How Do I Consolidate Investment Accounts?

Dear Kristin,

Over the years, I've dipped my toes in investing by signing up for different investing apps to test them and write about and share my experience. I also received shares of company stock at my first job out of college, which I still own.

Now, after all this time, I have a few different investment accounts: one on Robinhood with just a few shares of a few different stocks; one on [a] real estate investing app; and then one with Fidelity, which houses the shares of stock that I got while working at my first job.

Is it smart to keep all of these separate accounts and just let them grow? Should I consolidate them, and if so, how could I do that? I want to keep investing as I'm only in my 30’s, but having such little money (less than $2,500) across the three different accounts/apps feels like it's pointless. What do you think I should do?

Sincerely,

Adventurous Investor

Dear Adventurous,

This is a great question and I think that for you, consolidating some of your investment accounts is probably your best course of action. You mentioned you invest in real estate through one of your accounts, and you might want to continue your real estate investing through that platform. As for the others, you can consolidate your investments in stocks, bonds, and other securities.

Having multiple brokerage accounts may be hard to manage and can add complexity to your investing strategy, which it sounds like you don’t want right now. You said you want to keep investing, and the best strategy is to invest a consistent amount regularly, so it will be easiest for you to pick one brokerage account for all your needs. By using one brokerage account, you’ll need fewer tax forms, won’t have multiple login details, and can invest regularly through one account. So spare yourself the effort and consolidate!

So how do you do that? Many brokerages make it easy through the Automated Customer Account Transfer Service (ACATS). You fill out a Transfer Instruction Form (TIF) and send it to your new brokerage account indicating that you want to transfer assets. The new brokerage firm contacts your old one, which then sends over the assets. You might have to pay fees to do this, but overall, the process usually isn’t too difficult. If it goes smoothly, the transfer should only take three to five business days.

It can become more complicated, though, depending on your portfolio. If your old brokerage account holds assets that the new one doesn’t offer to investors, then you may have to sell the assets and transfer the money to the new broker, which could trigger capital gains taxes.

For example, if you bought Bitcoin through one account, you might not be able to move it to another brokerage firm if it doesn’t offer cryptocurrency investments. If you still wanted to consolidate those investment accounts, you’d have to sell your Bitcoin and transfer the cash over. If you had made a profit on your Bitcoin, you’d owe capital gains taxes.

So when you’re investing in something that you can’t invest in on other platforms, it may actually be advantageous to hold multiple investing accounts. And when deciding which investment account becomes your main account, consider how easily you can make transfers, too.

It seems like you are on the right track, though, so definitely keep it up!

Good Luck!

-Kristin

If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.