Author Topic: Merrill Edge vs. Vanguard Roth IRA  (Read 5157 times)

TooMuchGlass

  • 5 O'Clock Shadow
  • *
  • Posts: 36
Merrill Edge vs. Vanguard Roth IRA
« on: February 19, 2017, 02:00:31 PM »
So my wife and I have decided to jump on the FIRE bandwagon! We have no retirement accounts, and we want to establish a couple of Roths for 2016.

We bank at Bank of America (this could change in a few months), who is partnered with ME.

Apart from the fact that our Roths would be clearly visible when logging into our bank info, is there any reason to go with ME over Vanguard, who seems to be the darling of the forum?

MDM

  • Walrus Stache
  • *******
  • Posts: 9711
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #1 on: February 19, 2017, 03:06:02 PM »
...is there any reason to go with ME over Vanguard, who seems to be the darling of the forum?
Fidelity's and Schwab's low fee index funds also get a lot of love here. :)

What would it cost you at ME vs. your options at Fidelity/Schwab/Vanguard?

TooMuchGlass

  • 5 O'Clock Shadow
  • *
  • Posts: 36
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #2 on: February 19, 2017, 05:25:31 PM »
MDM, why would you do that to me? Introduce two more great options which I now must research? The nerve!

For real, ME is good because we have the requisite funds in our bank account to get 30 free trades a month. How many will we use? Hell if I know! My guess is 0, though. Then sometimes a few.

I think ME also has more options for where to put our money, which sounds like it could be good for someone who knows wtaf they are doing.

I like Vanguard for the low rates, buy one freaking fund that people say is good (read: lowest cost, broad index fund) and then roll with it until I'm like 80.

I'm sure fidelity and schwab rock, too, but for now unless there is a marked advantage of one of those over BSACKS or whatever all the Vanguard fanboys are always talking about, then just give me the BSACKS, ya know?

MDM

  • Walrus Stache
  • *******
  • Posts: 9711
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #3 on: February 19, 2017, 06:15:57 PM »
I think ME also has more options for where to put our money, which sounds like it could be good for someone who knows wtaf they are doing.

I like Vanguard for the low rates, buy one freaking fund that people say is good (read: lowest cost, broad index fund) and then roll with it until I'm like 80.
Actually, too many options can be a problem.  You don't need much (any?) more than a decent Three-fund portfolio.

The fund expense ratios should be more of a concern than the trading fees.  That's what "cost you at ME" was about.

Spork

  • Walrus Stache
  • *******
  • Posts: 5753
    • Spork In The Eye
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #4 on: February 19, 2017, 06:17:34 PM »
I'd avoid Merrill Edge at all costs.  I spent years trying to get my dad out of it (to no avail).  When he died, I've tried to convince the other beneficiaries to get their money out of it (to no avail).

Take a gander at this:
https://www.personalcapital.com/assets/whitepapers/PC_Fees_WhitePaper.pdf

Now first off, totally ignore Personal Capital other than the producer of this flashy "buy our stuff" brochure.  It definitely is written to make PC look all golden and shiny.  Also note that Vanguard isn't even mentioned.  The reason likely being that there was no way they could spin Vanguard in a way that made them look more expensive than PC.  The point is: ML is very likely the absolutely most expensive way to invest. 

What they did for my dad... well, he was with some really awful rip off artists, so when he moved to ML... it was probably a real blessing.  They were better than what he'd used before.  But he was a very high earner and a real cheapskate in most areas of his life.  I was shocked at how little his nest egg was.  It was still big... but based on his earning and spending, it should have been huge. 

TooMuchGlass

  • 5 O'Clock Shadow
  • *
  • Posts: 36
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #5 on: February 19, 2017, 07:10:38 PM »
Spork, my (extremely limited) research indicates that you're right. .85-.90 was the lowest I saw on ME's investment choices. Thanks for the help!

MDM,

I took a look at the ERs for ME and Vanguard. While those Admiral shares looked awesome (.08? Seriously?), I know we won't have access to those in our Roths until we have 10k a piece in them. That isn't something I'm comfortable doing right away, so we are just going to max out our 2016 ones for now. Maybe just throw the whole lot into Target Retirement 2060 (.13) or something. Then we can trade over to VTSAX etc. once we get to admiral status for no fee because we are trading within the Vanguard family (I hope I got that part right).

Also, I want to publicly acknowledge that I'm sure this info is available somewhere else, and that asking for the badasses of the forum to mamabird the info to me is ridiculous. The skin between my lip and nose is smooth as a baby's bottom. I get it.

But, wow, I super appreciate it. Thanks all.

