I have my roth ira, 401k, MSFT stock and some index funds all in my Fidelity. If I want to do more investments would it make sense to move to Vanguards? Is this considered "diversification". #personalfinance #investments
No that is not considered as diversification.
If you're actively trading and a single provider experiencing an outage might prevent you from executing a trade when you really need to, then I'd diversify providers. If you're just holding for years with no intention of needing to trade on specific days, then it's fine to keep everything in Fidelity. Even if Fidelity had an Enron-style failure, everyone's accounts would be purchased by another major brokerage and life would go on without too much trouble. It's not like Fidelity goes out of business so your money just disappears, or you need to seek SPIC restitution. The funds/stocks you hold actually live outside of the company Fidelity itself.
Oh wow, okay. I thought they were with Fidelity itself. That's good to know.
Diversification means to invest in companies in different categories like energy, technology, commodity, etc. keeping all the money in a large well known company is ok.
You mean if I buy Tesla on Robinhood and fidelity and vanguard, my portfolio isn't diversified and is at risk of high volatility? 🤔
Custodian risk is real.
It really depends. Are you making sure to change up the number of rocket ship emojis that you use when talking about your investments at each? Diversify your memes to diversify your dreams 🚀🚀🚀
I think it’s good to compare different brokers. They all have strengths and weaknesses, and some may be better at managing certain types of accounts versus others, etc. But diversification is really about the securities you buy; not the broker holding them for you in custody.
Yes, is a bit more risky to have all your accounts with one provider. No, moving some accounts to other firms isn’t considered “diversification” in the common understanding of the term.
But the marginal risk between 1 provider and multiple providers is low. Fidelity or Schwab or Vanguard is not going to evaporate overnight and take with it all of your investments.
@Banana_Butt, so what is the likelihood of this. I won't retire for another 30 years, a lot can happen between now and then. Fidelity can crumble no?