Author Topic: Couple of quick questions about Vanguard  (Read 13805 times)

chantling

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Couple of quick questions about Vanguard
« on: September 27, 2013, 12:58:06 PM »
Hi, I've been following the Mustache blog for a couple of months now, and after reading the past posts on investing and browsing through jlcollinsnh's website, I decided to invest some cash I had sitting in a low interest checking account.  I wanted to start with a low entry minimum fund and then switch to VTSAX once I had $10000 saved.  I started with about $4500 (since increased to about $10500) and planned on having about $300-500/month that I could invest on an ongoing basis.

I opened up an account at optionshouse, but upon trying to make the trade, got an error that VDIGX was a mutual fund.  Weird, I thought they offered mutual funds, but since the trading page was an absolute nightmare for an investing idiot to try to figure out (I've flown 747's in flight simulators with fewer controls, gadgets, and doodads), I decided to switch brokerages.

Googled for the best online brokerage for mutual funds and found Scottrade.  The reviews I read said they charged no fees and no commissions for no-load funds (I thought), so I transferred my money over and bought $3000 of VDIGX (can't remember why I went with that over VTMSX), only to find out there was a transaction fee of $17. O_o $17 is a pretty big percentage if you're buying $300 worth of shares every month.

Clearly, I suffer from reading comprehension issues.  So I'm reading through Vanguard's website and they would appear to not charge transaction fees for their ETFs.  However, I thought this to be the case with Scottrade, and I was obviously way off the mark there.  So before I go switching everything over again, I wanted to verify:

  • If I open a Vanguard account, fund it, and begin investing in a no-load Vanguard ETF (say VTSAX), is there some fee that I will be charged?  They state no commission and no transaction fee, but I'd like to be sure I'm not going to be charged a "brokerage fee" or a "securities fee" or a "company picnic fee" or some other fee that I didn't know existed and therefore didn't know to check for.
  • Can I transfer the VDIGX shares I've already bought from Scottrade to Vanguard, or do I have to sell them and transfer the money?  Probably a moot point, as I now have enough to buy VTSAX anyway.
  • Is there a minimum amount of money I could invest each month?  I understand that I have to buy ETFs in whole increments, that there is a minimum investment on each of the ETFs, and that, for VTSAX at least, there is a $100 minimum for additional investments.  I don't see anything on their website about additional fees for monthly investments under a certain amount, though, so I assume that I could in theory invest $100/month without incurring some sort of penalty?

Thanks for any help

matchewed

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Re: Couple of quick questions about Vanguard
« Reply #1 on: September 27, 2013, 01:44:19 PM »
Opening an account at Vanguard and purchasing their index funds through them will result in you paying nothing but the expense ratio.

You would have to sell, take a check, cash it (save some for taxes), and open a Vanguard account and put the remaining in that.

There is no fee for a monthly investment.

https://personal.vanguard.com/us/funds/snapshot?FundId=0085&FundIntExt=INT#tab=3 Look at the fees & minimum tab. There is a 20$ fee for each <10k fund in your account but this can be waived by going electronic.

The Financial Lexicon

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Re: Couple of quick questions about Vanguard
« Reply #2 on: September 27, 2013, 02:52:28 PM »
"If I open a Vanguard account, fund it, and begin investing in a no-load Vanguard ETF (say VTSAX), is there some fee that I will be charged"

FYI that VTSAX is not an ETF.  The ETF equivalent of VTSAX is VTI.  There is no minimum investment in VTI (unlike in the mutual funds), and you can trade VTI for free (no commissions) at Vanguard.

Regards,

TFL

Greenbeard

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Re: Couple of quick questions about Vanguard
« Reply #3 on: September 27, 2013, 02:54:01 PM »
When you open your account at Vanguard you can do an "in-kind transfer" and move the funds without causing a taxable event.

Here is the paperwork you'd need:

http://www.vanguard.com/pdf/v412.pdf

I recommend chatting with a Vanguard representative.  I've found them to be knowledgeable and helpful.

kyleaaa

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Re: Couple of quick questions about Vanguard
« Reply #4 on: September 27, 2013, 03:42:28 PM »
If you're going to invest in Vanguard mutual funds, just open an account at Vanguard. There are no purchase fees whatsoever.

