokerage firm than going directly to the bank.
I have been using Quicken for years to track multiple investments accounts and spending. PC version has a very good retirement planner. We have set up our saving/cash/check writing with a Lake Michigan CU that is paying 3.00% on Max Rewards account...CU are good place to research cash management needs.
I used to use ING Direct several years ago, but now using Goldman Sachs (Marcus). They offer a fairly competitive MM rate. You can usually get cash withdrawn and transferred back to checking in 2-3 business days.
One thing to add for risk management purposes I would not want to have all my assets at one firm. If your account gets hacked you could have your funds frozen for a while as they investigate what happened to it. For this reason I would want to have at least 2 separate institutions (say brokerage and bank account).
Another risk many people do not consider but which has bitten many, is having social security direct deposited into the same institution as the rest of your assets. If there is any kind of confusion or problem where the SSA thinks that fraud may have been committed, they can take and/or freeze your assets at the institution where you direct deposit and you are guilty until proven innocent. If you have everything at the single institution, you are in trouble. I recommend keeping most of your assets elsewhere, but have a checking account (and perhaps savings account with only a month or two of spending needs) in a separate institution, and have your SS check deposited to that checking account. My such account is at Chase Bank, and a regular monthly transfer is enough to waive the fees. A credit union is probaby better, if you have a convenient one nearby.
Having a local institution makes it easier to deal face to face if you need a cashier's check for a large purchase, or to resolve the inevitable problems that seem to happen to everyone now and then.
I agree with using multiple banks. That was more clear during the 2008 crash. Past 10 years have been stable and slowly the risk of a single bank fades. And of course FDCI limits.
Correct, don't keep all the eggs in the same basket. Dont use these "free" apps and tools, they keep all your passwords having zero liabilities.
I keep one month expenses in hard Cash at home. Most 2 months of expenses in checking account (Capital One). 9 more months in HYSA (3% in Capital one). 4 more years of expenses in brokered CDs ladder, Treasury bonds and rest in Dividend ETFs in Schwab.
I began retirement planning the first day out of college. I worked to live, travel and to retire.
You NEED a "brick and mortar bank" if you ever need to get a "Medallion Signature Guaranty." In my area, unless you have an account at the bank, they will most likely NOT provide this service. One reason you might need this service is because of certain brokerage account changes requirements, and also Treasury Direct requires it, if you try to change bank accounts. (I Bond Purchases, treasuries, etc.)
GREAT Video Bob.
FYI - Treasury Direct no longer requires this. You can add and change banks on line only. Not often said about anything related to the Treasury Direct site, but it was actually very easy and quick for me to add additional bank accounts.
@@aina07 Wow, great news!
@@aina07however you have forgotten your password and you want to reset or change your password...GOOD LUCK. Their Email request for assistance results in a return email telling you to call them. I have waited on hold over 60 minutes twice, and still not gotten through. Treasury Direct is an abomination.
I like keeping it simple and I'm fine with the options at Vanguard. We have a checking account at a local brick and mortar credit union and we minimize what we need to keep in checking to pay bills. We then transfer excess money to Vanguard to keep it invested in various types of funds. We have a few credit cards to earn cash back and points while never paying interest. Works great for us and is simple rather than spreading things out with multiple brokerages.
Question for Rob and others. I am recently retired and handle my own finances. I'm looking for some financial planning software to backcheck my decisions and to look at all of my investments comprehensively. Would u recommend New Retirement or Personal Capital?
Thank you, Rob, for all the great information.
Really helpful and well-timed for me! I recently sold my house and have been studying how to manage the proceeds I didn't immediately need. Turns out I'm not far off from your suggestions but you gave me a couple of ideas to look at. Many thanks!
I'm also a big fan of Personal Capital, usually, but I have to say that their biggest weakness is keeping their aggregator working/linking with financial/investment institutions. They seem to have much more problems than say Mint (or Yodlee). When everything is linking, they are the best, but when things go down, it can take weeks, months, or never, for them to restore links. That can become a big problem when the break occurs with your main bank (like right now, Ally Bank is no longer updating and it has been down since Nov 21st) or your main investment firm (like it was a couple of years ago when the link broke for Vanguard). And because you don't pay for the Personal Capital app, you don't really have any room to complain when the aggregator misfires.
I will 2nd this comment regarding Personal Capital! I've had my account at Fidelity stop synching and several others too. It actually caused a sizable gap in my net worth for about 6 months. Many attempts to reach them were followed by generic "don't call us, we'll call you... we're working on it" messages. And when they did finally fix it, they never told me... it just started working again. What can you expect for free I suppose.
Perfect timing as I will be retiring next April.
