Investing: Streamline Your Investments

By Ryan Ermey | October 6th, 2017


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Corralling a significant portion of your assets in an all-in-one fund can simplify your financial life.

For example, Fidelity Four-In-One Index Fund (symbol FFNOX), an asset-allocation fund, holds four Fidelity index funds, with an overall mix of 85 percent of assets in stocks and 15 percent in bonds. The fund charges 0.11 percent of assets annually for a portfolio that includes stocks of large, midsize and small U.S. companies, shares of foreign companies in developed markets, and corporate and government bonds. Vanguard Star Fund (VGSTX) is more conservative, with 60 percent of the portfolio in stocks and the rest in bonds. Star invests in 11 actively managed Vanguard funds and charges 0.32 percent.

Target-date funds, like asset-allocation funds, hold a diversified portfolio of stocks and bonds, but they shift toward a more conservative asset mix as you approach retirement age. Vanguard and T. Rowe Price both offer solid, low-fee options.

Investors who are more hands-on can build a diversified portfolio on the cheap with exchange-traded funds. Just two Charles Schwab ETFs – US Broad Market ETF (SCHB) and US Aggregate Bond ETF (SCHZ) – give you a piece of some 2,000 stocks and 3,200 bonds. The funds charge expense ratios of 0.03 percent and 0.04 percent, respectively.

Putting all your investments in one basket could streamline your recordkeeping by making them easier to track (no more multiple statements) and reduce the paper trail at tax time. But be careful. If you transfer assets out of a taxable account, for example, watch out for tax consequences, transaction fees or transfer charges. You can avoid most charges by transferring assets “in kind” to the new account, but if you have to sell shares in a mutual fund your new firm doesn’t offer, you could trigger a commission or redemption fee – and a tax bill. If you roll 401(k) funds into an IRA, your company may send you a check payable to the new firm. If you fail to deposit it within 60 days, you’ll owe income tax on the money plus a 10-percent penalty if you’re younger than age 55.

If consolidating makes sense, choose a firm that charges low fees and has services you’ll use. Fidelity, for instance, offers more than 3,700 mutual funds without a load or transaction fee, and it sports a wide range of advisory and retirement-planning services. If your assets are difficult to move, consider aggregating them virtually, with an online investment-management tool such as Personal Capital. The site lets you link your investing accounts and analyze your whole portfolio on a single dashboard.


Ryan Ermey is senior reporter at Kiplinger’s Personal Finance magazine.

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