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@dtconroe : With your last comment it leads me to ask, what % are you receiving for your $15K deposit & I'm taking it to mean saving, MMF, or checking account ? My bank offered to move MMF at a higher rate if I opened checking account paying .01% I put $100 in checking & there it sits. With rates falling I need to make a move of some kind as MMF is down to 1.7% as of Dec. !!
Derf, I am not yet a member of Kelley Credit Union, but If I do invest in their Share Certificate/CD, my $15,000 requirement would be fully covered by the 4.5% CD. I have no existing plans to have significant amount of money in their other products, but a minimum investment in a checking account, would likely be my other investment, along with a debit card, and the $15,000 would also be met by my taking out a Car Loan to replace my wife's 2010 Chrysler minivan--we love that minivan!
- There is a shared network of brick and mortar CUs so that you can conduct some transactions in many locations (if your CU participates) even though individual CUs tend to have small footprints. https://www.coop.org/Solutions/Engage/Co-op-Shared-Branch
- As Yogi noted, some CUs are privately insured through ASI. In 2002, Patelco moved to ASI, though five years later, it returned to NCUA. In 2002, ASI covered deposits up to $250K while NCUA coverage was limited to $100K (it's now $250K). Differences between ASI and NCUA can be more than just private vs government backing.
It looks to me that a big CU is a better choice for safety. I use Penfed for their credit cards. It is federally insured by the National Credit Union Administration. I would not select a small CU for large amounts of Certificate of Deposit to get a small extra %. It's similar to MM. In a very risky market, I have used Fed MM and not the highest paying MM who can be locked.
- There is a shared network of brick and mortar CUs so that you can conduct some transactions in many locations (if your CU participates) even though individual CUs tend to have small footprints. https://www.coop.org/Solutions/Engage/Co-op-Shared-Branch
- As Yogi noted, some CUs are privately insured through ASI. In 2002, Patelco moved to ASI, though five years later, it returned to NCUA. In 2002, ASI covered deposits up to $250K while NCUA coverage was limited to $100K (it's now $250K). Differences between ASI and NCUA can be more than just private vs government backing.
msf, I failed to mention that Kelley Credit Union stated that in addition to the $250,000 NCUA deposit insurance, per account, per owner, identical to FDIC, they also have an additional insurance coverage through a private insurance company, that doubles the NCUA/FDIC deposit coverage. How many banks do you think do that?
It looks to me that a big CU is a better choice for safety. I use Penfed for their credit cards. It is federally insured by the National Credit Union Administration. I would not select a small CU for large amounts of Certificate of Deposit to get a small extra %. It's similar to MM. In a very risky market, I have used Fed MM and not the highest paying MM who can be locked.
FD, I have other "agendas" going on here beside the attractive Share Certificate/CD offering. I am trying to develop a "process" of setting up some local resources for my wife to use, in case I die and my wife needs to deal with financial life, in my absence. My wife hates investing, but loves CDs from experiences managing her parents CDs when they were at end of life. At the Kelley Credit Union, they happen to have a licensed Financial Advisor she would trust, because he is the son of an old friend she use to work with. For my own piece of mind, and to address some increasing anxiety my wife has with how to handle financial resources in my absence, this is a viable plan for her to learn more and be prepared to be successful without me.
These threads often have a lot more unique individual issues that impact each poster/investor, than just what asset products to use or not use, or what investing strategy will be the most productive.
One should avoid bank or CU financial advisors. They typically have high commissions & push a narrow group of products or firms' own products.
A general salaried advisor at Fido or Schwab may offer better free, no obligation opinions.
Use banks or CU for banking services. Use brokerages for brokerage banking services.
Probably valid observations "in general" but would not work for my wife, in times of bereavement, in Tyler, Texas. I have to work with the cards I am dealt, including my wife's rigid resistance to travel 2 hours, to meet a stranger at a brokerage, that she has no history with. I have an opportunity to use this specific Financial Advisor, who my wife knows and trusts, and that has a much greater odds of succeeding. We can talk in generalizations all day long on these threads, but individual posters have to decide on what will work, for their specific circumstances
Use banks or CU for banking services. Use brokerages for brokerage banking services. Why not use a brokerage for banking services?
