How to Manage a Large Investment Portfolio

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Managing a large investment portfolio can be complicated, especially if your funds are scattered across several accounts. There are many reasons why this can happen – people change jobs more frequently than they used to, so they may have several employer sponsored retirement plans (401k, 403b, TSP, and similar accounts). They may also have more…

Managing a large investment portfolio can be complicated, especially if your funds are scattered across several accounts. There are many reasons why this can happen – people change jobs more frequently than they used to, so they may have several employer sponsored retirement plans (401k, 403b, TSP, and similar accounts). They may also have more than one IRA, different taxable investment accounts, and other investments. After awhile, managing these various accounts can become a daunting task. Thankfully, there are a few steps you can take to consolidate your accounts to simplify book keeping, better understand where your investments are and how your money is invested, and more importantly, more easily manage these funds. Let’s take a look at this reader question and see how we can put this into action.

Hi, I am 46. My previous employer was recently acquired and I have to decide what to do with the $456,000 balance in my 401k held at ING. I have to decide to roll it into my new 401k plan which is managed by Schwab, or roll it into an IRA. Can I split my rollover between a brokerage firm and mutual fund company? I currently have $96,000 in a self funded IRA at Fidelity and a $20,000 IRA at E*TRADE. I also have $72,000 in an old 401k managed by Wells Fargo. My children have 529 funds in the Utah Educational Savings Plan and Vanguard.  I am looking for some stability within mutual funds and flexibility to buy individual stocks. Also, which do you prefer, Fidelity or Vanguard? Would you also say I am working with too many companies? Thanks.

large investment portfolio
The first step is to simplify your portfolio.

First off, congratulations on your retirement savings! You are well above average and well on your way to a nice retirement. I hope you can continue to meet your savings goals. After taking a look at the nature and number of investments you have, it seems like you can do a little consolidation. This will make your investment portfolio easier to manage. Let’s break this down into bite size chunks:

  • Wells Fargo – $72,000 (old 401k)
  • ING 401k – $456,000 (old 401k, needs to be moved)
  • Schwab – New employer 401k plan
  • E*TRADE – $20,000 (IRA)
  • Fidelity – $96,000 (IRA)
  • Utah Educational Savings Plan – (529 plan)
  • Vanguard – (529 plan)

Let’s start by grouping your funds together by type and looking at your possible goals. We can break these accounts down into two types:

  1. College Savings
  2. Retirement Savings

Let’s attack these one at a time to determine how you can best manage them to reach your savings and investment goals.

Consolidating 529 Plans

The easiest place to start is with your 529 plans. Though one account is easier to manage, there can be good reasons to have more than one 529 plan. Many states, including Utah, allow state residents to make tax free contributions up to a certain dollar amount each year. In most cases, it makes sense to make contributions within your state plan if you are eligible to get the tax credit. Contributions above that amount may be better off in another fund if there are legitimate reasons, such as better investment options, lower management fees, etc. Here is the Utah tax credit limit.

The Utah Educational Savings Plan offers Vanguard mutual funds as one of the investment options. They may not have the exact funds you have in your Vanguard 529 plan, but if they are similar, you may consider rolling your Vanguard 529 plan into your Utah 529 plan to consolidate your accounts and make make your management easier. If you are not a Utah state resident and don’t get any tax benefit from your contributions, then you could consolidate to Vanguard if you prefer their investment options. Take a look at your overall situation, management fees, and other factors before pulling the trigger.

Streamlining Retirement Accounts

managing retirement accounts
It’s easier to manage fewer accounts.

You have two different retirement classes to look at – IRAs and 401ks. Let’s break things down further:

Investment Needs and Goals. Your investment style and investment goals are the primary factors to consider with your retirement accounts. For example, you mentioned you would like to have the flexibility of buying individual stocks. You can do that at almost all of the brokerages and mutual fund houses you mention. For example, you can buy individual stocks at Fidelity ($7.95), Wells Fargo ($8.95), E*TRADE ($7.99 – $9.99), Schwab ($8.95), and Vanguard (variable – as low as $2 with over $500k, or $7 with over $50k, less than $500k). The only one I’m not sure about is ING, but you have to move that account, so it’s a non-issue.

What is important, however, is determining how often you will trade so you can compare these brokerages accordingly. You can open a new online brokerage account and get trades for as low as $3-5 per trade. But I wouldn’t sweat the difference between a $5 commission and a $9 commission if you only trade a handful of times a year. A few dollars a year represents such a small portion of your portfolio that it wouldn’t be worth the overhead of adding a new account to manage. But if you are a high volume trader, then saving a couple bucks per trade could make a big difference in the long run. The commissions at most of these brokerages and mutual fund houses are within a couple dollars of each other, so use the cost of trades as a tie-breaker. The only standout option with the companies you are currently working with is Vanguard, which charges $2 per trade if you have $500,000 or more with them. You could reach that goal by rolling your ING 401k and the Wells Fargo 401k into a rollover IRA at Vanguard. (Note: I previously moved one of my old 401ks into a Vanguard IRA – here are the instructions if you are interested.)

