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I recently read "The Coffeehouse Investor" and now that I've drunk the Kool-Aid I'd like to allocate our retirement investments across a simple set of index funds. SO and I have our money in Fidelity spread over numerous accounts that cannot be joined (we both have a combination of Keoghs, Rollover IRA and Roth IRA).

Fidelity's Spartan index funds are cheap in terms of expense ratio, but they all carry a minimum investment of 10,000. Since we have different amounts in different accounts (and only add to some of them on a monthly basis), it's virtually impossible for us to a) make that 10K minimum investment and b) because of a...allocate assets properly. I sat in front of Excel four hours trying to make this work and we just don't have quite enough money in certain accounts, nor will that change any time soon.

So...

I'm now looking into transferring our retirement accounts over to Vanguard, which, while their expense ratios for index funds is a bit higher (.25% vs. Fidelity's current .10%), their minimums for retirement are $2500 across the board.

Before I enter the nightmare of asset transfer, can any of you weigh in on your experiences with Vanguard? Good, bad, indiffernt?

Any and all input is greatly appreciated!
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I have used both fidelity and vanguard, and found them both similar. Both gave good reports, both had strengths and weaknesses. It does seem a bit easier if you are going with vanguard's fund to use vanguard, and vice versa (a bit cheaper on the purchase if it is within their family). Both had good phone support.

Vanguard had smaller phone hours- but that is to be expected they run a leaner shop.
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Before you transfer everything, is there some reason you are not considering ETFs? Vanguard's VIPERS can be bought via anyone's brokerage service and they have jaw-droppingly low expense ratios.
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can any of you weigh in on your experiences with Vanguard? Good, bad, indiffernt?

I invest with Vanguard and I have over a decade of experience with them. I recommend Vanguard to anyone who asks. I believe that they are the only mutual fund company whose interests are almost perfectly aligned with mine. Fidelity and others might lower their expense ratios, but that alone is not enough to lure me away from Vanguard. Fidelity has a responsibility to its owners and profits from its mutual fund investors. That is a good model since failing to serve those mutual fund investors well will hurt profits eventually. Vanguard also has a responsibility to its owners, but for Vanguard those owners ARE the mutual fund investors. This is a even better model. That's why Vanguard's expenses have always been low.

Our unique corporate structure has always been a vital point of differentiation setting us apart from other firms. The Vanguard Group is owned by the Vanguard® funds, which in turn are owned by our fund shareholders. We are the only mutual fund complex owned by the funds themselves.

This structural alignment of the company's interests with those of our clients creates many advantages. The Vanguard Group provides services to the Vanguard funds on an at-cost basis. We return profits to our fund shareholders in the form of our lower expense ratios.


Keep in mind that you are making a choice for the long term. I don't think you can go wrong with either Fidelity or Vanguard. I have been delighted with Vanguard's service and very happy with their management even after the retirement of founder, John C. Bogle. If I had to make the choice today it would still be Vanguard.

Regards,
Prometheuss
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Here's my suggestion. Call Fidelity and ask to speak with someone about your accout. Tell them you love their company but that you are trying to re-allocate your account and you can't meet their minimums. You'd like to stay with them, but unless they wave that requirement you are going to have to switch over to Vanguard who will let you do what you are trying to do.

My suspicion is that they will wave the requirement. If not, ask them to send you the roll over paperwork so that you can transfer your account. I'm guessing they might bite at this point. If not, leave.

I really like Vanguard and have a bunch of money with them. I also have a good friend that is and EVP at Fidelity and he loves the company. But you should get what you want.

nmckay
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I moved all my funds from actively managed fidelity and Janus funds to Vanguard Indexes, basically following a Coffee House approach. I also have Roth Ira's, Roll Over Ira's, ane regular accounts with Vanguard. I even have my kid's 529 plans at Vanguard. Like you, after I decided to get edumecated about investing, I decided indexing was the path I would follow.

I have no complaints other than the volume of crap they mail me, even after I signed up for email notification. Customer service is fine.
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Thanks for all the wise replies.

The reason I don't invest in ETFs is the trading fees. Why pay to trade the same indexes that I can just buy in a fund for no fee? I'm planning to re-allocate quarterly (since we contribute frequently). At a potential 1-2 trades over 8 retirement accounts, that adds up to a big chunk of fees over a typical year.