Happy Thanksgiving Rob!
You, too!
@@rob_berger C’mon Rob, don’t be lazy now. Type it all out, “Happy Thanksgiving to you too” 😂
I have been sitting on the fence about moving my banking to Fidelity (where all my retirement accounts are). I think it is more of a mental thing right now. I might just set it up and put funds in it so that if my traditional bank pisses me off I can quickly move over.
It has been over 5 years since I have actually had to go into a physical bank.
I divorced my bank, BOFA. All on schwab. So easy and service is top notch, 24x7. Did it all in one month, at age of 54.
I think you need at least 2 credit cards maybe 3. Plenty of times your card will get stolen, hacked etc. So while a new card is being sent to you you should have at least 1 backup to switch stuff onto and it might make sense to have 1 credit card that is only used for auto payments and nothing else., it's probably less likely to get hacked or stolen. I tell you it's a real hassle once or twice a year to re establish auto payment programs just because your card got stolen. Plus having one card for just subscriptions or auto pays for utilities etc sort of gives you a very fast idea just what your auto payment output is each month or so.
I gave my husb a new slim wallet with built in RFID protection. We also use a low limit CC for online buying and NEVER keep any banking info and limited personal info on our phones. We’re well aware by 2030 CBDCs will rolled out and global banking money system tokenized on blockchain. Big banks, CBs and big corps have put billions into it over last 20 yrs or more. AMZ admitted working on Ai for 60 yrs. EMs will prob switch by 2025. Pros and cons. Big change.
this can apply preretirement as well. use a checking/savings for your direct deposit and spending and payment accounts. if your bank doesn't have a local branch open another account that will have a local branch as well( i.e for financial documents that need a notary or medallions). consolidate your retirement accnts if you can when you change jobs to keep easier track. take out excess earning from each paycheck you don't need for your monthly expenses before spending( you can always adjust the pay yourself amnt later if too aggressive) and park it in a money market fund earning higher interest. from that money market fund draw money for aftertax investments whilst maintaining a balance for emergencies. pay large recurring bills ( home and car insurance, utilities etc..) with the CC with biggest rewards to get the points and pay off monthly. if you have CC debt don't bother investing till you pay it off.
I was thinking the same...why would retirement change anything other than inflow of one check? IMO I've a few people go a little nuts when they retire and make big changes almost like they though big changes were required. I retired 21 years ago at 45 but didn't realize I had retired until I was about 55. Thought the money would run out and I'd go back to work at some point...but the money never ran out. I loved my career as a software engineer so going back to work wasn't a fear. Just enjoyed the freedom of not going to a job everyday. Still wrote code everyday because I enjoy it.
@@MrWaterbugdesign i agree. retired at 55 from being a physician last yr at 55. i could easily go back even part time but then i remember why i quit in the first place. so far no big changes in my plan except implementing the roth conversions previosly planned in spite if the market gyrations..
Not sure why you don't recommend credit union for cash management. I like using credit union accounts for two reasons, all of the funds are controlled by local folks who you can see face to face and I can go to quarterly board meeting where I can voice any issues concerning my account.
Thanx Rob.
Very good practical information for those of us close to retirement.
Great video. I have a similar setup with one of the major financial entities that you recommended
The 12 buckets of retirement 🎄thanks for this Rob!
Some saving accounts have limits on cash withdrawals.
Another factor in evaluating banks/brokerages is their functionality for designating a representative(s) to manage your cash when you become incapacitated. Institutions have varying abilities for this. A predetermined and clearly documented process to pay bills when you are unable to is important.
Designating beneficiaries upon death for each account should also be dealt with. My brokerage accounts fully support this; my bank doesn’t.
And of course ensure your web of accounts is fully understood by your spouse.
It is easy to set up any bank account with a payable on death beneficiary. All they have to do to access the money is provide a death certificate.
Great info, Rob!
Curious to hear your take on fintechs, like Wealthfront, etc.
Thank you Rob for this awesome video! Which brick and mortar bank do you recommend with no fees (with low minimum checking balance) please? I notice some banks have $0 in monthly fees but they charge $25 or more on incoming/outgoing wires, which makes any monthly fees. Have you found a good brick and mortar that also has no wire fee?
Why not set up a line of credit HELOC or something else instead of tying up cash for emergency?
Great video, Rob. I initially had everything at one place, but I found I needed a bit of a buffer to stop me from making rash trade decisions. So... checking/savings accounts are separate from brokerage accounts for me.
