I was inspired by Millenial Money Honey’s blog to share all of the accounts and financial products we use in our own personal journey to achieving financial independence. If you haven’t seen her blog, you should definitely check her out. She’s got awesome resources and is currently on track to retire by age 35!
When I was first starting out on my road to better educate myself on personal finance, I felt that often people would give broad suggestions like “open a Roth IRA,” or “put your emergency fund in a high yield savings account,” without actually giving suggestions on specific accounts or funds to invest in. So I thought I would share the actual tools and accounts that I use and be totally transparent about the funds that we actually invest in.
Disclaimer: These accounts are what work best for us and my intention is to simply educate. I am not a financial advisor and this post does not represent formal financial advice.
401k: Charles Schwab
A 401k is made available by an employer, so you are limited to the options that they offer. Mine is with Charles Schwab and I invest it in their Vanguard Target Retirement Trust 2055 II plan. I choose to max it out, because it lowers taxable income by $19,500 and I am very happy with the plans offered and how low the fees are.
I highly recommend using this tool here by Personal Capital to check your 401k plan to ensure that the fees are low. If the options that you are offered by your employer are not great and have high fees, I would simply contribute enough to get your employer match and put the money elsewhere.
HSA: Fidelity
While I haven’t opened up the HSA account yet, this is the one I plan to open later this month. An HSA stands for Health Savings Account. You can only open up this type of savings account if you have a high-deductible health plan (HDHP). If you are unsure about whether you have that, check with your benefits team at your place of work. I will do a more comprehensive post about why this type of account is so powerful, but spoiler alert, it offers you a triple-tax benefit. This means you can (1) contribute to them on a pretax or tax-deductible basis, (2) your savings grow free of taxes over time and (3) you can also make tax-free withdrawals to cover qualified medical expenses.
Checking Accounts: Chase
We use Chase for our checking accounts. We currently have two checking accounts, one is for our bills that are mainly all automated (i.e., mortgage, gas, electric, daycare, cell phones etc.). The other checking account is set up for our spending, so a set amount of our paychecks go into this account on a bi-weekly basis and covers all (I’m not perfect and sometimes we go over our budget) of our spending for the month (i.e., gas, eating out, groceries, shopping, basically anything that is not an automated bill).
Savings Account: Ally
We use Ally for our savings account. I purposely wanted to setup a savings account that was in no way connected to our checking account, so as to fight the urge to easily dip into money from our savings account. I went with Ally because I liked that they:
(1) had no monthly fees
(2) allow you to organize your money into different financial buckets
(3) earns a way higher Annual Percentage Yield (APY) of 0.5% than the typical bank savings APY of 0.01%.
When I had first opened our Ally account, we were actually earning 2% APY which was fantastic. But since 2020, it has dropped down to 0.5%. A bit of a bummer, but it’s still a lot higher than the other savings accounts that I have looked at.
Roth IRA: Vanguard
We went with Vanguard to open up our Roth IRA’s. I really like Vanguard for their low fees, and high quality funds. We have been able to max out each of our Roth accounts over the last two years and plan to continue doing this for the foreseeable future.
The beauty of the Roth Accounts is that you contribute funds to it using already taxed dollars (aka money from your paycheck) so that when you withdraw later in life, you don’t have to pay any taxes on it then.
We invest the funds into my favorite low cost index fund, VTSAX. I will write a more comprehensive post on the advantages of using a Roth IRA, but if you want to take a closer look at Vanguard’s Roth, navigate here. They do have an income limit to be able to contribute, but there are ways to get around this, by using the back door method.
” With a Roth IRA, you get a future bonus: Every penny you withdraw in retirement stays in your pocket, not Uncle Sam’s.”
Taxable Brokerage: Robinhood
My husband manages this account because he is a very hands on and active investor. I am much more of a “set it and forget” investor who loves index funds and anything that I can simply set up and forget about. I also have a lower threshold for risk.
He on the other hand, loves to study the market, pours over research and is genuinely interested in learning about companies within sectors that he is interested in. So our money in this account is mainly in ETFs within the electric vehicles (EV), battery, gambling and technology industries.
So there you have it. These are the accounts that we currently use on our journey to FI.
I would love to hear from you. Which tools and accounts do you use and love?
