Fidelity vs. Chuck

[snoopy369]

Originally posted by DaShi


Well, I don't think many people with less than 5k would really be setting up savings accounts.

Not true at all. It's very common for people (like me, say) who are just above the paycheck-to-paycheck line to set up a savings account and put $100-$200 a month in it. That account is then used for larger purchases/expenses (moving expenses, healthcare, etc.) and may not hit $5k for a long time, but is helpful for beginning to save money; and then once wages rise enough to be well above the line, it's helpful to be in the habit of saving money so you don't just go blow it all

Also there are students who get quarterly stipends - helpful to put the $3-4k in the savings and give yourself a monthly 'wage' by auto-transferring $1k a month or whatever. Lets you earn interest and keeps your spending under control

It's very helpful to have accounts like mine (USAA - free savings, instant transfer between check/save) or Orange or whatever that let you transfer quickly and for free, have no minimums, but are there to use when you need them

[Spec]

Easy.



Chuck for president!


Spec.

[DaShi]

Re: Unsafe?

Originally posted by pchang


Ameritrade and eTrade do not have the financial reserves of Fidelity or Schwab. If they hit a rough patch, they may go under or get bought out. This might interrupt access to your funds, but FDIC and SIPC insurance would prevent you from losing your funds (unless you have over $100,000 in any FDIC account or $100,000,000 in any SIPC account).

Well, I'm looking to start a Roth IRA and maybe do some trading later. My current bank gives me about 2% (maybe less now) on my savings and 0.5% on my checking. I was thinking about opening a Roth IRA at Fidelity and moving my savings to E-trade for the interest rate.

[pchang]

Sounds like a plan

except that I like Vanguard better than Fidelity.

[LordShiva]

I opened a Fidelity MySmartCash account. Teh ATM reimbursements (even internationally!) are nice, and with teh Fidelity WorldPoints credit card, I earn 1.5% cashback directly into teh account (for those rare purchases when I can't earn 3% or 5% cash back on my Chase Freedom, Citi Universal with teh grandfathered 5%, or Amex TruEarnings).

Teh interest rate on teh account isn't great at 1.5%, but I found a way around that. Using my MySmartCash balance, I purchased Fidelity's Select Money Market mutual fund, which offers a better interest rate than any savings account out there. Teh best part is, I can now move all of my "checking" money into teh mutual fund, and when I make a withdrawal (by writing a check, from an ATM, through an ACH pull, for buying more funds, etc.), Fidelity checks my MySmartCash account for a balance, and, not finding any, automatically sells enough of my shares in teh fund to cover teh withdrawal. It's completely transparent.

There is a minimum initial investment of $2,500 for teh fund, and for other options like it (including several tax-free funds, which I would have gone with over Select Money Market were I not quitting my job halfway through teh year for b-school). Technically, teh balance isn't supposed to go below $2,500, but from what I've read, Fidelity only checks for this once a year, in November, and that teh true, enforced minimum is $500, and even then, they give you a warning to fund teh account, failing which teh shares are just sold and teh money redeposited into MySmartCash.

[One_more_turn]

When those BBB rated brokers (IB, Etrade, and etc) go under, your assets may very likely be trapped. When multiple creditors fight for the same piece of assets, things can get ugly, as many Refco customers had experienced in 2005.

FDIC is all but a sham: they can let you wait up to 7 years to get your principal back, and if there is major inflation in between, good luck to you.

Fidelity represents the ultmate safe brokerage house because:

1. Its main business is money management, which unlike banks never carries fixed obligations to its customers, and money management is a damn low-risk high margin business.

2. Fidelity doesn't carry any debt. A debt free company cannot go bankrupt.

3. Fidelity is a privately owned company, and is never forced to grow or meet Wall Street estimates. That means it can be managed conservatively and doesn't have to dabble in risky businesses in order to grow. Etrade wanted to grow at any price, went into the mortgage business, and met their demise there.

[Spaced Cowboy]

I've been with fidelity for over 20 years. I had an etrade account at one point (for cheaper trades, and they gave me $50 to open it), but transferred it to fideilty for simplicity of the multiple statements (plus fidelity came way down on the fees).