Good afternoon forum, My name is Alex, I'm new here and to the investing world in general and would highly appreciate some input. I've been investing with Interactive Brokers (IB) over the past several years, mainly into the S&P500 ETF's and now have an opportunity to invest quite a large sum of money. I've sold my business for close to $4M and would like to invest most of these funds into the stock market. I really like IB's platform, low fees, and low margins rates so I'm leaning towards transferring all of my funds into my IB account. However, would it be advisable to split these funds (perhaps 1/3 into IB, 1/3 into Vanguard, and 1/3 into T/D)? Reason being - I'm quite apprehensive about having all my funds in one brokerage firm.. putting "all eggs in one basket" so to speak. As I understand, SIPC insures brokerage accounts for $500k in case of fraud/bankruptcy/fund mismanagement, etc. So looking at a worst case scenario - if IB goes bankrupt (I do realize it is very unlikely), I would potential only recover a small portion of my assets. Would an experienced investor spread these funds out among several brokers or am I just being paranoid here?
I have my stocks on two different platforms: Scotia iTrade and TD Waterhouse. Because each is better in different areas, I am happy with this arrangement. Also even if an account is insured, there still could be delays in accessing your funds if there is trouble.
We are entirely with one institution and I have had this same question. There would be advantages to having a second institution. It is convenient to have everything in one place. Also, it is more efficient to have assets in as few accounts as possible for a variety of reasons, preeminently synthetic DRIPs. For now, we remain with only one. In the future, it could make sense to have a small amount of money with another institution so we could survive if our primary has a problem. I should add that I have had problems in the past, where my account has been frozen. Some jackwagon with a similar name did some bad stuff and the next thing I knew my checks were bouncing. This was back in the early 1990s. I ended up having to sue the bank and I ate a lot of cost on that. Immediately following that event, I decided to maintain two institutions but that idea fell by the wayside between then and now.
