Author Topic: Convert to Admiral Shares myself?  (Read 549 times)

NewDay1

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Convert to Admiral Shares myself?
« on: April 15, 2019, 01:16:03 PM »
I just got a notice that at the end of the month one or more of my funds in my Vanguard ROTH IRA is going to convert to Admiral Shares, but that I can do the conversion on my own now following their procedures. 

1. Should I go ahead and do that now?
2. Does the worth of my investment change?
3. Is this a good thing primarily because of lower expenses?

Thanks for your thoughts.

secondcor521

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Re: Convert to Admiral Shares myself?
« Reply #1 on: April 15, 2019, 01:25:08 PM »
1.  If you want to.  Depending on how much you have there (I assume about $10K, that was the threshold for Admiral last I looked), you might save a few nickels to a few dollars in fund expenses.

2.  Well, obviously the value of your investment varies with the value of the underlying stocks or bonds or whatever.  But otherwise, no; there is no change or loss of value because of the conversion itself.  And there will be no tax consequences either.

3.  Yes.

Congrats on reaching that milestone!

terran

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Re: Convert to Admiral Shares myself?
« Reply #2 on: April 15, 2019, 01:27:30 PM »
1) Sure, but I probably wouldn't bother. Say you have $9,999.99 in VTSMX (because if you had $10k or more you'd already be in VTSAX) with an expense ratio of 0.14%. If you moved that to VTSAX, with an expense ratio of 0.04%, you'd have a 0.1% lower expense ratio. In a month that would be a savings of $9,999.99 x 0.1% / 12 = $0.83.

2) The number of shares you own will change, but the total value will not. For example, on 4/12 VTSMX was $72.32/share so the $9999.99 from the example above would be 138.274 shares, while VTSAX was $72.35/share for a total of 138.217 shares. Other investor/admiral class pairings may be more different. Regardless it doesn't matter -- the total value of your holdings won't change.

3) Yes, the only difference between investor and admiral class shares of Vanguard mutual funds is the lower expense ratio on the latter than the former.

1.  If you want to.  Depending on how much you have there (I assume about $10K, that was the threshold for Admiral last I looked), you might save a few nickels to a few dollars in fund expenses.

Vanguard has closed investor class mutual funds to new investors and lowered the minimum of admiral class shares to $3000, which is probably what has prompted to message Vanguard sent the OP. PS - Congrats on your 2000th post :-).
« Last Edit: April 15, 2019, 01:30:42 PM by terran »

NewDay1

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Re: Convert to Admiral Shares myself?
« Reply #3 on: April 15, 2019, 01:29:39 PM »
Thanks for the replies so far.  I haven't made it to $10K in these funds.  It's something Vanguard is doing for a bunch of funds now - making it a $3000K minimum to have admiral shares and getting rid of the other "investor' versions of the fund.

dorster

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Re: Convert to Admiral Shares myself?
« Reply #4 on: April 15, 2019, 02:28:21 PM »
1.  Yes, you'll gain confidence by taking baby steps such as converting from investor to admiral shares.
2. No.
3. Yes.

secondcor521

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Re: Convert to Admiral Shares myself?
« Reply #5 on: April 15, 2019, 02:41:15 PM »
1.  If you want to.  Depending on how much you have there (I assume about $10K, that was the threshold for Admiral last I looked), you might save a few nickels to a few dollars in fund expenses.

Vanguard has closed investor class mutual funds to new investors and lowered the minimum of admiral class shares to $3000, which is probably what has prompted to message Vanguard sent the OP. PS - Congrats on your 2000th post :-).

That's probably a good thing.  Thanks for the congrats! :)