See also "starter kit."
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Final Advice
Minimize the number of financial institutions with which you have to deal:
- local bank: for depositing cash; physical checks
- discount broker
- cash management (checking account)
- brokerage account
- life insurance: to be discussed elsewhere
My recommended one-stop shopping financial institution: Schwab. These are the components one should have in one's Schwab's account:
- checking account: minimum amount, maybe $1,000. Max depends on history.
- money market account: SVWXX -- park your cash until you decide on other investment options
- ETFs:
- SCHD
- SCHG
- SCHB
- Schwab ETFs: list here.
- 529s (where applicable: parents and grandparents)
- IRAs (where applicable; must have active income)
- Roth IRAs
- max out
- don't forget spousal IRAs
- self-directed sub-account;
- no-load, no-fee mutual funds; all listed ETFs, stocks
- Account aggregator
- link external subscriptions for better monitoring, easy-to-cancel subscriptions no longer used
Federal and state income taxes:
- if you have a "relatively simple" financial plan, filing your own taxes is fine;
- however, once you get into "more complicated" situations, it behooves you to go through a professional tax preparer.
Comments:
- once you have active income, best place to invest within the Schwab account, is in a self-directed IRA;
- you can re-balance your diversification at any time without tax consequences
- money is fungible: as long as you have active income, you can place "up to that annual amount" in an IRA regardless of where the money come from
- in other words: if you earn $30,000 in one year, you would need all of that income to cover your living costs;
- however, if your parents, or grandparents, or others "gift" you money, you can place that money ("up to your total income") in your IRA
- it is unlikely that you can generate more income than your allowable IRA contributions -- think about that
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Comments
Why Schwab over others?
- most important
- the only discount broker with physical branches in larger cities
- has checking sub-account as well as brokerage sub-account in one Schwab account
- physical checks: free
- all discount brokers
- no fees
- incredibly easy-to-use websites
Account aggregators:
- I know almost nothing about account aggregators except what I see Rocket Money advertise on television
- it appears Schwab offers the same service
- to learn more: suggest googling Rocket Money vs Schwag vs Empower -- Reddit will provide some interesting observations
From Reddit, link here:
I use Schwab for aggregation and have 30+ accounts linked. It works fine if you just want to see balances, your net worth, and positions for investment accounts. You can use the Portfolio Checkup Tool to run portfolio reports on your Schwab plus non-Schwab investment accounts. Also, the linked accounts flow through to your financial plan at Schwab, which is primarily what I use the aggregator for.
I was a devout Mint user for 10+ years, and I'm currently looking for a replacement for that. Schwab is nice if all you need is aggregation of balances and for running holistic portfolio reports and financial planning. But Mint was good at the micro-budgeting level--like aggregating transactions, too, and I used Mint's budgets and goals tools, so that's what I'm looking for. No brokerage firm is going to have the level of detail Mint had, since that's a full-time business keeping up with all the software issues for customers (and it doesn't make Schwab or any brokerage firm any money), so I imagine this needs to be a standalone budgeting site that's meant for this like Mint was.
IRAs: Roth IRAs, not traditional IRAs.
- this article just coincidentally popped up today: ROTHs IRA for children.
Schwab ETFs: list here.
Schwab tools: link here.
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