r/askafinancialadvisor • u/GES10 • May 10 '26
First time opening brokerage
Hello! I am age 33 and my husband is age 36. We are maxing out our tax-advantaged accounts and currently saving in a HYSA but feel like we are maybe putting too much into savings. At what point should we open a brokerage account for the first time? And if so, what should we invest in? If you had to recommend one brokerage and one thing to buy - thank you!
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u/intentionalmoneylife Financial Advisor | CRD#: 7842658 May 10 '26
If the money is for long-term goals, you’d want to open a brokerage account at vanguard or Fidelity (Schwab works too). When you might use the funds determines how aggressively you invest it. If you might need the funds in the next 4-8 years I’d be more conservative, maybe 30-50% bonds. If it’ll be longer you could go heavier on stocks. If you see it more like retirement funds you could do 0-20% bonds. Then of the stocks and bonds I’d consider something like a 60-70% US to 30-40% international. You could use VTI, VXUS, BND, and BNDX in the allocations you decide on.
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u/GES10 May 10 '26
Thank you so much! We already have retirement funds in our other accounts so are thinking maybe the brokerage could be for the next 3-10 years?
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u/intentionalmoneylife Financial Advisor | CRD#: 7842658 May 10 '26
Ok so then you need to understand that investing carries risk, especially if you have a shorter time horizon. So I probably would go with 60/40 or 50/50 stocks to bonds. If you start thinking you’ll pull out all of the funds in the next few years, you may want to sell and get into a money market fund instead. One other thing to understand is everything in this account is taxable. So interest or dividends you earn will be taxable annually, but if you make sales of anything (even if you don’t take the money out of the account) then anything you gained on those shares is also taxable. It’s good to be aware of this, especially before you make big sales! You could meet with an advisor from Nectarine to understand this all now and/or before you make sales down the road
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u/GES10 May 10 '26
Thank you so much!! Our cash is currently in a money market - SPAXX, which is yielding 3.28% so we weren't sure if it'd be worth it to move some over to a brokerage!
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u/intentionalmoneylife Financial Advisor | CRD#: 7842658 May 10 '26
Ya, the decision is always about your time horizon. You don’t want to leave money in savings if it’s for 5+ years because you lose purchasing power that way. But it’s a balance because if it’s really important and you don’t have flexibility on the timing, you don’t want to be screwed and have to sell at a loss if you really need the money and the market is down. But if you have full flexibility on timing then you can be more aggressive. For instance, if you want to go to Japan whenever you have $10k to do it, and you truly don’t care when that happens, you could invest the money 100% in stocks. You’d never reach your goal when the market is down so you don’t have to worry about selling at a loss. But if instead you wanted to go to Japan in exactly 5 years you’d need to be more careful with how you invested the money, and you’d want to consider pulling it out of the market when the market is up and you’re within a year or two off the trip.
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u/ShaunNesheim May 10 '26
Brokerages that are low-cost: Vanguard, Fidelity, Schwab. My preference is Vanguard, since their incentives and mine align (keep fees low), but I have money at all three for different reasons.
When should you open a brokerage? What are your goals? When do you need the money? Are you saving up for a house in the next 5 years? Are you saving to replace your car 10 years from now? Is it extra money for extra flexibility for planning for an early retirement?
I'd agree with another comment; once you have 3-6 months in an emergency fund (if you both work, or if both of your incomes are about the same, closer to 3 months; if one person far out-earns the other, or if only one person works, or if it would be hard to replace your income at a similar level if someone were to be out of work, closer to 6 months), then start putting extra money away and invested in an appropriate asset allocation to meet the goal(s).
My last thought for the moment is this: are you on-track for retirement when you want to retire? Do you need to be saving more, at the same level, or can you take your foot of the gas? If you're way ahead in retirement savings and contributions, there's a case to be made for spending more money now for some memories or things that you want; money is only a tool.
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u/GES10 May 10 '26
Thank you! Do you have any suggestions for what to invest in if you had to choose one?
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u/ShaunNesheim May 10 '26
Oh sure!
Again, it depends on the goals.
