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Retirement Discussions / Retired Fools
|Subject: Re: opinions requested||Date: 12/21/2002 7:49 PM|
|Author: TheTortoise||Number: 8238 of 19027|
Lucy and all,
When I retired, I went through the same simplification/consolidation procedure for my financial accounts as you are doing. After extensive comparison, I put everything into one account with TD Waterhouse (TDWH), and have been quite satisfied for more than four years. Not only have I never paid them a cent in service charges, but they pay me money market interest rates on my checking account, and I earn free trades. Here's my system.
All of my investments are in a TDWH brokerage account. I have the dividends automatically deposited to the attached cash sweep account which earns money market rates. I selected their government money market because this is my safe money. I keep three-to-five years living expenses out of the stock market, in this cash account. (Yes, I know I might eke out a slightly higher return by putting some of it in bonds, but I prefer the simplicity of having just stocks and a government money market.)
TDWH lets me write unlimited checks for free from my brokerage cash account, earning money market rates, and this is the only checking account I need. They also give me a VISA debit card for the account, which I use to get cash from ATMs. Although TDWH doesn't charge an ATM fee on their end, most machines do. But my Whole Foods Market, where I buy most of my groceries, has a free ATM, so that's where I get my cash.
In line with keeping things simple, I keep just one credit card--a TD Waterhouse VISA. I put everything on it, and pay it off every month online, through direct debit of my brokerage cash account. For every $2,000 I charge, Waterhouse gives me a free trade.
Speaking of trading costs, my TDWH commissions are lower than they would be at Schwab, Fidelity, or Vanguard. With assets less than $250,000, online market orders are $17.95; with more than $250,000 in combined TDWH accounts, online market orders are just $12.
My checking/brokerage account is online, so I can go in daily and check that everything is in order. And I can download my end-of-month and end-of-year statements from the website. One complaint I do have, though, is the complexity of the monthly statements. Mine are five or six pages long, and the format could definitely stand some simplification.
I also use the free bill payer service, though this is another area I would improve. The bill payer is a service of TDWH bank, which is a separate entity from TDWH brokerage. To get the free bill payer, I had to open an account with TDWH online bank. The bank charges no fees or service charges to brokerage customers, and I'm able to transfer money back and forth between brokerage and bank accounts online. I go in once a month and transfer just enough from my brokerage account to my bank account to pay my bills and wind up with a zero balance in the bank account. I have no need of this bank account since the brokerage account does all the same things for me, and pays higher interest. It just generates an extra monthly statement, and I wish the brokerage would offer their own bill payer. (If I didn't have arthritis in my hands, I'd just write the checks myself.)
Wherever possible, I pay my bills automatically, by putting them on my VISA to earn free trades, or by direct debit of my TDWH brokerage cash account. Currently I'm able to pay all of my insurance this way--health, auto, home, liability--as well as my local phone, long distance, ISP, and VISA. Eventually, I think we'll be able to pay everything by direct debit, and won't need a bill payer service. (What a wonderful time to be alive.)
One last thing I enjoy about my TDWH brokerage account--it is a transfer on death (TOD) account. This is a magnificent estate planning tool which will allow my heirs to avoid probate altogether, without the hassle and expense of a living trust. Some states prohibit this probate avoidance feature, but fortunately mine does not.
Anyway, this is how I keep my finances simple, and I wasn't able to find this particular package of services and low costs anywhere else.
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