Admittedly, a guard cat is ideal in many ways. We rescued a feral cat who takes the business of defending her house very seriously. She growls and runs to the door when the doorbell rings.
Not everyone has Smoggy the Death Cat, so whom should you entrust with your investments?
Despite their differences, the entities below really are custodians–they don’t own your investments, you do–even if they went out of business, you’d still own your investments.
- Discount brokerages – There are many good options: Vanguard, Schwab, Fidelity, and more. Don’t let them upsell you services, but they aren’t pushy.
- Full Service brokerages – First, ask yourself why you’d pay for someone’s bad guesses? Second, go with a discount brokerage instead.
- 401k with employer – While these are “limited” to a few dozen investment choices, you don’t need even that many. Usually there’s some S&P 500 index fund with very low expenses. There can sometimes be excessive management fees, but if the employer matches part of your contributions, that likely more than outweighs fees.
- Bankers – Banks are considered very safe (unless we change the law to European-style “bail-ins). Safe also equates to “making almost no money”, so while some cash ought to be in a bank, your investments are probably better elsewhere. Bankers are often less expert than they once were, so using them as advisors may not be the best idea.
- Credit Unions – Like banks, only they never went through the banks’ “I hate you” phase, and tend to have lower fees. They also weren’t usually dumb enough to contribute to the mortgage crisis.