In 1977, Merrill Lynch took a gamble with a concept known as a CMA (cash management account). This blending of banking and broker services into a one-stop-shop for financial services ...
You're not going to get a safe deposit box or take out a loan at a brokerage. But for your basic cash management and notary services, ISTM a brokerage can do just as well. And by using a brokerage for these services, that's one less account to have to deal with.
Actually, we do. Schwab Bank is very convenient as an adjunct to Schwab Brokerage. Very easy to transfer money back and forth and also very easy to keep track of our checking account. Frictionless instant transfers.
All of our pension and SS income is automatically deposited at JP Morgan. By transferring money on an automatic scheduled basis from JPM to Schwab Brokerage there is no delay in access. Then an instant transfer to Schwab Banking with no delays. Works for us.
Actually, we do. Schwab Bank is very convenient as an adjunct to Schwab Brokerage. ...
What I had in mind was skipping the bank altogether and just using the brokerage. One less account to worry about, no "bucket brigade" to move money from an outside institution to Schwab brokerage and from there to Schwab Bank.
I had no idea about that option. However, for our purposes I prefer to keep the brokerage cash account and the checking account separate (but both accessible from the brokerage page). It's hard enough to watch two separate accounts with respect to moving money between the cash account and MMKT or Fixed Income without having to worry about checks in that mix also.
Wishing you a very good new year, @msf. Thanks for all that you do here.
I can endorse CU as financial institutions, especially for their excellent customer service. I have dealt with them over the years. I never had large enough invested with them to worry about their balance sheet or how NCUA works. It seems they get into trouble far less than regional / community banks. Do your DD.
In the interest of full disclosure, I stopped doing business with them when cyber attacks of US businesses became more prevalent. Just my luck, a few years after I closed my account, Patelco CU had a cyber attack and my info was compromised.
I bill pay and use Fidelity brokerage like a checking account. I do not have their CMA. I am not sure why I need a bank account, which I do not use for anything these days. Wires are free too.
Fidelity has had bill pay/checking in its "regular" brokerage accounts for decades, so there weren't many reasons to move to, or add, a CMA account when Fidelity introduced that.
Though the CMA account does have a few unique or different features: FDIC bank sweep (optional; also available for IRA accounts), Cash Manager (like overdraft protection), and full reimbursement for ATM surcharges. Only Premium ($500K AUM) and above customers get reimbursed ATM surcharges in "regular" Fidelity accounts.
In reading the various recent posts regarding banks and brokerages, I assume everyone's spouses have the skill sets, to do all the financial transactions online, without your direct assistance? With regard to Schwab, there is no local Schwab office where we live, so everything related to Schwab is online activity. When I have attempted to "train/educate" my spouse to be able to conduct online activities, she gets frustrated and upset, because it is not simple to her. Her response to my educational efforts with her is: "Just write it down and if something happens to you, I will try to call the toll free number and do my best to figure it out". We do have a designated person with Schwab, that we can contact for our Schwab account, and he has requested that we visit him at his office, to discuss brokerage account details--he is located 2 hours away in Dallas, in a very congested setting. Making a 4 hour round trip drive to Dallas to meet and talk to this Schwab representative is not a very appealing activity for my spouse or me.
My spouse is "old school", familiar with brick and mortar banks that are close and convenient, with a real person she can visit and talk with regarding financial matters. Doing that online is intimidating to her, is complicated to her, and it is scary to her. But everyone's situation is different, and maybe your spouses are comfortable and able to do that online independently, without your assistance when necessary.
@dtconroe, I remember discussing this some years ago. At the time, you had indicated that Fido office was 2 hours away in Dallas, but there was a 2-3 person local Schwab broker/office - did that close?
