I have all my investments through one investment company. Should I be using multiple investment companies?
April 9, 2010 by
Filed under investment companies
This is a diversification question. Is there any risk in having all your money in Fidelity or Vanguard? Should I be in multiple companies?
not necessaarily but you may want to diversy your portfolio and not put all your eggs in one basket. Fidelity and Vanguard are respected companies.
You would need to see what your fund invests in rather than the fund name. SO if you have a Fidelity Tech fund and a Vanguard High Tech fund and they have the same holdings, then you really aren’t that diversified.
These nationally known brokerage companies have backups of all their records stored off site in a very safe place, in case of their office buildings are destroyed. In case of employee fraud, they also have insurance for each customer’s account up to around $30 million. IMO its safe to leave it all in one.
If you mean portfolio diversification, these firms are also OK on that account. They have many different type of funds and are NOT at all like Janus funds during the late 1990 when most of their funds invested in the same 50 or so high risk tech companies..
It’s not a bad idea, I’m sure your money is safe no matter what but even the Titanic sank despite being built undestructable.
There is a very slight benefit in having investments in more than one company the way I see it. Identify theft. Suppose you have all your assets in investment company “A” and someone steals your identity and empties out your account you would still have money in investment Company “B”.
Another benefit is products and services can be different. Vanguard is great for index funds. Fidelity has a better cash management account.
Beyond two and it gets too hard to manage and you get buried in paperwork.