Are you a squirrel?
Squirrels bury food that they can’t eat at the moment into a large number of holes for use later. If you have money put away for future use that’s spread out across a variety of accounts, you might be a financial squirrel.
I’ve always known that I have a lot of different accounts, but for some reason it finally sunk in. I have accounts at the following places:
– a local credit union (one savings account)
– FNBO Direct (one savings account)
– ING Direct (six savings accounts and four CDs)
– Zecco (one brokerage account and one traditional IRA. I love Zecco.)
– Janus (one Roth IRA)
– Wells Fargo (two checking accounts)
That’s 17 accounts at 6 different institutions! And that’s AFTER I made an effort to cut back. (I used to also have multiple accounts at the credit union, an account at HSBC, an account at UFB Direct, plus some others.)
I’m pretty sure that I’m still forgetting about an account or two, which is sort of the point of this post. You see, squirrels also sometimes forget where they buried things. The nuts sprout into oak trees instead of being eaten. Good for the tree, not so good for the squirrel.
If you do have multiple accounts, be sure that they are serving a particular purpose, and that you’re not just hanging onto them out of habit. (I actually actively use all of the accounts above, except for the credit union.) Otherwise it can be too easy to forget about an account or to begin accruing inactivity fees (in some cases) that will wipe out your money. It’s also important to let a trusted person know about the accounts, and have instructions for accessing them in the case of an emergency.
I’ve never heard of Zecco, do you have an article about it?
Is it difficult to keep track of all the accounts spread out through multiple institutions? Do you worry about spreading it out too thin? I understand you want to diversify and not have it all in one place, but what’s the limit, and what’s the reason for you to go out to so many different places?
I’m a squirrel! I only have my money at two banks… so I’m good there, but man oh man I have a lot of accounts.
Katharine, I don’t have a post specifically about Zecco, but that’s a good idea. But it’s an online brokerage account. I buy stocks through there, and have my traditional IRA there.
Craig, no, it’s not difficult to keep track of the accounts through multiple institutions. I have a spreadsheet with all my accounts & stuff on it. Although it is kind of a pain to update my net worth, and to print out statements or file them when they’re mailed to me. I dislike the paperwork part of it. But that’s only once a month.
I’m not really doing it to diversify, it’s more like…I’m easily distracted. I see a good deal and think oooo let me try that! and then before I know it I have elventy billion accounts. I only keep the ones I really like or that I have a specific reason for keeping. Except now that I think of it, I have a couple more brokerage accounts that I’d like to get rid of because they aren’t the ones I like best. But in those cases I’m kind of stuck with them because there are fees to transfer the money out that pretty much outweigh the small amount of money I have in them. So I’ll just keep them.
Let’s see my accounts
I have a WAMU checking account
I WAMU sweep savings account
WAMU sweep account
WAMU CD
ING two savings accounts
FNBO Direct savings account
FNBO Direct bill pay account
PenFed CD’s two
Two US I savings bonds
I have closed some accounts as well. But I think that is all of mine.
To answer the person who asked you a question above……for my reasons…
I opened the ING account orginally and got the better interest rate and the $25 bonus…..I split it into to accounts…one for saving for a downpayment for a car , the other e-fund. I’ve kept it open, as my children have accounts tied to my accounts.
The I bonds are long term savings, that would only be broken in a true emergency
Same with the Penfed CD’s…they are earning over 6% interest…and are 3 year CD’s….
FNBOdirect is my escrow account…I transfer $ from checking each month into their, for house insurance, taxes, etc.
My CD’s and sweep account at WAMU earn over 5% interest that’s why I have them.
The online savings account with WAMU is short term emergency funds—I need the $ right away…..
I try to keep my accounts at a minimum.
For me, convenience and being organized sometimes outweigh getting a better rate at another bank.
That’s way too many accounts, but we have a few ourselves:
Checking at BoA
Brokerage and IRA at eTrade
Money Market accounts at HSBC and ING
Investing at Vanguard
529 at Morgan Stanley
IRA at Vanguard
Roth IRA at Vanguard
and of course a couple of 401k’s at Fidelity…
Too many…
I’ve always wondered about the impact on compounding interest of multiple accounts. At some point, I should set down and figure it out. Basically, I wonder–are you losing money by having several smaller pools of money instead of just a few large accounts? I suspect if folks who chased after $25 “bonus” deposit offers, etc. had placed all their funds in one savings account instead of several small ones, they would have made far more than the $25 in interest based on the compounding factor.
ConsciouslyFrugal, it makes no difference mathematically, if the interest rates are the same. Mine are pretty close.