In reading the various recent posts regarding banks and brokerages, I assume everyone's spouses have the skill sets, to do all the financial transactions online, without your direct assistance? With regard to Schwab, there is no local Schwab office where we live, so everything related to Schwab is online activity. When I have attempted to "train/educate" my spouse to be able to conduct online activities, she gets frustrated and upset, because it is not simple to her. Her response to my educational efforts with her is: "Just write it down and if something happens to you, I will try to call the toll free number and do my best to figure it out". We do have a designated person with Schwab, that we can contact for our Schwab account, and he has requested that we visit him at his office, to discuss brokerage account details--he is located 2 hours away in Dallas, in a very congested setting. Making a 4 hour round trip drive to Dallas to meet and talk to this Schwab representative is not a very appealing activity for my spouse or me.
My spouse is "old school", familiar with brick and mortar banks that are close and convenient, with a real person she can visit and talk with regarding financial matters. Doing that online is intimidating to her, is complicated to her, and it is scary to her. But everyone's situation is different, and maybe your spouses are comfortable and able to do that online independently, without your assistance when necessary.
Good point. My guess would be that 90% or more of the public lacks the skill-set evident regularly on this forum. I’m convinced that a few here trade C/Ds, stocks & ETFs in their sleep at night. Things not only your wife but most would be uncomfortable doing. Certainly there is a wide variance here as well - but most would appear far above the norm.
When I bought a new car a month ago, at first the local dealer balked at taking a check written on my Fido C/M account, preferring funds be wired. But it was the last day of the month (Saturday) and they were pushing to get the car out, so broke their house rules and accepted the check. Gosh - haven’t run into this before. I’ve never wired funds (at least in recent memory). I’d imagine it can be done online but might take an extra day?
I don’t write checks on the Fido C/M often. Mostly for large purchases, taxes, home infrastructure. I also keep a bit of cash in a TOD account at Fido just so I can keep the “invested” cash (part of overall portfolio) separate from that earmarked for near term expenses. Could be done on paper, but simpler this way. Easy to move the $$ back and forth. Up until a few months ago Fido defaulted cash into a lower interest rate offering. I think it was an FDIC insured bank account. But thanks to @msf’s comments and those of others here we have learned that there is now a way to bypass that default setting and have C/M and TOD accounts kept in a higher yielding money market fund.
@dtconroe, I remember discussing this some years ago. At the time, you had indicated that Fido office was 2 hours away in Dallas, but there was a 2-3 person local Schwab broker/office - did that close?
Yes, it closed, and all the Schwab Account information was reassigned to a "new" personal account representative in the Dallas area. We had switched from a Fido office in Dallas, to the Schwab office in Tyler, for access and convenience for my wife. My wife was very willing to make the 10 minute drive to the Tyler Schwab office, to meet staff, and know who to meet with when necessary. When Schwab closed in Tyler, I was back to the same predicament we had with Fido. That is very frustrating regarding brokerage services for my wife, and I sure am not going to switch my local banking services to Schwab and further complicate financial access and convenience issues for my wife.
I may be more obsessed with a financial system, that is user friendly for my wife, than others are. If something happens to me, I don't want to leave an emotionally distraught spouse, struggling with a financial arrangement that is online, scary, and intimidating for her. I keep banking local and enough money in local banks, so she can take a 10 minute drive to the bank, and ask a local bank representative to "help" her make necessary changes to reflect my demise. She can't do that easily with Schwab, does not have the online skills to handle that, and does not want to make a 4 hour roundtrip drive to a Dallas office in very congested traffic.
DT, you know I like and respect you, but often it boils down to your wife and extremly limited options in a 10-mile radius. What would happen if there was only one lousy bank and nothing else? I think the best choices long term are mutual funds. If I'm gone, my wife has to drive to the local Schwab and meet with our local rep so he can sell all other funds and do the following. Another possibility could be that I grow old and decide to implement it anyway. I can do it all online.