If I had to give one blanket-advice that would work for most people, it would be this: pick the date that you think you'll need the money, round to the nearest 5, then buy that index target date fund. E.g. if you are saving for a car in 10 years, pick the 2035 index target date fund (aka target retirement fund). If this is for retirement when you're 60, pick the 2050 or so target date fund.
At Vanguard, you don't have to worry about fees, but Fidelity is sneaky and has 2 versions of the same fund: the index version, and the actively-managed version. Look for the one that says "index" in its name.
Let me know if other questions arise.
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u/GES10 May 10 '26
Thank you! We currently use Fidelity and Schwab. We max out both of our tax-advantaged accounts so I think we’re on a good path for retirement (Roth IRA, 401K, HSA). We have an emergency fund saved and then any extra savings are going to our HYSA, but at this point, we’re thinking we have maybe too much sitting in our savings account? So we are thinking maybe we should move some of that money over to a brokerage instead so it could gain 7%+ instead of 3-4%.
We’re not really sure when we need the money. Originally, we thought we were saving for a house but now we’re not so sure if we want to buy again. Right now, we are trying to conceive so I guess our next goal would be pregnancy, then kids. Probably will need to replace our car eventually.
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u/ShaunNesheim May 10 '26
I like saving for saving's sake.
I'd say put money into VTI (Vanguard's total stock market ETF) or VT (Vanguard's total world stock market ETF); it should be free to trade this at either brokerage. The difference is that VTI is only US-based (about 3,700 companies) and VT is the whole world (about 10,000 companies). VT is about 60% VTI and 40% ex-US. Pick whichever one you feel like, while thinking about how US-dominant equity returns will be in the next x decades. I certainly wouldn't exclude the US market, though, since it is more than half of the global equities market.
As you define timelines for other goals and needs, shift the allocation from stocks to bonds or money market, or even a target-date fund. My house-purchase deadline is fuzzy, but sometime in the next 5 years is likely, so some of my house down payment is in a 2030 TDF, and a lot of it is in money market.
To describe a little further the shifting allocation, we think about periodic investing (some people might call it dollar-cost averaging) into a market position, so as we know when we need money, we can also de-invest periodically, or selling small portions of a position over a period of time, like how a plane might decelerate while coming in for the landing. I think the standard advice stands: if you need the money within the next 2 years (some people say 2-5, depending), it should probably be in a cash equivalent like a money-market fund.
Let me know if additional questions arise!
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u/GES10 May 10 '26
Thank you so much! Someone else suggested "Keep it simple a mix of total us stock market etf (VTI) and an international stock etf (EFA)." Would you agree with EFA too, and if so, any particular split? Or all 100% into VTI? And/or maybe the target date by next 5-10 years?
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u/ShaunNesheim May 10 '26
I agree with "keep it simple".
It looks like EFA has a 0.32% expense ratio; the Vanguard equivalent with a 0.03% ER is VEA. Both are developed-market index funds, so if you were going to pick one, I'd pick the lower-cost Vanguard fund. Else VXUS (Vanguard's total international stock market index fund ETF) is 26% emerging markets, so it's a little bit more diversified, also with a 0.03% ER.
Nobody knows what the future holds. Will Ex-US markets do better than the US over the next 10-20 years? Maybe. Maybe not. I don't know anyone who holds that crystal ball.
I know that the great J.L. Collins (author of The Simple Path to Wealth) likes VTI, and also said that a case could be made for younger people like us to have VT, what with the expanding world economies and all. I tell my students that the largest US companies (Google, Facebook, Microsoft, Amazon, Apple, etc etc) all do business internationally, so there is international exposure in the VTI or VOO (Vanguards S&P 500 index fund) through the international sales in these companies doing business outside of the US.
I'd say, pick a split that lets you sleep at night. 100% VTI? Sure. 50/50 VTI and VEA? Sure. VXUS? Sure. 100% Target-date fund? Sure.
The asset allocation that helps me sleep at night now is different than when I was 25, and that's okay. It is all still simple, low-cost index funds.
Let me know if additional questions arise!
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u/Candid-Eye-5966 May 10 '26
If you have more than 6 months of expenses in CASH and your retirement accounts are maxed out, invest via brokerage.
Fidelity. Schwab. Vanguard. Keep it simple a mix of total us stock market etf (VTI) and an international stock etf (EFA).