Thanks for the discussion. Have you looked into any of the M1 Finance "smart transfers" capabilities? I know they are creating a HYSA sometime soon. It looks like one would be able to create a "waterfall" process of transferring investment gains (dividends/cap gains) -> HYSA -> checking (M1) -> checking (brick/mortar). Curious on your thoughts on this. Thanks.
Rob. Appreciate your videos. Can you do a short section on how card points translate to $ for one of the cards you recommend?
Thanks for the tips Rob, especially regarding brokerage banking services.
Could you speak to credit unions? We have one that has so many benefits. Low cost credit card, free bill pay and checking accounts and CD.
Most in Canada have/ being taken over by larger banks who don’t change the name to give illusion it’s still independent. Google some credit unions in US and who largest shareholders are. Maybe a surprise.
@@jmc8076 GOOD point..happened to me in Florida
I’ve found that none of the Personal Cap and similar accounts will download all of my accounts. I need an app that will allow one to add transactions manually. As one gets older simplicity becomes ever more important, more so than returns.
I use Mint to track spending and income with Personal Capital and find it works well. You can add transactions manually with Mint.
excellent video! i plan on retiring soon and im thinking about moving everything over to either Schwab or Fidelity,, the one that has the best brick and mortar branch by me with competent advisors and personal help..sometimes its a pain in the butt to deal with issues over the phone and i prefer that personal service since i would probably be considered a high net worth individual and dont want any clown that thinks he's a wall street cowboy shrinking my net worth ..maybe do a video someday for upper tier brokerage/wealth management firms like JP Morgan,,Merrill Lynch,,UBS,,Morgan Stanley etc etc..
How long it takes to get $30k as credit card rewards? And how many credit cards being used? That’s that include the bonus cash reward?
Have a mid-6 figure sum that is our kids inheritance in 10 to 15 years. What investments will retain the most purchasing power? Thanks
Very comprehensive video.
I have one retirement account and 2 brokerage accounts. I enjoy your videos and per your disclaimer, how can one enlist services of a registered/licensed advisor? I’m retiring in 6 months. I've read that they are better equipped to look for opportunities in bear markets anyway.
I would not put money into bonds right now. When interest rates go up bonds go down.
Yes there’s an inverse relation but the role they play in a portfolio is a more of a ballast for many. Also good index or ETF funds with mix of short, med and longer term bond weighting. Then just have to rebal annually unless large pump of dump. ✌️
Hey all, I couldn't find an answer to this question, so I thought I might give it a go here. I'm planning to diversify some of my funds into Vanguard Bond ETFs, but I couldn't understand how yield to maturity and coupon rate affect my returns.
I do briefly know the differences but let's say, for VGSH, YTM is 4.6% per annum and coupon rate is 1.7% per annum.
At the distribution date every month, will I be receiving only the coupon-rate dividends? If so, how can I be eligible for the 4.6% YTM p.a. return? Do I need to hold the ETF for 1-2 years to be eligible for that? And how does the calculation work? Would appreciate if someone could help me understand this. Thanks in advance!
Isn't it risky to link your accounts to an organization like Personal Capital?
You didn’t mention that Personal Capital also offers a cash account currently paying 3.35% APY 😉
My suggestion is the call the credit card company and make the limit w/e your monthly expenses are. To ensure no over spending.
Any perspective on the fees charged by "Brick & Mortars" compared to "Brokerage houses"? Thanks, Happy Thanksgiving to all!
You should be able to find no-fee accounts at both.
In 57 years as a customer of PNC bank I have paid ZERO in fees, ever.
I’m 62. Pnc, Good loan rates, bad cd rates, good points card.
Backup accounts at local credit union. Zero fees
Good cd rates, not as good loan rates, good cash back card.
Mix and match.
Too much risk for me to have everything at one broker account. I have 4 broker accounts at different brokers.
Sounds like a management nightmare to me.
Yeah explain how FDIC covers $1.2 million deposit of cash when the rules state $250K per account per bank customer(s).
At Fidelity, and other brokerage firms you are able to purchase "brokered CDs" from multiple banks via the brokerage, for example you could purchase 5 CDs for 250K each through the brokerage company so the 250K insurance is per bank and not the brokerage firm. I have found rates are even slightly better through the brokerage firm than going directly to the bank.
@@suzycreamcheese8888 very true
I have been using Quicken for years to track multiple investments accounts and spending. PC version has a very good retirement planner. We have set up our saving/cash/check writing with a Lake Michigan CU that is paying 3.00% on Max Rewards account...CU are good place to research cash management needs.
Quicken is great. Excel can fill in any holes for reports.
I used to use ING Direct several years ago, but now using Goldman Sachs (Marcus). They offer a fairly competitive MM rate. You can usually get cash withdrawn and transferred back to checking in 2-3 business days.