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I’m a big fan of low-hanging fruit when it comes to personal finance. There are myriad opportunities to make hundreds or thousands of dollars when you are an active steward of your money, and most of them don’t actually require much work at all: they simply require knowledge. You just need to know they exist.
I’ve talked about how finding an atypical mortgage source is going to save me over $145,000 over the life of the loan for just a few hours of work. They’re not all quite that eye-popping, but there are a slew of opportunities that each provide several hundred to a couple thousand dollars. When stacked upon each other in a well-functioning money system, you could be putting $5k-$10k more a year into your pockets.
One particular opportunity we’ve cemented into our money system is a rotation strategy for brokerage accounts to take advantage of sign-up bonuses. If you are sitting on at least $10,000 of savings (including IRAs) which you plan to invest in stocks and bonds, you may be a good candidate for this strategy. Many folks have heard of credit card churning, where each year you optimize for credit card sign-up bonuses. You can also do the same for your brokerage accounts, but since the amounts in question are often larger, the cash bonuses to you are also larger, sometimes 3-4x what you can make on credit card churning. We’ve dubbed this the Annual Migration, and this is how it works
Rotate Your Brokerage Accounts
Time Commitment: 30-90 Minutes (Half an hour per account)
Payoff: Approximately $1,000-$4,000+
Every year, the husband and I move our assets into a new online brokerage account to take advantage of brokerage sign-up bonuses. These sign-up bonuses are pretty generous. Here are the going rates, for example, at Charles Schwab starting at $10,000 or more.
And here are the bonuses from one of our favorite vendors, TD Ameritrade (they have the best UI and customer service):
Another set from Etrade:
The list goes on and on. Sometimes the offers expire at one house, but a new one opens up at another reputable provider. Fidelity isn’t running one right now to my knowledge, but they certainly have in the past and we signed up for accounts when they did.
We dub this The Annual Migration, and you can layer this into your arsenal of money making tools.
How It Works
You can open a new account and fund it either with cash or with existing assets. Your cash bonus will typically appear within 60 days of signing up. The important part is that you are able to transfer assets in-kind. That means if you’ve got some juicy index fund shares you don’t want to sell and take a tax hit on right now, no biggie. They just move right over to the new account along with all the tax lot history.
All it takes is you filling out and signing a transfer form. The new brokerage firm will handle the rest.
All told, this process usually takes me less than half an hour per account each year. That comes out to a pay rate of over $1000 an hour for my work.
But I Love My Current Brokerage Firm – Can I Still Make Money?
If you’re in love with your online brokerage and don’t want to move, all is not lost. You can call your account rep or the main customer line and tell them you’d like to transfer a significant chunk of assets to them, and would like to know if they have a bonus that can match what you’re seeing out in the market. That way you can stay with your current provider but still see some bonus cash. In my experience, this usually works only if you’re going to bring $100k or more over at one time, so your results may vary.
If you want to sweeten the pot, call the customer service line and ask for them to throw in some free trades. I’ve had about 50-50 luck asking for this. You can also ask if they’ll match the low commission fees at X competitor.
I personally like to keep less than $500k in an individual or joint account with any individual vendor. This is because most of these vendors are insured by SIPC, which means if they go under for some reason, the SIPC will refund you the amount in your brokerage up to a certain limit. The limit? $500k per account. If you have one individual account and one joint account, they each have $500k protection. If you have two joint accounts at the same brokerage firm that are $500k, you only have a total of $500k of protection. For more information on that, check out their guidelines here.
I generally will talk to someone before I open the account simply because I like to make sure someone’s looking out for my account and making sure the bonus will hit my account. You don’t have to do this, but call me a little paranoid. It also helps you double-confirm that the bonuses you are seeing are up to date.
With over $2 million in assets, the hubs and I are able to generate an extra $4000-$5000 per year for just half an hour of work per account. It feels like being gifted money simply for having money! I’m passing on the strategy to you. Hopefully it will find a place in your arsenal of money making strategies and help snowball your wealth as it has ours.
Any of you already doing an annual migration of your own? Any other tips you use when when it comes to brokerage houses?