Author Topic: Want to open traditional IRA and buy VTSAX--Fidelity vs. Vanguard?  (Read 2593 times)

RedwoodDreams

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I have both a brokerage account and my 401k with Fidelity.

I want to open a traditional IRA (for 2016 tax savings) and finally buy the famed VTSAX... I know I can go to Vanguard and do so directly, but can I do so via Fidelity (open an IRA and buy VTSAX)? I really like having everything viewable under one umbrella, but maybe the additional fees from Fidelity mean it's not the way to go. Thoughts?

WallStreetPhysician

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Re: Want to open traditional IRA and buy VTSAX--Fidelity vs. Vanguard?
« Reply #1 on: February 17, 2017, 04:09:53 AM »
I have both a brokerage account and my 401k with Fidelity.

I want to open a traditional IRA (for 2016 tax savings) and finally buy the famed VTSAX... I know I can go to Vanguard and do so directly, but can I do so via Fidelity (open an IRA and buy VTSAX)? I really like having everything viewable under one umbrella, but maybe the additional fees from Fidelity mean it's not the way to go. Thoughts?

Buy the Fidelity equivalent of VTSAX, FSTVX, and keep everything under one umbrella.

NoStacheOhio

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Re: Want to open traditional IRA and buy VTSAX--Fidelity vs. Vanguard?
« Reply #2 on: February 17, 2017, 06:57:45 AM »
There shouldn't be any additional fees with Fidelity. We have all of our investment accounts (3 IRAs, two employer-sponsored plans, a 529 and a taxable account) at Fidelity, and we don't pay anything beyond our fund expense ratios.

The IRAs are all in ITOT (not a big enough balance to get the better shares of the mutual fund), which doesn't have any transaction fees when you hold it beyond the short-term trading period (I think it's 30 days). There aren't any account fees at all.

RedwoodDreams

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Re: Want to open traditional IRA and buy VTSAX--Fidelity vs. Vanguard?
« Reply #3 on: February 25, 2017, 10:56:54 PM »
Thanks to both of you for the helpful responses!

Frankies Girl

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Re: Want to open traditional IRA and buy VTSAX--Fidelity vs. Vanguard?
« Reply #4 on: February 25, 2017, 11:07:43 PM »
I have both a brokerage account and my 401k with Fidelity.

I want to open a traditional IRA (for 2016 tax savings) and finally buy the famed VTSAX... I know I can go to Vanguard and do so directly, but can I do so via Fidelity (open an IRA and buy VTSAX)? I really like having everything viewable under one umbrella, but maybe the additional fees from Fidelity mean it's not the way to go. Thoughts?

Buy the Fidelity equivalent of VTSAX, FSTVX, and keep everything under one umbrella.

To clarify further: Fidelity has index funds exactly (for the most part) like Vanguard's funds, because they realized a little while ago that to stay competitive, they needed to keep up with Vanguard. They created their own version of index funds and priced them the same as Vanguard. In some cases, the expense ratios are ever so slightly cheaper.

They are technically "loss leader" items. They aren't really losing money but they aren't making nearly as much if you bought their more expensive managed funds. But by offering them, they both remain competitive with Vanguard, AND hope that once you're established with Fidelity, you're going to look around and maybe purchase a few other funds they offer that aren't index funds - much like stores offer an item on super sale in the hopes of getting you in their store so you are tempted by other stuff not on sale. Nothing wrong with this as long as you are aware they'd love to sell you on the other stuff (but they're not pushy if you tell them you're strictly an index investor in my experience).

If you buy Fidelity funds at Fidelity, you pay no extra transaction fees (cause you're getting their in house brand of funds). If you buy Vanguard funds in a Fidelity account, there will be additional fees (because you're buying an outside mutual fund, so they charge you for the handling of it when buying/selling). So if you're wanting a Fidelity account, buy the Fido equivalents.

https://www.bogleheads.org/wiki/Fidelity
^for further reading

Rhoon

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Re: Want to open traditional IRA and buy VTSAX--Fidelity vs. Vanguard?
« Reply #5 on: February 26, 2017, 09:39:32 PM »
Not sure if this makes a difference, but I've noticed that distributions for Vanguard funds happen quarterly (or there abouts) where as the bulk of Fidelity's distribution is at the end of the year. One would image those extra distributions throughout the year have some sort of compounding effect -- I could be wrong; as I'm with Fidelity.