Author Topic: Traditional IRA - How do I switch from other fund families to Vanguard?  (Read 537 times)

GOFU

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Traditional IRA brokerage account at Vanguard.

I have a bunch of different funds in this IRA (BlackRock, Oppenheimer, a bunch of ETFs, etc.). I want to get out of most if not all of these and get into low cost Vanguard index funds.

Do I just sell the existing assets and then when the sale transactions clear use the cash to buy the Vanguard funds?

Is there a more efficient way to effect this exchange?

Thanks!

boarder42

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #1 on: February 04, 2018, 04:58:42 AM »
It's in an IRA so there aren't tax implications just sell then buy
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GOFU

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #2 on: February 04, 2018, 05:38:24 AM »
It's in an IRA so there aren't tax implications just sell then buy

Mechanically I don't see another way.

Those other funds charge transaction fees so I will pay for the sale but that's better than the high expense ratios. Dang some of those are high. Thanks Merrill Lynch.
« Last Edit: February 04, 2018, 06:22:19 AM by GOFU »

Rob_bob

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #3 on: February 04, 2018, 07:45:22 PM »
I don't know what funds you have or the ER but remember that just because Vanguard has low fees doesn't mean they have the best performing funds in every sector.  Sometimes paying a higher fee is made up for by better total returns.  All I'm saying is don't just say "oh the ER is lower so it must be better" compare total returns over a 10 year or longer period and see who comes out on top.

TomTX

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #4 on: February 04, 2018, 08:00:52 PM »
Traditional IRA brokerage account at Vanguard.

I have a bunch of different funds in this IRA (BlackRock, Oppenheimer, a bunch of ETFs, etc.). I want to get out of most if not all of these and get into low cost Vanguard index funds.

Do I just sell the existing assets and then when the sale transactions clear use the cash to buy the Vanguard funds?

Is there a more efficient way to effect this exchange?

Thanks!

Sell 'em all, put everything in VTI until you have at least $50k and don't mess around with it.
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boarder42

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #5 on: February 04, 2018, 09:00:56 PM »
I don't know what funds you have or the ER but remember that just because Vanguard has low fees doesn't mean they have the best performing funds in every sector.  Sometimes paying a higher fee is made up for by better total returns.  All I'm saying is don't just say "oh the ER is lower so it must be better" compare total returns over a 10 year or longer period and see who comes out on top.

This is a terrible way to look at anything. If you choose a fund based on what it did the last ten years it doesn't mean it will do it over the next 10. Low cost index funds are the best approach to investing. And you'll have to lay out some pretty convincing data to change anyone's mindset around here.
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GOFU

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #6 on: February 05, 2018, 03:59:04 AM »
"Sell 'em all, put everything in VTI until you have at least $50k and don't mess around with it."

I'm curious about the $50k part. What is the idea if it is $50k or above?

"I don't know what funds you have or the ER but remember that just because Vanguard has low fees doesn't mean they have the best performing funds in every sector.  Sometimes paying a higher fee is made up for by better total returns.  All I'm saying is don't just say "oh the ER is lower so it must be better" compare total returns over a 10 year or longer period and see who comes out on top."

I did look at the returns. Over 10 years every single one of those funds under-performs benchmark by anywhere from a few basis points up to five full percentage points. For the shorter 5, 3 and 1 year periods the under-performance spread is greater for almost every one. There is one that is performing 5 percentage points over benchmark for the last year (I bet that looks good in the current promotional campaigns), but its 10-year returns are less than half (43%) of benchmark.

As I see it there are two options: (1) higher returns with lower cost, or (2) lower returns with higher cost. How long should I think it over?

TomTX

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #7 on: February 05, 2018, 04:54:06 AM »
"Sell 'em all, put everything in VTI until you have at least $50k and don't mess around with it."

I'm curious about the $50k part. What is the idea if it is $50k or above?

It's my personal rule of thumb. Not worth diversifying to multiple funds and dealing with rebalancing unless you have at least $50k during accumulation. I'm perfectly happy if you want to stay with a single fund to at least $250k.

Having multiple funds means you need to select multiple funds, and track multiple funds - and not only is any likely improvement miniscule, there is the huge risk of getting emotionally invested and getting sucked into some flavor of market timing (well, the market's up a lot - I should delay rebalancing...)
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GOFU

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #8 on: February 05, 2018, 06:05:10 AM »
"Sell 'em all, put everything in VTI until you have at least $50k and don't mess around with it."

I'm curious about the $50k part. What is the idea if it is $50k or above?

It's my personal rule of thumb. Not worth diversifying to multiple funds and dealing with rebalancing unless you have at least $50k during accumulation. I'm perfectly happy if you want to stay with a single fund to at least $250k.

Having multiple funds means you need to select multiple funds, and track multiple funds - and not only is any likely improvement miniscule, there is the huge risk of getting emotionally invested and getting sucked into some flavor of market timing (well, the market's up a lot - I should delay rebalancing...)


Wouldn't the same thinking apply to higher amounts, say, a million?

TomTX

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #9 on: February 11, 2018, 10:36:40 AM »
"Sell 'em all, put everything in VTI until you have at least $50k and don't mess around with it."

I'm curious about the $50k part. What is the idea if it is $50k or above?

It's my personal rule of thumb. Not worth diversifying to multiple funds and dealing with rebalancing unless you have at least $50k during accumulation. I'm perfectly happy if you want to stay with a single fund to at least $250k.

Having multiple funds means you need to select multiple funds, and track multiple funds - and not only is any likely improvement miniscule, there is the huge risk of getting emotionally invested and getting sucked into some flavor of market timing (well, the market's up a lot - I should delay rebalancing...)


Wouldn't the same thinking apply to higher amounts, say, a million?

Sticking with just VTI isn't a problem, but the scale is large enough that it may be worth your time to look into a second or third fund. Perhaps a broad-based international fund. There are lots of reasons to diversify beyond a single ETF.
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GOFU

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #10 on: February 11, 2018, 12:44:29 PM »
I'm curious too why an ETF like VTI instead of a traditional index fund like VTSAX

TomTX

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #11 on: February 11, 2018, 06:31:15 PM »
I'm curious too why an ETF like VTI instead of a traditional index fund like VTSAX

VTSAX is perfectly fine if you are buying from Vanguard directly. If you have another brokerage, it's often cheaper/easier to get VTI.

VTI is also more portable when you change brokerages. For example, Merrill Edge paid me $600 to move over my IRA money. They could do an "in kind transfer" of VTI - so no selling and rebuying, my shares just move with the account. Couldn't do that with VTSAX.
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GOFU

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #12 on: February 11, 2018, 07:57:10 PM »
I'm curious too why an ETF like VTI instead of a traditional index fund like VTSAX

VTSAX is perfectly fine if you are buying from Vanguard directly. If you have another brokerage, it's often cheaper/easier to get VTI.

VTI is also more portable when you change brokerages. For example, Merrill Edge paid me $600 to move over my IRA money. They could do an "in kind transfer" of VTI - so no selling and rebuying, my shares just move with the account. Couldn't do that with VTSAX.
Makes good sense. And good info. Thank you, TomTX.

TomTX

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Re: Traditional IRA - How do I switch from other fund families to Vanguard?
« Reply #13 on: February 12, 2018, 05:33:37 AM »
Happy to help.
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