Author Topic: Oppenheimer vs Vanguard  (Read 8179 times)

ethereality

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Oppenheimer vs Vanguard
« on: February 25, 2014, 09:49:55 PM »
Hi everyone,

I'm very new at learning about investing, so I'm trying to do as much reading as possible. I found out my grandmother had invested $10,000 for me in '12 for college, which is now at $14000. By the time I found out, I already had a plan in place to pay for college, so I left it to grow. It's invested in Oppenheimer's Main Street Fund A.

I took the advice here and invested the minimum $3000 in Vanguard's VTSMX. One of my goals is to invest $10,000 to get to the Admiral shares by the end of 2014.

Would it make sense to take money out of the Oppenheimer and transfer it to Vanguard? Or, switch entirely to Vanguard altogether. I also have some money in Vanguard's VFINX (based on advice by Ramit Sethi I think).

I will continue all my research, but I appreciate all of your collective wisdom as well!

ethereality

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Re: Oppenheimer vs Vanguard
« Reply #1 on: February 25, 2014, 09:52:27 PM »
I forgot to add that since I'm self-employed and making more money than I'll need in the near future, with nearly nothing to deduct from my taxes (no car, no house, no dependents), I'm researching SEP IRAs. Thinking of going with Vanguard as well, for simplicity's sake. Anyone have any specific recommendations? I think I could put in at least $3000 up front into a SEP IRA right now.

the fixer

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Re: Oppenheimer vs Vanguard
« Reply #2 on: February 25, 2014, 10:23:19 PM »
A few comments:
- when you open a SEP IRA with Vanguard, they do not require a $3000 minimum. I think I opened my SEP with something like $600, because it was all I could contribute that tax year. I was worried about this limit and asked on the phone, but they didn't even flinch, it's not a problem.
- consider an individual 401(k) instead of a SEP, there's a thread on the forum somewhere about that. It's more complex but those who use it say the extra complexity isn't so bad. Unless you're pulling in more than ~$200k, you can set aside more pre-tax money with the solo 401k than you can with a SEP.
- keeping your money in lots of separate places is costing you in increased expenses. For instance, owning VFINX and VTSMX. If the balances of these two accounts together are more than $10k, you're missing out on owning Admiral shares with a greatly reduced expense ratio that is guaranteed to increase your returns by about 0.1% per year. If you can sell one of these funds to buy the other without incurring too many tax consequences, you should do it. Watch out for wash sales from reinvested dividends, making dividends no longer "qualified," and excessive capital gains. If you can't cost effectively sell, convert each fund to Admiral shares as soon as possible by contributing to both until they're at least $10k, then continue contributing only to the one you like more (in your case it sounds like VTSMX)
- Your Oppenheimer fund would be great to sell, but you'd be subject to capital gains taxes. At the very least, stop automatic dividend reinvestment. Next, see if there are "tax lots" of shares that can be sold for either minimal capital gain or a loss, such as reinvested dividends here and there. With the rest, hold them until you encounter a tax year with abnormally low income, such as if you take an extended vacation or your work dries up or something, and sell then.

soccerluvof4

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Re: Oppenheimer vs Vanguard
« Reply #3 on: February 26, 2014, 04:09:25 AM »
I just want to add if you watch everyday it seems someone  posts  similar ??? vs Vanguard. I think that pretty much shows the volume behind Vanguard and for good reason the low cost on idex rates. I personally use a 4 fund approach in Vanguard in full disclosure of VTSAX, VTIAX,VBTLX,VGSLX. I agree with everything the fixer said as well. One thing i would do is go to there web sight and play around with there tools or call them to figure what best fits your comfort zone.

GlassStash

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Re: Oppenheimer vs Vanguard
« Reply #4 on: February 26, 2014, 08:30:45 AM »
I just want to add if you watch everyday it seems someone  posts  similar ??? vs Vanguard. I think that pretty much shows the volume behind Vanguard and for good reason the low cost on idex rates. I personally use a 4 fund approach in Vanguard in full disclosure of VTSAX, VTIAX,VBTLX,VGSLX. I agree with everything the fixer said as well. One thing i would do is go to there web sight and play around with there tools or call them to figure what best fits your comfort zone.

This is a great point. Vanguard has been the standard for a while now (although others do offer some great funds) and the comparisons show as much. Any new-ish investor would do well to invest in the Vanguard funds you listed and nothing else. Any funds with higher fees are out of the question.