Rollingover IRA Questions

[onecoolcat]

I was under the impression that Vanguard had the lower expense ratios on index funds, and they do for their admiral funds, but it looks to me like Fidelity has them beat on investor index funds. 

Vanguard 500 Index Fund Investor Shares (VFINX) has an expense ratio of 0.17%
Spartan 500 Index Fund - Investor Class has an expense ratio of 0.10%

When you get to $10,000 minimum investments its better to go with Vanguard because their Admiral Shares have an expense ratio of only 0.05% while Fidelity's Advantaged Class has an expense ratio of 0.07%. So, if I'm just starting my IRA, is it better to throw my 5.5k (uninvested from 2014) into Fidelity's FUSEX fund and then later in the year roll it over to Vanguard's Investor Shares after which I will hopefully have $10,000 to invest?  Tell me if this is just ridiculous or worthwhile.

Similarly, my wife just rolledover her IRA from a few years ago.  She had a CD (LOL) with $2,100.00 in it.  She planned to put it into her Vanguard account but there isn't a lot she can do with that amount.  She has $5,500 in Fidelity's Target Retirement 2045.  I'm no pro at investing but we were thinking she would be better off rolling that over into an index fund.  Here is what I'm thinking: 1) roll that Fidelity 2045 over to Vanguard, 2) invest $5,500 as her 2015 IRA contribution, and 3) use her rolledover $2,100.00 and throw this $13,000+ into Vanguard 500 Index Fund Admiral Shares (VFIAX).  Can we do that?  Then every year she could throw her max IRA contribution into that fund.

[seattlecyclone]

I was under the impression that Vanguard had the lower expense ratios on index funds, and they do for their admiral funds, but it looks to me like Fidelity has them beat on investor index funds. 

Vanguard 500 Index Fund Investor Shares (VFINX) has an expense ratio of 0.17%
Spartan 500 Index Fund - Investor Class has an expense ratio of 0.10%

When you get to $10,000 minimum investments its better to go with Vanguard because their Admiral Shares have an expense ratio of only 0.05% while Fidelity's Advantaged Class has an expense ratio of 0.07%. So, if I'm just starting my IRA, is it better to throw my 5.5k (uninvested from 2014) into Fidelity's FUSEX fund and then later in the year roll it over to Vanguard's Investor Shares after which I will hopefully have $10,000 to invest?  Tell me if this is just ridiculous or worthwhile.

Suppose you invest $5,500 right now in Fidelity and $5,500 six months from now, when you switch to Vanguard. The difference in expense ratios is 0.07%. 0.07% fees/year * $5,500 * 0.5 years = $1.93, give or take a few cents depending on how the market does in the next six months. Not worth it in my opinion. If you want to be with Vanguard long term, just start out with them now and pay the extra two bucks.

Similarly, my wife just rolledover her IRA from a few years ago.  She had a CD (LOL) with $2,100.00 in it.  She planned to put it into her Vanguard account but there isn't a lot she can do with that amount.  She has $5,500 in Fidelity's Target Retirement 2045.  I'm no pro at investing but we were thinking she would be better off rolling that over into an index fund.  Here is what I'm thinking: 1) roll that Fidelity 2045 over to Vanguard, 2) invest $5,500 as her 2015 IRA contribution, and 3) use her rolledover $2,100.00 and throw this $13,000+ into Vanguard 500 Index Fund Admiral Shares (VFIAX).  Can we do that?  Then every year she could throw her max IRA contribution into that fund.

Yes, you should be able to consolidate your IRAs into one, add in this year's contribution (is the Fidelity money her 2014 contribution? If not, make a 2014 contribution before a 2015 contribution), and put it all in a Vanguard Admiral index fund. I might recommend the total market fund rather than the 500 fund. This would give you better exposure to the full market. Vanguard's target retirement funds aren't bad either, because they give you some bond exposure as well.

[MrsCoolCat]

Speaking of which is there a limit to how many times one can transfer between accounts like Vanguard to Fidelity, etc. within the year? Seems like a hassle...