I'm not letting any bank (even not BofA + Merrill) or CU hold my money except 3-6 months cash.
In order to make my wife's investment decisions easier, I set up a written plan for her to invest in only 3 funds. I only trust 2 choices indexes + Vanguard funds managed by Wellington for long term hold. Wellington Management is the oldest, it's conservative, team style, and not one dominant manager, with a very cheap expense ratio. Since our money isn't with Vanguard, we would have to own the more expensive funds(not Admiral), but it's still cheap. For a younger age, until age 75 and still having a taxable account...50% VWINX(40/60)...taxable=20% VWAHX(HY Muni)...30% VSMGX (60/40 invested in 2 US + 2 international indexes). Since HY Muni bonds are hybrid, this portfolio is more like 40/60. Older than 70-75 or taxable account is gone: 40% VWINX(40/60)...30% VWEHX(HY Corp)...30% VSMGX(60/40). Since HY Corp bonds are hybrid, this portfolio is more like 35/65(stocks/bonds). As long as I'm managing the portfolio, I will be using my style.
DT, you know I like and respect you, but often it boils down to your wife and extremly limited options in a 10-mile radius. What would happen if there was only one lousy bank and nothing else? I think the best choices long term are mutual funds. If I'm gone, my wife has to drive to the local Schwab and meet with our local rep so he can sell all other funds and do the following. Another possibility could be that I grow old and decide to implement it anyway. I can do it all online.
I'm not letting any bank (even not BofA + Merrill) or CU hold my money except 3-6 months cash.
In order to make my wife's investment decisions easier, I set up a written plan for her to invest in only 3 funds. I only trust 2 choices indexes + Vanguard funds managed by Wellington for long term hold. Wellington Management is the oldest, it's conservative, team style, and not one dominant manager, with a very cheap expense ratio. Since our money isn't with Vanguard, we would have to own the more expensive funds(not Admiral), but it's still cheap. For a younger age, until age 75 and still having a taxable account...50% VWINX(40/60)...taxable=20% VWAHX(HY Muni)...30% VSMGX (60/40 invested in 2 US + 2 international indexes). Since HY Muni bonds are hybrid, this portfolio is more like 40/60. Older than 70-75 or taxable account is gone: 40% VWINX(40/60)...30% VWEHX(HY Corp)...30% VSMGX(60/40). Since HY Corp bonds are hybrid, this portfolio is more like 35/65(stocks/bonds). As long as I'm managing the portfolio, I will be using my style.
FD, what you and your wife do in the future is a private and personal issue, that you will have to resolve. Other poster opinions will be based on their unique situations. I am absolutely sure, my wife and I will go down our own unique path, and I am absolutely sure my wife would not be willing to tolerate a "written plan" that involved mutual funds that "I" trust, or would tolerate. She will live her life, with "her" tolerances, and based on some arrangement that she accepts. The type of situation that she most often quotes to me, is that of what several of our lifelong close friends have--they have a "financial advisor" who works for an investing firm. Our friends do not have the investing skills to perform self-directed investing decisions. My wife will need a professional to hold her hand, attempt to meet her financial wishes, and try to avoid investing decisions. Our friends will be her "support system", and I will be a "cherished memory" who is not available any longer to help her.
Now, the current topic has become the idea that it would be good to have all banking activities rolled into the brokerage umbrella that we have developed with Schwab. I know my wife, I know her needs, I know her frustration level, I know her financial skills, and I know what she would prefer. All she knows is banking activities, tied to local brick and mortar banks, located close to our residence. That is what our friends do with their banking as well, including a friend who uses Schwab for his investments. My wife would be very resistant if I tried to impose online banking, through Schwab brokerage. Others know what will work for them, maybe very different than my situation with my wife--that is fine and none of my business.
If it seemed like I was pushing you to bank at a brokerage, I apologize. I was responding to a statement that banking should be left to banks. Since some brokerages capably provide most banking services, then if one's brokerage is convenient and if one is comfortable with this idea, banking and investing through one institution can simplify things.
