Author Topic: wondering if tranfering American Funds IRA to Vanguard is good idea  (Read 1186 times)

Big Daddy J

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Iím a new Mustachian; (self-appointed of course) and I want to move our, a his and hers IRA and Roth IRAs from American Funds to Vanguard funds.  We have had these funds at AF since early 2000ís and have paid the commish on every penny put into them.  Since my recent discovery to JL Collins and MMM, I have learned and confirmed that the average expense ratio is .69% for the 5 funds we own at AF.  And I have learned most recently of the inexpensive expense ratios at Vanguard, hence we want to make the move, but Iím a bit frightened to make the wrong move.  The funds we own at AF have collectively provided about the same return as the Vanguard S&P 500 fund; and I can expect that to continue if I left the $$ at AF.  Itís my costs, the expense ratio I hoping to reduce by making this transfer.  I got the ball rolling with my investigation and see in order to make the transfer to Vanguard a Medallion Signature Guarantee is required and have started to look for that service in town.  Is there any other issue or concern I may be over looking or missing all together with my planned actions?  To boot, this whole transfer will take 4 to 6 weeks to completeÖ..any and all input is appreciated.  Big Daddy J

GOFU

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Re: wondering if tranfering American Funds IRA to Vanguard is good idea
« Reply #1 on: March 14, 2018, 07:33:50 PM »
Just last month I transferred American Funds to Vanguard. Sounds about like the same fund as yours, basically the same as VTSAX or VFIAX. The only significant difference I could see between the Vanguard and American assets was the expense ratio. .04% for VTSAX or .69% for the American Funds.

On $100k in assets over 10 years those extra expenses cost about $10k in gains, comparing 4.96% return vs. 4.31% return over 10 years. On a million dollars the difference over 10 years is about $98k. Those are not trivial amounts.

For me the decision was an easy one to transfer the IRA to Vanguard, sell the American Funds and buy Vanguard funds of the same class and reduce the expenses. That's what I did. Of course that was inside an IRA, so no tax implications.

I was not required to get a Medallion Signature Guarantee. American did not require one. Just my own signature on the form leaving the Medallion signature part blank. It also did not take that long. It was less than 7 business days to have the assets transferred once Vanguard had my signed form. It was no muss no fuss.
« Last Edit: March 15, 2018, 09:58:28 AM by GOFU »

Cwadda

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Re: wondering if tranfering American Funds IRA to Vanguard is good idea
« Reply #2 on: March 14, 2018, 10:14:22 PM »
It is a good idea. American Funds is completely bogus. I did the same several years ago.

clumlee

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Re: wondering if tranfering American Funds IRA to Vanguard is good idea
« Reply #3 on: March 16, 2018, 06:57:27 PM »
I did last year for the same reasons you're talking about. Never had a second thought about it :)