Consolidating IRAs. You currently have two IRAs – one with Fidelity and one with E*TRADE. Is there a specific reason to keep these accounts separate? If you are an advanced stock trader, then I can see the point of keeping an account like E*TRADE open. They have advanced tools for stock research and analysis. If you only need basic tools for researching stocks and making trades, then one of the large mutual fund houses like Fidelity or Vanguard will probably be enough for your stock trading needs, and will also give you access to thousands of commission free mutual funds and ETFs. Take some time to analyze your investment needs and goals, and see which of these brokerages best meets your needs (consider trade frequency, the tools you need, investment options, cost per trade, and other factors). The answers to these questions will go a long way toward determining how much you need to consolidate. Choose the one that best meets your needs and consider consolidating your other IRA into that account (or into Vanguard, if you decide to roll your 401ks into Vanguard).

Old 401k plans. Old 401k plans can quickly become a burden. You can no longer contribute to them, and many companies will charge you a monthly, quarterly, or annual fee to participate in them if you are no longer employed by the company. It is generally better to roll your old 401k into an IRA or another 401k plan unless there is a specific reason to keep the old account open (e.g. an investment you can’t find elsewhere, or extremely low fees).

Rollover IRA or Rollover 401k? Your question was whether or not you should roll all or some of your ING 401k into your new employer 401k plan, or if you should roll all or some of it into an IRA. Unless there is a specific reason to keep the Wells Fargo account open, it would probably be a good idea to treat the Wells Fargo 401k plan the same way you treat your ING 401k plan.

In general, I prefer having my retirement funds in an IRA for this simple reason: I can better control how and where my funds are invested. I don’t have to worry about having a limited number of investment options, and I don’t have to worry about how high the management fees are inside the new 401k. That said, Schwab is an excellent brokerage, and you should have access to numerous excellent investment options in your new 401k. Just be sure to verify the types of investment options meet your needs before deciding to roll your old 401k into your new company plan. If there are any doubts, just roll it into an IRA. You get the same long term tax benefits, and better long term flexibility.*

*Advanced investment topic: There is one other consideration to make before rolling your old 401ks into an IRA. If your IRAs at E*TRADE and Fidelity are Traditional IRAs and you want to recharacterize them as a Roth IRA, then you may reconsider rolling your 401k into an IRA. This has to do with how the taxes are calculated on Roth IRA rollovers. I recommend speaking with a financial advisor or tax professional if this is something you are considering because it can get complicated. You can disregard this if your IRAs are already a Roth IRA, or you don’t plan on rolling it into a Roth IRA.

Account Consolidation

Now let’s see if you can consolidate your accounts to simplify your account management while still meeting your investment needs. You currently have seven investment accounts, two of which are college savings, five of which are retirement accounts. With some careful consolidation, you should be able to get these down to 2-4 accounts and still meet your investment needs. At the minimum, you will need the following types of accounts:

  1. One 529 plan – Either Utah or Vanguard
  2. One 401k plan – Schwab
  3. One IRA – Fidelity, E*TRADE, Vanguard, or another brokerage

As you can see, you have the option of mixing and matching. The good news is that you should be able to manage taxable investment accounts, IRAs, and possibly your 529 plans under one roof. So you don’t necessarily need to keep an account open just because it has a different investment class. Again, I can’t tell you which account is best out of these options – it all depends on your investment needs. But I can say that all of these companies are reputable and will offer you a variety of investment options that should meet your needs. Consolidating them will just simplify things on your end.

Managing a Large Investment Portfolio

Personal Capital DashboardOnce you decide on the best number of investment accounts, you will need a way to manage them. It’s easy to log in to each of them, write down the balance, and know how much you have. But it’s another thing to see all your accounts and balances in one place. It’s even more powerful to be able to understand how your accounts are working together. There are several ways you an do this. You could hire a financial planner or spend a lot of money on investment software. But the easiest way I have found to do this is by opening a free account with opening a free account with Personal Capital.

Personal Capital is a free online financial and portfolio management tool. It works by aggregating your account balances. It tracks their value over time and can show you how your accounts are performing. The coolest feature is the tool that shows users how their accounts are balanced compared to how they want them to be balanced. Here is an example: you enter your name and investment risk tolerance and Personal Capital comes up with a basic asset allocation. It will compare the example allocation to your actual allocation to show you where you can make changes to get in line with your preferred asset allocation. This is an incredibly powerful tool for people who are investing with multiple mutual funds across several brokerages. There are several other excellent online management tools and investing tools, but Personal Capital is my favorite for managing large portfolios.

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Fred says

    Hi Ryan, that was a comprehensive answer, I’m only in the infancy of my investment portfolio, but you showed how it’s important to keep track of it all the time!

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