For someone who likes to blog about how simple becoming financially independent is, and claims that the only accounts you need are retirement accounts, a checking account, and a brokerage account, my financial life is a little on the messy side. To be specific, I have the following accounts:
- A checking account1Well, technically two, read on…
- A traditional IRA
- A roth IRA
- A taxable brokerage account (this, along with #2 and 3, is with Vanguard)
- Another brokerage account (Robinhood)
- A coinbase account
- A CD with Barclays
- Plus the usual accounts to transfer money between family and friends. I use Venmo and Paypal.
What a mess. Writing that down for the world to see is actually quite embarrassing!
So I’ve decided to change it. Lately I’ve started to value simplicity. There’s something satisfying about only having a few accounts that contain only a few investments (e.g. a US stock market index fund, a US bond market index fund, and an international stock fund). It’s easy to track, easy to contribute to, and minimizes any distractions or temptations to invest in what will surely be less effective alternatives.
So why do I have all these accounts? Well, several are relics of an older time when I didn’t quite understand How the Stock Market Works and how a fixed asset allocation can be beneficial. But I’m trying to change that now. A couple years ago I bought some cryptocurrency on a friend’s suggestion, which ended up being profitable but was also quite lucky and a little bit stupid. Now that I’ve gotten rid of that, I can close the coinbase account. Robinhood also needs to go, as it doesn’t really provide any benefit over the Vanguard brokerage. I also recently learned from Frugal Professor about a checking account setup with Fidelity that offers over 2% interest. So I’m switching to that for my checking account, and when my CD expires just holding a little bit of extra cash in the checking account (as an emergency fund) and investing the rest.
In fact, Fidelity also offers IRAs and brokerage accounts with index funds that are even cheaper than Vanguard’s (free vs almost almost free), so you could have everything you need at one institution. I still like Vanguard for other reasons, so for now I’m not switching everything over. Maybe I’ll do a full comparison post at some point.
Of course, there can be benefits to complexity. I currently have 7 credit cards, with no plans to get rid of any of them in the near future. I’m currently writing this post from an airport lounge courtesy of one of those cards! In my opinion, they key is to find where complexity pays off versus where it simply wastes time.
Anyway, it’s almost time to leave for my flight and some more free snacks are calling my name. Until next week!