FWIW, I see there is a fee-only advisory firm (via NAPFA) in Tyler that can work through Schwab. This is just a suggestion of something to explore if you haven't done so. Tyler does seem to be rather removed from much of the financial industry so as you stated, there aren't many options for face-to-face transactions.
That's not to say it is impossible to find a financial advisor at a bank who meets your needs. Just be careful. Given the stringent constraints you're working with (geography, wife's capabilities, comfort level, interest in brick and mortar) it sounds like you're doing the best you can.
Comments
- There is a shared network of brick and mortar CUs so that you can conduct some transactions in many locations (if your CU participates) even though individual CUs tend to have small footprints.
https://www.coop.org/Solutions/Engage/Co-op-Shared-Branch
- As Yogi noted, some CUs are privately insured through ASI. In 2002, Patelco moved to ASI, though five years later, it returned to NCUA. In 2002, ASI covered deposits up to $250K while NCUA coverage was limited to $100K (it's now $250K). Differences between ASI and NCUA can be more than just private vs government backing.
I would not select a small CU for large amounts of Certificate of Deposit to get a small extra %.
It's similar to MM. In a very risky market, I have used Fed MM and not the highest paying MM who can be locked.
These threads often have a lot more unique individual issues that impact each poster/investor, than just what asset products to use or not use, or what investing strategy will be the most productive.
A general salaried advisor at Fido or Schwab may offer better free, no obligation opinions.
Use banks or CU for banking services. Use brokerages for brokerage
bankingservices.bankingservices.Why not use a brokerage for banking services? https://www.sri.com/press/story/75-years-of-innovation-cash-management-account-cma/
Several brokerages offer cash management services. You can write checks and use a debit card from a Schwab brokerage account - you don't need Schwab bank for this.
https://www.schwab.com/content/how-to-order-new-debit-credit-card
You're not going to get a safe deposit box or take out a loan at a brokerage. But for your basic cash management and notary services, ISTM a brokerage can do just as well. And by using a brokerage for these services, that's one less account to have to deal with.
Actually, we do. Schwab Bank is very convenient as an adjunct to Schwab Brokerage. Very easy to transfer money back and forth and also very easy to keep track of our checking account. Frictionless instant transfers.
All of our pension and SS income is automatically deposited at JP Morgan. By transferring money on an automatic scheduled basis from JPM to Schwab Brokerage there is no delay in access. Then an instant transfer to Schwab Banking with no delays. Works for us.
It seems to be little known, but at Schwab you're supposed to be able to write checks
https://www.schwab.com/content/how-to-order-new-debit-credit-card
and pay bills
https://www.schwab.com/content/how-to-set-up-biller
from a Schwab brokerage account without using a Schwab bank account. You get a whopping 0.05% either way.
I've not tried this (no taxable accounts at Schwab) so I can't attest to whether this actually works.
Wishing you a very good new year, @msf. Thanks for all that you do here.
I am requoting my previous post for reference. I never had any bad experiences with CUs when I was their customer.
Though the CMA account does have a few unique or different features: FDIC bank sweep (optional; also available for IRA accounts), Cash Manager (like overdraft protection), and full reimbursement for ATM surcharges. Only Premium ($500K AUM) and above customers get reimbursed ATM surcharges in "regular" Fidelity accounts.
My spouse is "old school", familiar with brick and mortar banks that are close and convenient, with a real person she can visit and talk with regarding financial matters. Doing that online is intimidating to her, is complicated to her, and it is scary to her. But everyone's situation is different, and maybe your spouses are comfortable and able to do that online independently, without your assistance when necessary.
When I bought a new car a month ago, at first the local dealer balked at taking a check written on my Fido C/M account, preferring funds be wired. But it was the last day of the month (Saturday) and they were pushing to get the car out, so broke their house rules and accepted the check. Gosh - haven’t run into this before. I’ve never wired funds (at least in recent memory). I’d imagine it can be done online but might take an extra day?
