Personal Finance Stack: Portfolio Simplification Progress for 2024

I recently found a handwritten note from early 2024 that outlined my goals to “SIMPLIFY!” my portfolio. The overall idea was to make things easier for my spouse to manage in case something happened to me. Even though I still have a rat’s nest of accounts overall, I wanted a streamlined “Core” group of accounts that held 99% of my portfolio. Here’s the current state of the investment side of my personal finance stack.

Vanguard. Vanguard still holds the majority of my investment portfolio, while at the same time has the least amount of transaction activity. The idea is to let it just grow, but also to avoid the need to deal with customer service. Vanguard has the best cash sweep if you don’t use automatic dividend reinvestment. I also want to give the new CEO a bit of time to see how things go.

In 2024, I did convert all my mutual funds into ETFs, so they are easily portable if I do want to move assets. In addition, perhaps the slightly lower ETF expense ratios will make a difference.

Fidelity. Fidelity holds the 2nd-largest total balance, and is where I keep my high-touch accounts. My Fidelity Cash Management Account (CMA) handles most of my monthly cashflows (direct deposit in; BillPay out). My Solo 401k with the manual contributions and ability to buy individual TIPS/Treasuries. My self-directed account with individual stock holdings. In the future, I plan on opening any custodial accounts for kids there.

TreasuryDirect (Sold all Savings Bonds!). A major reason to sell was to achieve simplification and no longer be reliant on the customer service of TreasuryDirect, mostly in for estate planning scenarios. In addition, their policy states that if my account is hacked, they maintain zero liability for any losses. I will miss the additional effective tax-deferred space of savings bonds, but it just wasn’t worth the additional hassle. I just don’t see things improving there in the future, it feels more like gradual decay. This was my 3rd largest balance.

Many of these savings bonds had fixed rates in the 0% to 1%; only a few were at higher fixed rates. The proceeds were reinvested into long-term TIPS (bought/held at Fidelity) with real yields of 2% to 2.6%. Finally, it worked out because the capital gains from this sale were offset from capital losses harvested from selling a bond fund previously when rates rose. (I did an ETF swap to harvest the tax losses while maintaining a similar bond holding without incurring a wash sale.)

Robinhood (setback!). In an unexpected setback for simplification, I ended up transferring my Vanguard IRAs to Robinhood in 2024 due to their 3% transfer promo. When the 5-year hold ends, my plan is to move them to Fidelity unless there is another lucrative offer. This was a new brokerage account to track, but I just couldn’t turn down an additional ~$18,000 in Roth IRA balances.

Utah My529. Thanks to some big early contributions and a very aggressive asset allocation, this is now my next largest investment account, although theoretically it should be completely obliterated within 12 years or so when the tuition bills hit. I consolidated 529 plans several years ago; it can be a lot of paperwork but it’s nice to have everything at one place. Utah seems to be on top of the game for 529 plans.

Bank of America/Merrill Edge to US Bank swap? I keep $100,000 in brokerage assets at Merrill Edge in order to qualify for the Bank of America Preferred Rewards Tier which essentially gets me a flat 2.625% cash back on all my purchases. However, in 2024, US Bank debuted their Smartly credit card that offers up to 4% cash back, also if you keep $100,000 in asset at their brokerage arm.

Should I set up yet another new account at US Bank to take advantage? Should I then close down BofA/Merrill Edge to offset? The problem is that I’m not convinced that US Bank will keep the 4% cash back for very long. US Bank has a history of rolling out new products and then shutting them down abruptly. On the other hand, they also have a history of sometimes keeping the existing perks for grandfathered customers. So maybe it’s best to get in early? Simplification vs. optimization. I didn’t take any action in 2024.

Honestly, as the now-5th largest balance, the BofA/Merrill Edge is the account that I should probably get rid of next, but it’s been so reliable with minimal hassles. I don’t like to mess with what works.

401k Custodians (consolidated with direct 401k-to-401k transfers). These are pre-tax accounts, so I didn’t want to go 401k-to-IRA since then I would have Pre-tax IRAs which would complicate my Backdoor Roth IRA conversions. This makes one less place I have to track my investments. Eventually, if/when our marginal tax brackets are lower, I’d plan to convert some of these accounts to Roth IRAs.

Final score: Two accounts closed (TreasuryDirect and 401k), one account opened (Robinhood).