Author Topic: Help Resolving Mistake of High Fee Investments  (Read 2815 times)

blahblahblah

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Help Resolving Mistake of High Fee Investments
« on: May 17, 2017, 09:57:54 AM »
Before discovering MMM last summer I was on Team Ramsey.  I used on of his ELPs to invest a large amount of savings (3 years of savings, 1 yr salary).  I had met w a few financial planners all of whom told me about all the fees they had.  This guys told me the only fee was an upfront fee, and was lower the more I invested.   Sooooo I went with his 4.5% upfront fee and got loaded into American Funds.  I've just broken ahead of the initial fees and have about a 1% return 10 months in.  Was looking at sticking with it, after all the fee would go down with more invested.  But I'm an idiot and there are still the regular fund fees made on sale of funds... I was sure this was the case but was assured the only fee was the upfront.

Anyways, what's the best way to roll this money into Vanguard or similar?  We have 2 Roths and a tax exempt preservation portfolio there. 
Easy on the questions, I was severely under-educated and probably don't know enough answers.

401K is with Fidelity, I am happy with the guidance and information available through their sight, have investments there that are .18%-.78% in fees.  Would be interested in a way to convert the American Funds accounts to Fidelity... sounds comparable to Vanguard... maybe slightly higher fees?

Holyoak

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Re: Help Resolving Mistake of High Fee Investments
« Reply #1 on: May 17, 2017, 03:56:35 PM »
Hey Blah,

Give VG a call, and explain your situation.  They are very good at what you are wanting to do painlessly, and pretty quick considering how insanely busy they are; since 2012, they have added almost $2.5 TRILLION to their AUM!!!  Mr. 4.5% upfront, and packing you into expensive AM funds glory days are over...  And I love it! 

Also, please be easy on yourself...  You learned a valuable lesson, and now are set to start getting a whole lot more back, especially if you can put $10k+ per VG fund, to receive Admiral shares.  Good luck.

Another Reader

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Re: Help Resolving Mistake of High Fee Investments
« Reply #2 on: May 17, 2017, 04:12:49 PM »
Fidelity has funds and ETF's that are similar in cost to Vanguard.  Check out their index funds and no-commission ETF's.  The service is much better, the website cleaner and more robust, and there are offices in most metropolitan areas. Vanguard cannot compete with Fidelity in these areas. In your shoes, I would consolidate your accounts at Fidelity.

Frankies Girl

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Re: Help Resolving Mistake of High Fee Investments
« Reply #3 on: May 17, 2017, 04:17:40 PM »
https://www.bogleheads.org/wiki/Fidelity
^ Fido funds that match up with Vanguard.

I have all my accounts with Fidelity. They are just as good and in some cases better as long as you stick with the low fee index funds. Agree with Another Reader - if it was me, that's what I would do (and actually did).

smallstache

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Re: Help Resolving Mistake of High Fee Investments
« Reply #4 on: May 17, 2017, 07:06:06 PM »
Dave Ramsey's advice on investing is one step above penny stock tips.  His model portfolio is confusing to beginners (what is the difference between "growth", "aggressive growth", and "growth and income"?  Which is an S&P 500 index fund???), completely undiversified, and is expensive as hell ("A" shares anybody?).

--Break, break--

I've heard a lot about how Vanguard's website is a piece of shit.  I don't get that sentiment..have had no issues with Vanguard.

I wish I could compare Vanguard's site to Fidelity's, but Fidelity blocked my access because I logged in from my Air Force computer that has an out-of-state IP address.  Fidelity would not restore my access until I proved to them that I took my home (not work, as if the Air Force would let me) computer to a repair shop to get it "professionally cleaned."  Whatever.  In my book, Fidelity is a shitty company.  I cashed out the taxable Fidelity account and put the proceeds into Vanguard IRAs.

blahblahblah

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Re: Help Resolving Mistake of High Fee Investments
« Reply #5 on: May 17, 2017, 09:45:59 PM »
I appreciate the reassurance that this wasn't a total disaster, still a bummer.  I will research both Fidelity and Vanguard options in more detail.

I doubt I'll make a decision before the end of the month when I'm scheduled to auto deposit into Am.F..  Since it's post tax money I might as well deposit the minimum amount (think it's $50) to minimize more fees and hold the typical deposit for a few weeks in the 1% Ally account while I think this through, yeah?

