Vanguard Account

[thebeachbum]

Hey Mustache Nation,

These may be dumb questions but I knew i would get good info if i asked them here regarding vanguard accounts.(I have never bought stocks on my own before)

1. How did you invest in vanguard? open an account through vanguard's website? through a different entity like betterment?
2. can you withdraw your money form your vanguard account? how often? are there any penalties? (obviously i would need to maintain the minimum balance)

 My situation:
I am a small time real estate investor, and want to save for my next down payment, however i don't want the money just to sit in my savings account, could i put it in a vanguard account, and then in about a year pull it out (or most of it) and use it to buy a house. is this a viable option? looking for advice, and any info on opening a vanguard account.

Thanks in advance for all the great advice!

Aspiring Mustachian

[sirdoug007]

Stick with the savings account if you need the money in one year.

In one year the stock market could lose 50%.  If you need the money so soon you want a more stable account.

[FireDAD]

1. vanguard's individual investor website is what you want. While I personally have not decided on if Betterment is worth it yet I can say it is NOT worth it in your situation.
2. You can withdraw your money, however if you are going to be more frequent than every couple of months I would suggest going with the ETF's instead.

I do the same thing with large purchases, real estate investments etc. Park the money there and let the market do it's thing. Keep in mind by doing this for "a year or so" as you said that it is a real possibility there will be less in there than you put in on such a short time frame.

[GGNoob]

If you'll need the money in a year, your best bet is to just put it in a savings account. But if you are flexible on when you can buy (so you aren't selling at a loss), then maybe you could go ahead and invest. For a 1 year investment horizon, Betterment would probably suggest something like 20% stocks and 80% bonds. You could go with Betterment and take their recommendation for a little extra fee. Otherwise you could simple invest in something like the Vanguard LifeStrategy Income Fund at Vanguard. You could also create your own allocation of ETF's for an even cheaper cost at Vanguard. But it's totally up to you.

Personally, I'd invest it as I hate my money sitting in a bank account earning next to nothing. My wife and I have our Roth IRA's and joint brokerage account at Vanguard invested in ETFs. However, I just opened an account at TD Ameritrade for our emergency fund so I could invest in their commission-free ETFs. I chose TD Ameritrade because they offer several commission-free municipal bond ETFs while still offering me the Vanguard stock ETFs that I wanted. Due to the longer horizon of an emergency fund (or hopefully longer horizon), I went 40% stocks and 60% bonds.

[neo von retorch]

Do you have a "normal" savings account (i.e. 0.05% interest) or one of the better paying online ones? (SmartyPig is 1%, GE Capital Savings is 0.95%)

[rugorak]

Agreed with everyone else. For only 1 year go with a high interest savings account. Tons of them out there. I have mine at Sallie Mae and haven't had any issues. I actually use the money market account but it is the same thing.

If you are going to do things longer Vanguard's personal investor site.

With most of the online things they have some delay between when you make your order (whether it being putting money in or getting it out). I believe most of this is due to regulations and not because they like to be slow. So keep in mind you might need to wait a day or 2.