Move T.Rowe Price ROTH IRA to Betterment, Vanguard or Fidelity?

[ponyespresso]

I have a T. Rowe Price ROTH IRA invested in their 2040 target retirement fund (TRRDX). I just tried out Stockchoker (it is kind of fun although slightly painful because I think there will always be a fund that outperformed yours!) and learned that I would have done better had I invested it in VTSMX (15,189.64) vs what I've earned (12,922.83). This is starting from $7056 in Oct 2009. I'm fine with the returns I've gotten as they were pretty good, however the expense ratio is high and may account for a decent amount of that discrepancy in gains. The expense ratio is 0.75%. And I know how it can add up over time. I think the reason I went with TRP originally was I started with small monthly automatic contributions and I didn't have the minimum necessary to start a Vanguard fund back in the day. I can't remember why I went with TRP instead of Fidelity, but it doesn't really matter now.

Anyway it's the expense ratio that's making me think of moving (or if you have a suggestion for something good with lower expense ratio at TRP too) Also I think I can contribute to the ROTH this year because our income is lower this year.

I'm thinking I should roll it over into Vanguard or Betterment. I also have an existing Fidelity account (trad IRA). Any opinions? I don't mind rebalancing myself, and reviewing my investments periodically. I do like Betterment's UI, but they cost more. And with things like Personal Capital I can view all my investments in their pretty UI.

[JordanOfGilead]

I have a Roth IRA with vanguard and the expense ratio is only 0.16%. I've only had it since May though, so I can't really comment on their long-term performance.

[EOS]

I believe you can purchase Vanguard funds through T. Rowe..

[ponyespresso]

that would be nice, no rollover forms to fill out! I'll look into it.

I believe you can purchase Vanguard funds through T. Rowe..

[Full Beard]

Earlier this year I did a direct rollover from T. Rowe Price to Vanguard with my Roth IRA.  I also had the Retirement 2040 fund and wanted to bring the expenses down.  T. Rowe Price charged me $20 for a closeout fee and they transferred my money directly to Vanguard.  It is a little nerve-racking being out of the market for several days to a week while your money is being rolled over.  With your balance being fairly small it shouldn't matter too much now what the market does, but it will matter in the long run with lower fees on your growing balance.

[Bbqmustache]

I am in the process of moving two IRAs to Vanguard.  One at Merrill Edge, who charges me if I want to by efficient ETFs.  The other at a advisory firm that I let them manage it for about 5 years.  Their fees plus the funds' 12.B1 fees put me in a hole that their management could not perform the magic needed to come close to matching the market, either in high times or low times.  I knew not to expect market matching returns during a boom cycle, but the downside protection the touted did not occur.

Putting it into five funds, sorry I don't have the ticker symbols:  REIT, Total Stock Market Index, Mid-Cap Index, Small Cap Growth Index and High Dividend Yield Index.  I will roll with these for a few years.  With no 1.25% management fee and fund fees below .2%, I am loving the Vanguard low cost to investing approach!

[seattlecyclone]

I have a T. Rowe Price ROTH IRA invested in their 2040 target retirement fund (TRRDX). I just tried out Stockchoker (it is kind of fun although slightly painful because I think there will always be a fund that outperformed yours!) and learned that I would have done better had I invested it in VTSMX (15,189.64) vs what I've earned (12,922.83).

This is not a great comparison. I'm not too familiar with T. Rowe Price's target date funds, but I have to assume they're fairly similar to Vanguard's in that they hold mostly stocks and some bonds, with a plan to switch to a more bond-heavy composition as we get closer to 2040. Stocks have outperformed bonds since 2009, so of course a mixed fund will underperform a 100% stock index fund! If you compare this T. Rowe Price fund to Vanguard's own 2040 target date fund, their performance since 2009 is actually quite similar. You're probably going to be better off with Vanguard's lower expense ratios in the long run, but differences in expense ratios only explain a small portion of why your own holdings underperformed the US total stock market index. Differences in asset classes are the big culprit here.