I could go the route of asking Fidelity to wave the minimums...but, quite frankly Vanguard offers a better array of index funds (for example, they don't just have a "large cap fund" -- they actually offer "large cap growth" and "large cap value". I'll start out simple, probably, but it's nice to know I can refine and choose more granular indexing approaches later on if I so choose.

I've sent off for the asset transfer paperwork from Vanguard. I'll probably keep my non-retirement accounts at Fidelity since they offer checkwriting and billpay at our savings level (Vanguard requires 250K in assets! It'll be a few years before that happy day.)

Anyway, thanks again to all who responded.
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>> The reason I don't invest in ETFs is the trading fees. Why pay to trade the same indexes that I can just buy in a fund for no fee? I'm planning to re-allocate quarterly (since we contribute frequently). At a potential 1-2 trades over 8 retirement accounts, that adds up to a big chunk of fees over a typical year. <<

In an account where you're constantly adding to your position through regular contributions, I agree -- ETFs make less sense. But the case for them is a bit more compelling in reasonably large accounts where new money isn't being added. A $5,000 position in an ETF only has a 0.2% added drag for commissions if you rebalance annually at $10 per trade. Given the ultra low expense ratios some of them have, it can be the best option, especially for more heavily traded ones with small bid/ask spreads.

But I agree that if you're adding money to a position regularly, or if you have only $1000 or so per position, the trading costs eat away all the advantages.

#29
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I own both Vanguard (IRA) and Fidelity (IRA, 401k) funds.

Vanguard's "live people" aren't available 24 hours a day. For me, that's no problem. Since I change asset mix once every few years, I can do it during the work day.

With Fidelity, there are so many funds that it's a mixed blessing--you might be tempted to jump on the latest trend or every new fund. OTOH, Low Price Stock has been good for me, as has Diversified International.

If you're going to go indexed, I recommend Vanguard. (Vanguard's S&P500 index fund outperformed Fido's since Fido went to the 0.1% fee, even though Vanguard's is 0.18%...it has to do with them buying futures to compensate.) Even then, I'd look at Vanguard Growth and Income in place of the S&P500 index fund, plus the Extended Market Index Fund, plus International Index Fund. If you prefer managed funds, I lean slightly towards Fidelity.
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FWIW, even though I enjoy owning individual stock, my long term money is in Vanguard and indexed pretty close to the coffeehouse percentages.

I currently have a very small percentage in my bond fund (10% vs 40% recommended). I'll start slowly shifting money toward it once the fed gets rates above 3.5%. Yea, that's market timing. But I think it's prudent.

I think the expression is "trust in Allah, but tie your camel".

nmckay
who likes multi-cultural chestnuts
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I agree with others that Vanguard would probably be the best place for you. Just be informed that in addition to the annual account maintenance fee of $10 for each retirement account, you will also have to pay a $10 annual fee for each index fund in which you have less than $10,000 invested.

I unhappily found this out at the end of 2004 :-(

2old
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you will also have to pay a $10 annual fee for each index fund in which you have less than $10,000 invested.

Unless your total with Vanguard is greater than $50K
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Unless your total with Vanguard is greater than $50K

Cool!

I actually meet a brokerage house's minimum? I feel so rich. ;)
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yea, they're pretty good to you once you get a good sized nut.

nmckay
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you will also have to pay a $10 annual fee for each index fund in which you have less than $10,000 invested.

Unless your total with Vanguard is greater than $50K


Vol, I'm afraid you're incorrect. The $10 annual fee for each index fund with less than $10,000 invested does not fall under the exception for accounts with greater than $50K. (I learned the hard way)

2old

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Vol, I'm afraid you're incorrect. The $10 annual fee for each index fund with less than $10,000 invested does not fall under the exception for accounts with greater than $50K. (I learned the hard way)


I went back and reread the fee policy at Vanguard and you are correct. But I still haven't paid any account maintenance fees on my funds with less than $10K. Can't tell you why though.
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I went back and reread the fee policy at Vanguard and you are correct. But I still haven't paid any account maintenance fees on my funds with less than $10K. Can't tell you why though.

Because they remove their fee from your dividend (hence buying less shares if you reinvest), you can easily not notice it. I noticed it when I printed my transaction detail for the entire year. Sure enough, On the transaction detail under NAESX, fund 0048, on the "Income dividend" line, it shows $36.44, but if I do the requisite multiplication, .265 dividend on 175.227 shares, I actually got a dividend on that date of $46.44, but they only reinvested $36.44. On the next line they show the account maintenance fee of $10 charged on the same date.

However, if you really haven't been charged, be happy!

2old
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