The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Jaketucson on July 12, 2012, 07:17:57 AM
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Is it a good idea to move all of our investments to Vanguard? The more I've been reading this blog and forum the more I've been researching where our money has been invested and I'm finding that Vanguard beats everything. I've already moved our Roths there, and now I'm looking at the kids' 401k plans. All of our investments (excepting our employer programs) were previously through John Hancock because my father was a financial planner with them for years. Being family, I don't get charged the sales load on the funds that is normally charged so I've mainly been comparing the expense ratios. Vanguard returns in some cases are similar but in others are much better, but the expense ratios are half or for the 529 plans 5 times less than our current plans! Is it a good idea to move all our investments to Vanguard, or would it be wise to keep some diversification in financial institutions as well? Our employers' retirement plans are not with Vanguard, so there's already some diversification, but otherwise I'd be putting the rest of the eggs in the Vanguard basket. The more I read about the company the more I like them but I'm still a bit wary. Opinions please!
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See Vanguard's FAQ (https://personal.vanguard.com/us/help/FAQBrokerageAcctWorkingsContent.jsp), under "How is my account protected." It appears that brokerages are insured by the SIPC (like FDIC for banks) up to $500k per person, and Vanguard has additional insurance for if they go out of business that protects accounts up to $49 million.
Besides, if Vanguard goes out of business you'll have bigger things to worry about.
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The Vanguard Group is also legally owned by its funds (http://en.wikipedia.org/wiki/The_Vanguard_Group), which are owned by you. This is much like how a credit union is legally owned by its members.
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I prefer to keep accounts with a couple of different companies. The 401k/IRA goes with Vanguard (because that's where the employer had the original 401k plan), but my personal stuff goes with T Rowe Price. I don't see all that much difference in types of funds available or expense ratios, but I do think TRP's online system is a lot easier to work with.