Ask your advisor: Should you consolidate your investment accounts?

“Welcome again”ask an advisor” features advice columns in which real financial experts answer questions from real people. Topics can be anything in the financial world, from retirement savings to taxes to asset management. It also includes advice about advice.

Is it important to be organized when it comes to investing? With so many financial apps, websites, robo-advisors, and other products available, it’s easy to let your nest egg become an unwieldy tangle of accounts. it’s simple. Wealth managers typically encourage diversificationBut at what point does it descend into chaos?

When it comes to retirement plans, the conventional wisdom is that one 401(k) is better than six or seven. When someone takes a new job, it is recommended that they roll over their old account to the new account. Failure to do so may incur costs such as: $1.3 trillion is in decline According to research firm Capitalize, it’s in forgotten or inaccessible 401(k)s.

read more: 4 Tips for Rolling Over All of Your Client’s Old 401(k)

But when it comes to other investments, advice usually leans toward increasing diversity rather than decreasing it. The benefit of diversification is that a healthy portfolio includes a variety of assets that perform in different ways, thus minimizing the damage from potential losses in any one investment. That’s why, 60-40 stocks and bonds Ratios are a rule of thumb and why advisors sometimes recommend unconventional investments such as: emerging market and small cap fund. This is why the S&P 500 is not the S&P 5.

But do the same principles apply to the accounts that hold those investments? In addition to a 401(k) and Roth IRA, the New Jersey video producer also invests in mutual funds, financial apps, and joint investments with her husband. I’m working on this issue while juggling my accounts.

Is it time to do some spring cleaning and organize your accounts? Or is it better to channel her money into different avenues, no matter how chaotic it may seem? Get help. , she consulted an expert. Here’s what she wrote:

Dear Advisors,

My investments feel messy. I have multiple accounts with different balances and I’m wondering if it makes more sense to consolidate them.

The biggest one is a joint Schwab account that I co-own with my husband. He invests in a combination of stock index funds and bonds, and has a balance of about $100,000. We donate $1,000 every month.

I also have a mutual fund through American Funds with a balance of about $90,000. I will donate $200 per month.

It also has a “Stash” app, which is similar to a robo-advisor that invests in ETFs. It currently has about $8,000 in it and I donate $100 a month.

Having so many accounts seems like a hassle and I’m wondering if my money would grow faster with one big account. Should I put everything in Schwab? Or to the American Fund? What should I do? Or is it better to leave it all alone?

Sincerely,

New Jersey Neat Freak

And here is the response from the financial advisor: