Author Topic: Vanguard? American Funds? or Fidelity?  (Read 12466 times)

jom2025

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Vanguard? American Funds? or Fidelity?
« on: February 09, 2017, 02:58:23 AM »
Hi MMM community
I was just wanted to know members opinions between Vanguard, American funds ,and Fidelity. Any comments would be appreciated.
I have spoken to advisors from all three companies, all three drew up plans for me . Of course all three claim they are a low cost  best value providers.

I am looking for help getting started on my retirement plan and intend to eventually oversee my plan myself. Saving the provider fees. Vanguard comes right out front and says they will set me up. or i can pay an advisor to oversee my account going forward and stop these extra fees at any time.
 
Vanguard has a flat rate depending on value of assets.
American Funds they show a fee of 1.45 % of assets.
With Fidelity the fee is hidden in the plan.

I am just looking for opinions of best way to start my ER.

As i do not have enough knowledge to go it alone at first.

The MMM community has been great in the past i have been researching all previous suggestions and at this time i took an ER and am looking for help going forward.

I thank you in advance

Frankies Girl

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Re: Vanguard? American Funds? or Fidelity?
« Reply #1 on: February 09, 2017, 04:02:16 AM »
TL/DR: Do your homework, figure out your AA, ask questions here, and once you're ready, invest with Vanguard (or Fido if you're so inclined) and SELF MANAGE a simple 2-4 fund portfolio. Don't over-complicate things.



Long version:

Are you trying to set up for your company or just for yourself? The way you've worded your post seems to be that you're investigating options for a small business, but I suspect that is not the case...

If you are looking for the best place to house your investment/retirement accounts/portfolio, then Vanguard is a no-brainer. You do not need to have them manage it for you. You should first do your homework - in other words, learn about how to invest and figure out what your goals are and your comfort levels with general volatility, and then decide your asset allocation and THEN open the appropriate accounts (taxable brokerage, traditional or Roth IRAs, etc) with the company that best suits your needs.

Start here: http://jlcollinsnh.com/stock-series/ with either Mr. Collins' book or read through the series on his website. Then head over to Bogleheads site, and read about how to write an investment policy statement, and figure out your asset allocation. Do some research on lazy portfolios there as well.

American Funds is a big NO. All of their funds to my recollection are loaded funds - meaning they take a large cut off the top just to give them your money to invest, and then they charge you an additional high expense ratio to stay invested with them and that management fee is awful (and additional to their expense ratios AND the load fees). They're little better than Edward Jones (EJ in my opinion: a terrible, horrible, awful, should be ashamed of themselves type of company). Steer way clear of any company that wants to charge you a load fee or offers "class" type of investments because it is all crap designed to put more of your money in their pockets.

Vanguard is the gold standard. They are not "claiming" that - they literally wrote the book on low cost investing. Vanguard was founded by John C. Bogle, the guy that came up with index funds and the company is founded on the principles of low cost, market tracking funds... you really can't do better than them insofar as a trust-worthy, solid investment group that isn't out to make themselves huge profits off of your money. Vanguard is owned by the funds themselves and, as a result, is owned by the investors in the funds. Vanguard overall seems to expect their investors to be more well-versed in investing/market knowledge, so it may be a bit of a learning curve starting out with them if you don't know what you're doing (totally my own opinion and full disclosure, I use Fidelity for my investments, but I was a total noob starting out). There are several other companies that aren't bad, but if you can choose, and you're halfway able to understand how investing works, Vanguard should be your first choice.

Fidelity is great as long as you self manage and stay away from their high fee funds or pay someone to manage your portfolio. In order to stay a leader in the investment field, they have a whole series of index funds that are as good as Vanguard's and their customer service/perks are arguably better than Vanguard. If you feel the need for a bit more handholding (I did), then Fidelity might be more in line, but do your homework and stick with their low cost Boglehead style funds outlined here.

And I've never been told Fido's fees are "hidden in the plan." Their professional management fees are a percentage of the value of the portfolio under management. Always has been to my knowledge. So that, plus whatever the expense ratios on the funds they set up would be what you would pay, same as Vanguard. But why on earth would you do that (even at Vanguard) when just a little bit of reading (the links above) and some time spent asking questions/reading on this forum will get you all the ability and confidence you need to select a lazy portfolio asset allocation of 2-4 funds, open those accounts, and throw your money in there. Most folks don't even have to look at their portfolio but once or twice a year (if that) to check and see if rebalancing is needed, and that generally can be figured out in under an hour.

If you can figure out how to drive a car, hold down a job and keep the bills paid... you can manage your own investment/retirement portfolio. ;)


« Last Edit: February 09, 2017, 04:06:28 AM by Frankies Girl »

rubybeth

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Re: Vanguard? American Funds? or Fidelity?
« Reply #2 on: February 09, 2017, 07:19:27 AM »
I would say definitely either Vanguard or Fidelity. DH and I use both. I like Fidelity's cash management fund (we use it as our checking account), and how fairly easy it is to use, and we have some taxable investments in Fidelity, too. I had my IRA there before DH and I got married. After reading MMM, I convinced DH to move his IRA (actively managed mutual funds) into Vanguard by reading him sections of the book by Jack Bogle. ;) So we have some in VTSAX and some in FUSEX. The fees are lower with Vanguard (correction: I have FUSVX, and the fees are LOWER than with VTSAX, so perhaps I need to talk to DH about rolling from Vanguard to Fidelity), though, so I've considered moving mine as well, or rolling into my employer's Deferred Compensation plan, which might be another thing to consider if your employer offers something like that (that's where I have my 457b going into VIIIX and the expense ratio is 0.02%--yes, 0.02%).
« Last Edit: February 09, 2017, 01:20:20 PM by rubybeth »

gReed Smith

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Re: Vanguard? American Funds? or Fidelity?
« Reply #3 on: February 09, 2017, 08:08:56 AM »
I have never used Fidelity, but they have some good funds.  The problem is, they are a for-profit company and therefore have lots of bad (read: expensive) funds too, and they may try to steer you in that direction.  As others have said, Vanguard's philosophy and structure cause them to lead you toward good (read: low cost) funds.  The only caveat is, I often hear that Vanguard has sub-par customer service and Fidelity has the opposite.  In the end, I use Vanguard because I am confident to do my investing on my own, and my portfolio is not complicated.

jom2025

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Re: Vanguard? American Funds? or Fidelity?
« Reply #4 on: February 09, 2017, 08:36:13 AM »
Thanks for the replies.
 
It seems from my prior questions on MMM, and from what i have read, Vanguard is a good choice.
We already fired and i need to choose soon.
I may just temporarily pay the fee to oversee my account until i can manage on my own.
And with Vanguard they allow you to stop the advisors support at anytime is my understanding.

Thank you MMM for all the current and prior help.

fattest_foot

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Re: Vanguard? American Funds? or Fidelity?
« Reply #5 on: February 09, 2017, 09:13:30 AM »
I have never used Fidelity, but they have some good funds.  The problem is, they are a for-profit company and therefore have lots of bad (read: expensive) funds too, and they may try to steer you in that direction.  As others have said, Vanguard's philosophy and structure cause them to lead you toward good (read: low cost) funds.  The only caveat is, I often hear that Vanguard has sub-par customer service and Fidelity has the opposite.  In the end, I use Vanguard because I am confident to do my investing on my own, and my portfolio is not complicated.

Just to add a personal anecdote, but I've had to deal with Vanguard's customer service a few times and they'd rank towards the top of all customer service interactions I've had over the course of my life.

ketchup

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Re: Vanguard? American Funds? or Fidelity?
« Reply #6 on: February 09, 2017, 09:20:34 AM »
NOT American Funds.  Never American Funds.

Hard to go wrong with either Vanguard or Fidelity.

Car Jack

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Re: Vanguard? American Funds? or Fidelity?
« Reply #7 on: February 09, 2017, 10:20:34 AM »
You can go full Do it Yourself right from the start.

I manage my $2M investments.  Want to hear my complicated and involved procedure of what this entails?  Ready?  On my birthday, I update all of my investments in my spreadsheet so I can see my actual asset allocation.  I compare that with my target asset allocation.  If I am off by at least 5%, I go do a "sell to buy" in my fidelity account to get to my target asset allocation.  I've never taken more than 15 minutes.

There is NO reason to go screwing with your account any more than what I just described.

I use Vanguard, Fidelity and Schwab (etfs at schwab).  Here's my take:

Vanguard: They have the most low cost index funds.  They have also been overwhelmed with all the new money coming in and customer service has gone completely in the toilet.  I would not recommend starting at Vanguard because there is such a high chance that they're going to screw things up or you simply won't be able to get in touch with them.  Even in the best of times, they work extended bankers hours.  No weekends anymore.  Go search the Bogleheads threads on Vanguard's slide in service.....even for people with $10M invested there.

Fidelity:  Recently, they have lowered fees on numerous index funds and now beat Vanguard in cost.  Yes, they are for profit.  I believe that they have spent the money over the years keeping their website and support personnel up to date.  I can call them at 3am on a Sunday and get info by phone, chat or email.  Most accounts can be opened without ever talking to a person or mailing anything.  I've transferred 4 or 5 accounts in to Fidelity of the past 2 years for me and my wife and it is smooth as silk.  Question?  I call and have someone on the phone in less than a minute.   To choose funds, you click the options.  Low cost, min investment (max) $25k, show net expense ratio.  Now click expense ratio to get it to order low to high.  There ya go.  Choose the funds you want.

Schwab:  To me, Schwab is best for ETFs, which trade differently from mutual funds but otherwise, they have the same excellent support that Fidelity has.  I do my taxable account with Schwab in ETFs.  Costs there (for less than $5M invested) can be lower than anyone.  Lower than Fidelity and way lower than Vanguard.

BTH7117

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Re: Vanguard? American Funds? or Fidelity?
« Reply #8 on: February 09, 2017, 11:04:03 AM »
Thanks for the replies.
 
It seems from my prior questions on MMM, and from what i have read, Vanguard is a good choice.
We already fired and i need to choose soon.
I may just temporarily pay the fee to oversee my account until i can manage on my own.
And with Vanguard they allow you to stop the advisors support at anytime is my understanding.

Thank you MMM for all the current and prior help.

You can totally do it right now!  Set up a Fidelity or Vanguard account (I use Fidelity) and buy a combination of their Total Stock Market and Total Bond Fund to achieve your desired asset allocation.  Spend an afternoon with the JL Collins stock series and you will be a pro.  It's not more complicated than that.

Switching your accounts in the future may lead to a tax bill.  I am confident you can do it on your own and keep potentially thousands of your dollars in the process.

dougules

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Re: Vanguard? American Funds? or Fidelity?
« Reply #9 on: February 09, 2017, 11:34:07 AM »
I've got a 401k with American Funds, an old 401k with Fidelity, and Vanguard for my Roth and taxable accounts. 

I'm a big fan of Vanguard

I don't really mess with the Fidelity 401k much, so I can't really speak to them good or bad.  They do seem to have funds with decent expense ratios.

American Funds - I'm not a fan.  They seem to be all about some high expense ratios.   

CorpRaider

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Re: Vanguard? American Funds? or Fidelity?
« Reply #10 on: February 09, 2017, 12:09:56 PM »
I agree with you guys about Vanguard, but just note that State Farm and plenty of other organizations are mutually "owned" but are not even close to the low cost providers, so people will need to pay attention especially after jack is gone.  OP if you are totally scared to do an allocation you could pick a vanguard lifecycle fund.
« Last Edit: February 09, 2017, 12:13:32 PM by CorpRaider »

gReed Smith

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Re: Vanguard? American Funds? or Fidelity?
« Reply #11 on: February 09, 2017, 03:51:24 PM »
I agree with you guys about Vanguard, but just note that State Farm and plenty of other organizations are mutually "owned" but are not even close to the low cost providers, so people will need to pay attention especially after jack is gone.  OP if you are totally scared to do an allocation you could pick a vanguard lifecycle fund.

Jack Bogle is still alive, but he hasn't had any real influence over the organization for 20 years.  You're right about "mutuals" though.  It's worth keeping an eye on.