If you have a lot of investment accounts, you may be buried alive under mountains of literature, statements and 1099s. Trying to monitor and balance multiple accounts can be a nightmare, but you can end the bad dream by consolidating your accounts.
Here are four easy ways to get your money in one place:
Roll over old 401(k)s and IRAs into one IRA. It's easy -- just open a rollover account at a brokerage (many offer no-fee IRAs). Then contact your 401(k) and IRA administrators and fill out a rollover request form. Make sure that the check is made out to the brokerage (not to you) so you don't get taxed for the distribution. It may make sense to roll the accounts into a Roth IRA, but remember that you'll pay income taxes on the contributions.
Move all your taxable investments to the same brokerage, too. If you've bought mutual funds straight from several fund companies or have accounts at more than one brokerage, transfer them to one brokerage that offers all the services you need. Brokerages such as Fidelity and Charles Schwab offer thousands of mutual funds from top fund companies, some at no transaction cost. To move assets, just go to your favorite brokerage and fill out a transfer form; they'll take care of the rest.
Close your bank account and bank through your brokerage. Brokerages such as Charles Schwab and E*Trade have the same services (checking, ATM, CDs, money market accounts) as banks, and they often charge less.
Consolidate DRIP accounts. It's a pain to keep track of several different dividend reinvestment plans. Instead, transfer all your shares to online brokerages that specialize in DRIPs, and do all your transactions through them. Check out BuyandHold.com and Netstock.com. You might pay slightly more in fees, but you can't beat the convenience.
Caveats: Some brokerages and DRIP administrators may charge fees for transferring assets. Also, you may be forced to sell some assets and transfer cash to a new account. If that's the case, ask an expert about tax consequences first.
This is the first in our series on Simplifying Your Financial Life.
