Having too many open investment accounts was never a problem that I ever fathomed facing. I don’t think that I have too many active accounts right now, but presumably the longer we remain investing, the more confusing accounts we will end up with.
Over time, I find myself signing up for accounts whenever custodians end up offering savings or cash back. I think that I started my E-Trade account years ago when they offered $100 for signing up and a few discounted trades. I opened a Fidelity account when my residency offered a 401k/403b plan. I had another 401k custodian through an employer that lasted for a year. When I finally became more educated on index funds, I opened a Vanguard account. I went back to Fidelity when they offered some airline miles and marginally lower expense ratios. I’ll probably open a Schwab investment account in the future since they now advertise expenses even lower than that of Vanguard and Fidelity.
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It’s also easy to rack up bank accounts. As a student, I opened quite a few bank accounts for minimal bonuses like a free mp3 player, $100, or free tickets. Was it worth my time then? Absolutely. I had a negative net worth with essentially no income. I even had to shuffle around my money to make the minimum balance requirements. It was worth spending my free time to get “free” stuff. Is it worth it now? Probably not, unless the sign-up bonuses are huge. I still have most of my old bank accounts open, but it’s relatively easy to manage since I have very little money in most of them. I don’t receive any 1099 interest forms at the end of the year, so I don’t really have to track them during tax season.
Fixed income deposits like CD’s also result in accumulation of excess accounts. Some banks require you to sign up for a savings account so that any interest accumulated can be deposited into an account outside of the CD. Other banks allow you to keep open a CD by itself without ancillary accounts. As you get older, you will inevitably open accounts, whether through the Treasury, banks, or even brokerage firms.
I have about twenty accounts of some sort under my name, including one from Macy’s that I opened while in college. It is too much that I can’t handle? Not yet, but it is becoming more difficult to track, especially when I get occasional mailings from banks that I have no recollection working with (yes, that is also a factor from age)!
It all of this worth it in the end? I still think so. I squeak out some marginal earnings that I otherwise would not have, and over my working career, I will likely squeeze out a few extra bucks. Once my CD’s start maturing, and these banks no longer offer great deals for renewing fixed income vehicles, I’ll start transferring out my funds and shutting them down. I still keep track of my accounts through Personal Capital, which does require some maintenance (I hate the login failures).
Do you have a threshold for the number of open accounts to deal with?
(Photo courtesy of Flickr)