Author Topic: Pulling the trigger - moving my actively managed funds to Vanguard!  (Read 2031 times)

iluvzbeach

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After reading MMM and the forums over the past year and learning quite a bit more about money in general, I've decided to pull my IRA (originally a 401K with a former employer) from an advisor who actively manages the funds and place them with Vanguard.  The amount we're talking about here is approximately 110K.

The funds have been actively managed for the past four years and as I reviewed my year-end statements from 2011 - 2014, it became apparent I could do much better.  I've been paying somewhere around 1.25% - 1.5% per year in account management fees and I am certain there are many more fees embedded within the funds themselves.  The returns (after fees) on my IRA last year were only 4.31% and I'm certain it could have been much better in some Vanguard funds.  I've learned quite a bit about how the fees have an impact on the growth of your funds and I've also watched (twice!) the PBS episode called The Retirement Gamble.

I prepared, but not attached, a detailed spreadsheet showing my returns over the past three years and comparing it to the funds I'd like to invest in (not sure whether this is the right way to look at it, so let me know if I'm way off base by doing it this way - trust me, I know that past fund performance is not a guarantee of future performance) and the difference in the Vanguard scenario is sizable.  Based upon my research, I was contemplating the following investment allocation and would appreciate any input you can provide:

    VTSAX - 30%
    VIMAX - 30%
    VBTLX - 20%
    VBIAX - 20%

Just to give you a little more background, I am maxing out 401K at current employer (my husband is doing the same), we have no children and our only debt is 34K on a mortgage that we're on track to payoff before the end of this year.  We have an emergency fund that we could live on for a year if we were to both end up unemployed and are working on a plan to retire in 5 1/2 years.  If one of us lost a job, we could easily live on the other person's salary.  I'll probably post a case study with all the nitty gritty details at some point in the future, but am not quite yet ready to do so.

After weeks of contemplating everything, I made the decision to bite the bullet and move the funds following some else's "ape-shit" post this past weekend and a recent experience that was nearly identical as what he/she was written about.  I would appreciate any input that others can provide.  Thank you for taking the time to review my post.

JasonS

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Re: Pulling the trigger - moving my actively managed funds to Vanguard!
« Reply #1 on: February 23, 2015, 05:39:35 PM »
Good move getting away from the financial advisor.
Everyone will have an opinion on your fund choices, "too many bonds" "not enough small cap" "where's the International exposure", etc.
Whatever you choose will likely turn out to be better than the financial advisor in the long run.
but I'd add some international index fund ;-)

MDM

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Re: Pulling the trigger - moving my actively managed funds to Vanguard!
« Reply #2 on: February 23, 2015, 07:40:30 PM »
Good move getting away from the financial advisor.
Everyone will have an opinion on your fund choices, "too many bonds" "not enough small cap" "where's the International exposure", etc.
Whatever you choose will likely turn out to be better than the financial advisor in the long run.
but I'd add some international index fund ;-)
+1

Also, look at the "Month-end ten largest holdings" for https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT and https://personal.vanguard.com/us/funds/snapshot?FundId=0502&FundIntExt=INT.

If you knew about the overlap between these funds, go for it.  Otherwise you might look for funds with less overlap, or choose fewer funds.