Thanks again guys, helpful insight.


blahblahblah

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Re: Help Resolving Mistake of High Fee Investments
« Reply #6 on: May 18, 2017, 06:36:59 AM »
I appreciate the reassurance that this wasn't a total disaster, still a bummer.  I will research both Fidelity and Vanguard options in more detail.

I doubt I'll make a decision before the end of the month when I'm scheduled to auto deposit into Am.F.. Since it's post tax money I might as well deposit the minimum amount (think it's $50) to minimize more fees and hold the typical deposit for a few weeks in the 1% Ally account while I think this through, yeah?

Thanks again guys, helpful insight.

I don't quite follow why you would need to do this?

Well now that I think about it... I took the requirement of depositing a monthly minimum to mean it was a requirement of the account, but maybe it was that in order to have auto deposits the minimum amount was there. 

Car Jack

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Re: Help Resolving Mistake of High Fee Investments
« Reply #7 on: May 18, 2017, 07:13:07 AM »
It's widely known in the low cost investment world that Dave Ramsey has become a total slime ball.  I am unaware of a way to incur higher fees than to go with his network of investment advisers.  I really think he needs some jail time.

How do you get the money out of their grasp?  The easiest way that I know of is to first find what bonuses are available with Fidelity.  Call them or click the box or whatever is needed and then just move everything online.  If you want help, they have brick and mortar stores and will do all the work for you right there.  Once there, I think you need to rethink what you're doing within Fidelity.  There's no need for their "advice" for investing.  You can ask on Bogleheads and receive much better, lower cost, more stable, simple advice.

I have most of my money at Fidelity, so am pretty familiar with banging around their site.  To find the funds to go with, go to research, click low cost and just hit the "show me" button (or whatever it says today).  On the left, you'll click through some of the different options and find minimum investment.  I click $25k because for some reason, there isn't a $10k option.  But doing the $25k removes all the $100M options.  Now hit the expense ratio column header.  Hit it again.  Now the funds should be listed from low to high ER.  You'll find a total US Market Premium listed and there's your US stock fund.  Now, you can change type of investment to Bond and work the same magic.  Finally, international.  With these, you're going to get the lowest cost index funds Fidelity has.  Use them. 

The market for brokerage houses has changed dramatically in the last 2 years.  Vanguard, who in the past was the low cost leader has fallen behind.  Yes, they have the most low cost index funds.....but if you're buying 3 funds, why does having another 100 available help?  Schwab is lower cost than anyone.  Unless you have $100M minimum for Fidelity's institutional premium shares.  Schwab has recently matched their low ETF ERs with the same mutual fund, so it's now a rival to both Vanguard and Fidelity.  If you really, really fell that Vanguard has the best products but don't like hour long phone waits and having to get a Medallion signature for everything, consider TDAmeritrade.  Sign up for free ETFs and buy any of the most popular Vanguard ETFs at the same cost as if you were inside Vanguard.  Like Fidelity and Schwab, you can go to a TDA store or call at 10 at night and not get the message that "we don't work this late, sorry, call us when your banker gets to work". 

Full disclosure, I have accounts at Fidelity, TDAmeritrade, Schwab and Vanguard.  I see first hand what they're all doing.

Another Reader

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Re: Help Resolving Mistake of High Fee Investments
« Reply #8 on: May 18, 2017, 08:21:20 AM »
Dave Ramsey's advice on investing is one step above penny stock tips.  His model portfolio is confusing to beginners (what is the difference between "growth", "aggressive growth", and "growth and income"?  Which is an S&P 500 index fund???), completely undiversified, and is expensive as hell ("A" shares anybody?).

--Break, break--

I've heard a lot about how Vanguard's website is a piece of shit.  I don't get that sentiment..have had no issues with Vanguard.

I wish I could compare Vanguard's site to Fidelity's, but Fidelity blocked my access because I logged in from my Air Force computer that has an out-of-state IP address.  Fidelity would not restore my access until I proved to them that I took my home (not work, as if the Air Force would let me) computer to a repair shop to get it "professionally cleaned."  Whatever.  In my book, Fidelity is a shitty company.  I cashed out the taxable Fidelity account and put the proceeds into Vanguard IRAs.