MDM

  • Walrus Stache
  • *******
  • Posts: 9711
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #6 on: February 19, 2017, 10:48:22 PM »
I took a look at the ERs for ME and Vanguard. While those Admiral shares looked awesome (.08? Seriously?), I know we won't have access to those in our Roths until we have 10k a piece in them. That isn't something I'm comfortable doing right away, so we are just going to max out our 2016 ones for now. Maybe just throw the whole lot into Target Retirement 2060 (.13) or something. Then we can trade over to VTSAX etc. once we get to admiral status for no fee because we are trading within the Vanguard family (I hope I got that part right).
The ~0.1% difference between admiral and investor class shares, or even admiral vs. target retirement date funds, is nowhere near as important as the ~1% (or more) difference between low cost and high cost funds.

Spork

  • Walrus Stache
  • *******
  • Posts: 5753
    • Spork In The Eye
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #7 on: February 20, 2017, 09:00:22 AM »
I took a look at the ERs for ME and Vanguard. While those Admiral shares looked awesome (.08? Seriously?), I know we won't have access to those in our Roths until we have 10k a piece in them. That isn't something I'm comfortable doing right away, so we are just going to max out our 2016 ones for now. Maybe just throw the whole lot into Target Retirement 2060 (.13) or something. Then we can trade over to VTSAX etc. once we get to admiral status for no fee because we are trading within the Vanguard family (I hope I got that part right).
The ~0.1% difference between admiral and investor class shares, or even admiral vs. target retirement date funds, is nowhere near as important as the ~1% (or more) difference between low cost and high cost funds.

And for the path wife and I chose... we bought everything in investor class.  At some point in the future, with continued investment, it just converts automatically to Admiral.  You don't have to save up enough to buy Admiral. 

For a new Roth, you can only contribute $5,500 each in 2017 anyway.  ($1000 more if you're over 55).  You won't hit the $10k on year 1.  But you can definitely hit it on year 2 if you are maxing it out.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5109
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #8 on: February 20, 2017, 09:53:20 AM »
Merrill Edge can have some benefits if you use it correctly.  If you move $250k over, you get $600, plus a bunch of free trades.  If you invest in low cost ETF's, it's as cheap as Fido.  No account fees but it will cost you a couple of dollars to sell, which you aren't going to do for many years.  You also get some perks with B of A.  At that level, you get a 75 percent bonus in credit card rewards.  If you would normally get 2 percent cash back on a transaction, you would get 3.5 percent instead.  Free checking and savings accounts, reductions in loan rates, free cashiers' checks etc. are additional benefits.

Note this is for self-directed Merrill Edge accounts.  Anything involving an "advisor" or "guidance" should be avoided.  Cause that's where they get you with the fees and the poor quality "products."

Ramparts

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #9 on: February 20, 2017, 11:21:31 AM »
I'd avoid Merrill Edge at all costs.  I spent years trying to get my dad out of it (to no avail).  When he died, I've tried to convince the other beneficiaries to get their money out of it (to no avail).

Take a gander at this:
https://www.personalcapital.com/assets/whitepapers/PC_Fees_WhitePaper.pdf

Merrill Edge is not the same thing as Merrill Lynch. The 'Edge' part is the discount brokerage that was formed when they merged with Bank of America, and if you use Merrill Edge it does not imply that you have a financial advisor or are in funds with high fees. The paper you link to talks about Merrill Lynch, which is the traditional investment service that it sounds like your dad was in.

Spork

  • Walrus Stache
  • *******
  • Posts: 5753
    • Spork In The Eye
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #10 on: February 20, 2017, 01:09:57 PM »
I'd avoid Merrill Edge at all costs.  I spent years trying to get my dad out of it (to no avail).  When he died, I've tried to convince the other beneficiaries to get their money out of it (to no avail).

Take a gander at this:
https://www.personalcapital.com/assets/whitepapers/PC_Fees_WhitePaper.pdf

Merrill Edge is not the same thing as Merrill Lynch. The 'Edge' part is the discount brokerage that was formed when they merged with Bank of America, and if you use Merrill Edge it does not imply that you have a financial advisor or are in funds with high fees. The paper you link to talks about Merrill Lynch, which is the traditional investment service that it sounds like your dad was in.

I know when he died and I inherited a portion, it came out of "Merrill Edge". Now, there still may be some distinction.  He definitely had an advisor that was buying/trading all the time. 

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5109
Re: Merrill Edge vs. Vanguard Roth IRA
« Reply #11 on: February 20, 2017, 05:43:09 PM »
Merrill Edge has an advisor option.  Just don't use it.  Banks and brokerages offer you all kinds of disadvantageous options.  Even Vanguard has some less than stellar managed funds. Pick the options that benefit you and let someone else pay your share of the cost by choosing less wisely.

Here's the webpage:  https://www.merrilledge.com/investing