I don’t write checks on the Fido C/M often. Mostly for large purchases, taxes, home infrastructure. I also keep a bit of cash in a TOD account at Fido just so I can keep the “invested” cash (part of overall portfolio) separate from that earmarked for near term expenses. Could be done on paper, but simpler this way. Easy to move the $$ back and forth. Up until a few months ago Fido defaulted cash into a lower interest rate offering. I think it was an FDIC insured bank account. But thanks to @msf’s comments and those of others here we have learned that there is now a way to bypass that default setting and have C/M and TOD accounts kept in a higher yielding money market fund.
I may be more obsessed with a financial system, that is user friendly for my wife, than others are. If something happens to me, I don't want to leave an emotionally distraught spouse, struggling with a financial arrangement that is online, scary, and intimidating for her. I keep banking local and enough money in local banks, so she can take a 10 minute drive to the bank, and ask a local bank representative to "help" her make necessary changes to reflect my demise. She can't do that easily with Schwab, does not have the online skills to handle that, and does not want to make a 4 hour roundtrip drive to a Dallas office in very congested traffic.
What would happen if there was only one lousy bank and nothing else?
I think the best choices long term are mutual funds. If I'm gone, my wife has to drive to the local Schwab and meet with our local rep so he can sell all other funds and do the following.
Another possibility could be that I grow old and decide to implement it anyway. I can do it all online.
I'm not letting any bank (even not BofA + Merrill) or CU hold my money except 3-6 months cash.
In order to make my wife's investment decisions easier, I set up a written plan for her to invest in only 3 funds. I only trust 2 choices indexes + Vanguard funds managed by Wellington for long term hold. Wellington Management is the oldest, it's conservative, team style, and not one dominant manager, with a very cheap expense ratio. Since our money isn't with Vanguard, we would have to own the more expensive funds(not Admiral), but it's still cheap.
For a younger age, until age 75 and still having a taxable account...50% VWINX(40/60)...taxable=20% VWAHX(HY Muni)...30% VSMGX (60/40 invested in 2 US + 2 international indexes). Since HY Muni bonds are hybrid, this portfolio is more like 40/60.
Older than 70-75 or taxable account is gone: 40% VWINX(40/60)...30% VWEHX(HY Corp)...30% VSMGX(60/40). Since HY Corp bonds are hybrid, this portfolio is more like 35/65(stocks/bonds).
As long as I'm managing the portfolio, I will be using my style.
Added, 27appears wrong, realized $1.50 - unrealized $12.44
Now, the current topic has become the idea that it would be good to have all banking activities rolled into the brokerage umbrella that we have developed with Schwab. I know my wife, I know her needs, I know her frustration level, I know her financial skills, and I know what she would prefer. All she knows is banking activities, tied to local brick and mortar banks, located close to our residence. That is what our friends do with their banking as well, including a friend who uses Schwab for his investments. My wife would be very resistant if I tried to impose online banking, through Schwab brokerage. Others know what will work for them, maybe very different than my situation with my wife--that is fine and none of my business.
DSDF, Derf
FWIW, I see there is a fee-only advisory firm (via NAPFA) in Tyler that can work through Schwab. This is just a suggestion of something to explore if you haven't done so. Tyler does seem to be rather removed from much of the financial industry so as you stated, there aren't many options for face-to-face transactions.
People have been suggesting alternatives because bank-affiliated advisors may wind up costing more than independent advisors, in terms of fees, in terms of limited offerings, in terms of recommendations (conflicts of interest). Here's an old Forbes opinion piece that goes into this.
https://www.forbes.com/sites/robrussell/2016/01/18/should-you-trust-a-bank-with-your-investments/
That's not to say it is impossible to find a financial advisor at a bank who meets your needs. Just be careful. Given the stringent constraints you're working with (geography, wife's capabilities, comfort level, interest in brick and mortar) it sounds like you're doing the best you can.