We usually recommend not mucking about too much with your investments. Chill. Hands off. Look but don’t touch. Don’t bother trying to beat the market (doesn’t work). Don’t sweat the downturns. Instead, invest regularly for the long term (a little bit out of each paycheck) in a well-diversified, low-cost investment portfolio.
But sometimes “set it and forget it” doesn’t cut it. If you’re in one of these eight scenarios, shifting things around might be the right move — especially if you’re able to consolidate everything into a single happy place.
8 signs it might be time to move your investments
1. You left a job — and a 401(k) — behind
Your 401(k) or 403(b) is an “employer-sponsored” retirement plan. That means when you leave your employer, you can’t contribute to it. You can let it sit, but you risk forgetting about it and letting it get out of whack. You could cash it out, but you’ll almost certainly get hit with massive tax penalties if you do. So: Bad idea.
The third option is to roll it over, either into either a 401(k) with your new employer or an individual retirement account (aka IRA). That way, you can keep adding money and keep an eye on how it’s invested.
2. Fees got you down
Fees add up. You’re shelling out for the fees themselves, of course — and then every penny you’ve paid in fees is a penny that isn’t in your investment account and can’t earn you returns. If moving your investments could lower your fees, it’s probably a good idea. For a digital adviser, the management fee (the amount that adviser charges you) should be well below 1% per year of your assets under management.*
3. You feel the need for some clarity ...
It can be tough to get a feel for your overall financial picture if you have a bunch of accounts at a bunch of places. Consolidating your investments into one place can help you wrap your mind around your finances so that you can plan for some badass goals.
4. … and some balance
A healthy investment portfolio is diversified across asset classes (equity, bonds, etc.). If your investments are managed in a lot of different places, they might accidentally start to overlap too much, especially as the markets change.
Or maybe you own individual stocks — whether you bought into a certain company, inherited them, got ‘em as a gift, you name it — but now you want to merge that money into the rest of your portfolio to make it more balanced. (Good idea.)
At Ellevest, by the way, each of your investment goals is automatically rebalanced whenever the asset allocation gets off-kilter. We make sure the amount of risk you’re taking for each goal makes sense for that specific goal and your specific timeline.
5. You’ve got “Groundhog Day” syndrome
Multiple accounts in multiple places means multiple logins, emails, statements, and paperwork ... not to mention doing the same tedious chores — like updating your address and beneficiaries — over and over.
6. You’re getting near retirement age
You can’t keep money in a tax-advantaged retirement account forever; once you reach a certain age (depending on the account type), you have to start making withdrawals. These are called required minimum distributions, and if you don’t take them on time, you’ll get slapped with a big penalty. If you have an old, forgotten 401(k) from a previous employer (it happens) — or even just many different accounts all spread out — it could be easier to accidentally miss one.
7. You’re out of options
Not everybody offers the investment options you want. If you're interested in investing in something specific (like, say, directing your money to companies that power positive social change by advancing women), you might need to switch advisors to get that done.
8. You want to work with a single human
If you’ve got a lot going on with your finances, you probably have more than one financial advisor. But this can start to cost you, in extra fees and extra time. (Or maybe you just want to go to a woman who gets it for all your investment Qs.)
How investments get moved from one place to another
Moving retirement accounts
For an old 401(k) or 403(b), you can start a rollover. The easiest type is called a “direct rollover,” where your old 401(k) provider cuts a check directly to your new provider (or advisor, if you’re rolling into an IRA). And the process for IRA-to-IRA transfers is pretty similar.
Moving taxable investment accounts
Transferring investments between taxable investment accounts is a bit trickier. It’s easy to transfer regular cash money from one bank to another bank — but with an investment brokerage account, your money may be tied up in things like stocks, bonds, and other investment products. The old-school way to move your money is called “in cash.” You sell off everything you own with your old investment firm and then re-buy a portfolio worth of investments with your new firm.
Today, many firms (including Ellevest) use Automated Customer Account Transfer Service (ACATS), which enables you to transfer your investments “in kind.” They’re sent to your new broker at their market value on the date of the transfer — no selling, buying, or headaches required, allowing your investments to move easily behind the scenes.
If moving your investments will save you fees, help you feel more confident about managing your money, make it easier for you to invest regularly, or otherwise clear the path for you to rule the world, then we’re here for it.
Ellevest's fee is .25% per year for your assets under management for Ellevest Digital, 0.50% per year for your assets under management for Ellevest Premium. Fund fees are charged by the underlying fund manager, for the management of the fund. Advisory fees are charged by investment advisors, such as Ellevest, for ongoing investment advice and portfolio management for the account.
© 2018 Ellevest, Inc. All Rights Reserved.
*Ellevest's fee is .25% per year for your assets under management for Ellevest Digital, 0.50% per year for your assets under management for Ellevest Premium. Fund fees are charged by the underlying fund manager, for the management of the fund. Advisory fees are charged by investment advisors, such as Ellevest, for ongoing investment advice and portfolio management for the account.
Information was obtained from third party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.
The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.
Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.