Happy to hear Fidelity is security conscious.  I would not like the sequence of events you describe either. 

Another Reader

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Re: Help Resolving Mistake of High Fee Investments
« Reply #9 on: May 18, 2017, 08:24:17 AM »

How do you get the money out of their grasp?  The easiest way that I know of is to first find what bonuses are available with Fidelity.  Call them or click the box or whatever is needed and then just move everything online.  If you want help, they have brick and mortar stores and will do all the work for you right there.  Once there, I think you need to rethink what you're doing within Fidelity.  There's no need for their "advice" for investing.  You can ask on Bogleheads and receive much better, lower cost, more stable, simple advice.

I have most of my money at Fidelity, so am pretty familiar with banging around their site.  To find the funds to go with, go to research, click low cost and just hit the "show me" button (or whatever it says today).  On the left, you'll click through some of the different options and find minimum investment.  I click $25k because for some reason, there isn't a $10k option.  But doing the $25k removes all the $100M options.  Now hit the expense ratio column header.  Hit it again.  Now the funds should be listed from low to high ER.  You'll find a total US Market Premium listed and there's your US stock fund.  Now, you can change type of investment to Bond and work the same magic.  Finally, international.  With these, you're going to get the lowest cost index funds Fidelity has.  Use them. 

The market for brokerage houses has changed dramatically in the last 2 years.  Vanguard, who in the past was the low cost leader has fallen behind.  Yes, they have the most low cost index funds.....but if you're buying 3 funds, why does having another 100 available help?  Schwab is lower cost than anyone.  Unless you have $100M minimum for Fidelity's institutional premium shares.  Schwab has recently matched their low ETF ERs with the same mutual fund, so it's now a rival to both Vanguard and Fidelity.  If you really, really fell that Vanguard has the best products but don't like hour long phone waits and having to get a Medallion signature for everything, consider TDAmeritrade.  Sign up for free ETFs and buy any of the most popular Vanguard ETFs at the same cost as if you were inside Vanguard.  Like Fidelity and Schwab, you can go to a TDA store or call at 10 at night and not get the message that "we don't work this late, sorry, call us when your banker gets to work". 

Full disclosure, I have accounts at Fidelity, TDAmeritrade, Schwab and Vanguard.  I see first hand what they're all doing.

The advice and fund fees are for choices in a 401k, not the OP's personal investments.  +1 on everything else quoted.

blahblahblah

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Re: Help Resolving Mistake of High Fee Investments
« Reply #10 on: May 18, 2017, 02:38:03 PM »
Thanks Car Jack, you're right this should be as simple as just moving the money.  Since the big fee was paid on the front end, there's no reason to wait for a good time to transfer.  I just need to do it.  Weekend task #1.

Fidelity "advice" = exactly as you described, I find their data presentation helpful in making decisions through the research option and have found some of the other tools to be helpful.  I'll probably find a brick and mortar to switch things over for mental ease if I go that route.

Thanks for putting Schwab on my radar, I'll look into them as well.

smallstache

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Re: Help Resolving Mistake of High Fee Investments
« Reply #11 on: May 19, 2017, 05:45:00 AM »
Dave Ramsey's advice on investing is one step above penny stock tips.  His model portfolio is confusing to beginners (what is the difference between "growth", "aggressive growth", and "growth and income"?  Which is an S&P 500 index fund???), completely undiversified, and is expensive as hell ("A" shares anybody?).

--Break, break--

I've heard a lot about how Vanguard's website is a piece of shit.  I don't get that sentiment..have had no issues with Vanguard.

I wish I could compare Vanguard's site to Fidelity's, but Fidelity blocked my access because I logged in from my Air Force computer that has an out-of-state IP address.  Fidelity would not restore my access until I proved to them that I took my home (not work, as if the Air Force would let me) computer to a repair shop to get it "professionally cleaned."  Whatever.  In my book, Fidelity is a shitty company.  I cashed out the taxable Fidelity account and put the proceeds into Vanguard IRAs.

Happy to hear Fidelity is security conscious.  I would not like the sequence of events you describe either.

They are all security conscious.  Fidelity is paranoid or something.  Same thing happened to a guy that tried to log into his account through a VPN, which is way more security than Starbucks' open wifi.