Before you go ahead with investing in Vanguard funds through your current account, look into what trading fees (if any) you will have to pay each time you buy or sell shares of these Vanguard funds. There are no trading charges when you have the money in an actual Vanguard account.

[mrpercentage]

I like T Rowes funds a lot. I use them in my 457. I think if you were to pick a mutual fund company T Rowe is probably # 1 for funds that out perform with low cost.

I use PAMCX. Its a closed fund now. If you can get into one of those when they open they will probably be worth your time.

I also use Vanguard Small Cap Index for my 457.

I would keep T Rowe personally. Or I would keep what I have in it anyway. I don't like target dates though. T Rowe's growth funds are so much better. Don't blame you for hearing the sirens call you to Vanguard. They are just so easy with so many options. I also have an American Funds Roth that Im leaving alone but not currently adding to. It will be there waiting for me when I retire.

[ponyespresso]

seattlecyclone, that is very true and it's not really fair comparison because of the bond/stock ratio.

I realized I'd rather be 100% in stocks and rebalance myself later on down the line.  I don't know why I moved into target date funds way back when. Probably advice online. It's not bad advice but I don't mind thinking about my investments and doing research and making decisions.

I'll check out their growth funds, see what they look like. I may end up rolling it over to try to minimize the number of accounts, but I guess it doesn't really matter. All these websites aggregrate them for me as it is (P.C., Mint, etc.) so it's easy to keep track of the total.

[rmendpara]

I have a T. Rowe Price ROTH IRA invested in their 2040 target retirement fund (TRRDX). I just tried out Stockchoker (it is kind of fun although slightly painful because I think there will always be a fund that outperformed yours!) and learned that I would have done better had I invested it in VTSMX (15,189.64) vs what I've earned (12,922.83). This is starting from $7056 in Oct 2009. I'm fine with the returns I've gotten as they were pretty good, however the expense ratio is high and may account for a decent amount of that discrepancy in gains. The expense ratio is 0.75%. And I know how it can add up over time. I think the reason I went with TRP originally was I started with small monthly automatic contributions and I didn't have the minimum necessary to start a Vanguard fund back in the day. I can't remember why I went with TRP instead of Fidelity, but it doesn't really matter now.

Anyway it's the expense ratio that's making me think of moving (or if you have a suggestion for something good with lower expense ratio at TRP too) Also I think I can contribute to the ROTH this year because our income is lower this year.

I'm thinking I should roll it over into Vanguard or Betterment. I also have an existing Fidelity account (trad IRA). Any opinions? I don't mind rebalancing myself, and reviewing my investments periodically. I do like Betterment's UI, but they cost more. And with things like Personal Capital I can view all my investments in their pretty UI.

Your first mistake is comparing the return from a stock/bond fund to a 100% stock fund.

Look at Vanguard's 2040 fund and check the performance from when you invested in 2009 through today and compare that to your TROW fund. It will likely be very close.

In the long run, fees will be important if they are significantly higher for a fund that has the same allocation as another fund with lower fees (remember that any price data you see online is Net of fees... meaning fees are removed automatically from the fund assets).

I'm a fan of Vanguard, but if your motivation is performance, there are comparably good options through TROW too. Also, you can purchase Vanguard funds through TROW, I believe, if you really want something that they offer... just check on transaction fees, if any.

Another option would be to open a new IRA or whatever account at Vanguard/Fidelity and start contributing there going forward.

If you really wish, you can roll over the account (for retirement acounts) or do an "in kind transfer" for a taxable account to move the assets between brokerages.

[ponyespresso]

Good idea, I will compare to the Vanguard 2040. Turns out TRP has beat it (using 2006 as the start date). And it's given me nice returns, but I started thinking about the money one can lose out from with the expense fees. But it seems those managers know what they are doing.

I started looking at some of TRPs other offerings last night. Some have also had good performances compared to the indexes (as in beating them). thanks for the advice! I'll compare some of them to VTSAX, Spartan funds, etc. then go from there. Thanks for the help!