In general, you don't want to buy mutual funds through a brokerage. Just open an account with the company itself.

chantling

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Re: Couple of quick questions about Vanguard
« Reply #5 on: September 29, 2013, 08:14:28 AM »
Awesome.  Thanks so much for the information.

in2themild

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Re: Couple of quick questions about Vanguard
« Reply #6 on: September 29, 2013, 11:17:06 PM »
This is an interesting topic for me.  A couple of months ago I rolled over two old 401(k)'s into an IRA account I opened at Etrade.  After much internal struggle, I ended up splitting my ~$115 K or so amongst various Vanguard index funds: VB, VO, VT, VTI and VNQ (for fun).  I thought I covered my bases with my research to be sure that aside from the initial $10 commission (negligible in my opinion), I am only paying the expense ratios.  But it never occurred to me to open a new account with Vanguard itself.  Based on your research, do you think I biffed?  I was biased towards ETrade because it links conveniently to my money market, roth, etc accounts.

Will

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Re: Couple of quick questions about Vanguard
« Reply #7 on: September 29, 2013, 11:28:41 PM »
I thought I covered my bases with my research to be sure that aside from the initial $10 commission (negligible in my opinion), I am only paying the expense ratios.  But it never occurred to me to open a new account with Vanguard itself.  Based on your research, do you think I biffed?  I was biased towards ETrade because it links conveniently to my money market, roth, etc accounts.

Yes. But it is what it is.  Like you said, the $10 isn't much, so why sweat it? Are there any extra expenses now?  Or is it the same as if you had gone directly with Vanguard in the first place?

Greenbeard

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Re: Couple of quick questions about Vanguard
« Reply #8 on: October 02, 2013, 02:54:51 PM »
This is an interesting topic for me.  A couple of months ago I rolled over two old 401(k)'s into an IRA account I opened at Etrade.  After much internal struggle, I ended up splitting my ~$115 K or so amongst various Vanguard index funds: VB, VO, VT, VTI and VNQ (for fun).  I thought I covered my bases with my research to be sure that aside from the initial $10 commission (negligible in my opinion), I am only paying the expense ratios.  But it never occurred to me to open a new account with Vanguard itself.  Based on your research, do you think I biffed?  I was biased towards ETrade because it links conveniently to my money market, roth, etc accounts.

It's not too late, simply do an "in-kind" transfer to Vanguard and pay no taxes.  There is no sale of the equities required.  Vanguard make it easy.  Just initiate the transfer and they pretty much take care of everything.

I'm required to have an Etrade account for my work options, I've had an Etrade account for 8 years so I know their site well.  I've had my Vanguard account for 2 years.  For long term investing I feel Vanguard has nicer tools.

Vanguard leans toward buy and hold, so their tools stress long term gains and attempt to hide daily fluctuation.

Etrade makes money on transactions, so they would like you to trade often.  It seems they put focus on things like short term fluctuation.

Transferring money from Etrade to Vanguard is trivial.  Or from any checking account to Vanguard for that matter.   

neoptolemus412

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Re: Couple of quick questions about Vanguard
« Reply #9 on: October 05, 2013, 06:26:12 AM »
Vanguard charges outside brokers a fee to invest in Vanguard funds, unless it's a special circumstance around a sponsored retirement plan.  It's one of the ways they keep expense ratios so low.  They force people to either come to Vanguard for one stop shopping or pay an extra fee if they want to use an outside broker.  In fact, it's silly to buy Vanguard funds anywhere but Vanguard, unless you absolutely hate the extra paperwork. 

As a retail investor, if you simply want to invest your taxable/IRAs/Roths/SEPs/ect. in index funds, open up a Vanguard account directly with them.  They are not the best on advisory services, but make this up in offering simple, understandable funds that will cost you little on fees. 

J

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Re: Couple of quick questions about Vanguard
« Reply #10 on: October 13, 2013, 03:56:04 PM »
In addition to what others have already said (just invest directly with Vanguard), I'd also point out that if you start investing in the "investor"-class shares at Vanguard, and you hit $10k, Vanguard will automatically convert you to the "admiral"-class shares.  You don't need to change anything.

Also note that Vanguard supports direct deposit.  Highly recommended.

Brandon Curtis

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Re: Couple of quick questions about Vanguard
« Reply #11 on: October 13, 2013, 07:19:14 PM »