How to split retirement funds.

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How to split retirement funds.

Postby dallas01 » Thu Jan 31, 2013 12:35 am

I have been reading this site for some time now and sure enjoy it. I am retiring in 90 days at age 55 and have a 50k pension and 300k in cash. I will be rolling over 500k from my 401k and thought I would split it into three to five different funds with Vanguard. I have two brokers pursuing me to get the funds and invest them for me. Bottom line is besides the fees to buy what they suggest there is the 1.5% annual brokers fees. Do any of you smart folks see any reason not to just split up the 500k myself and avoid the broker? I do not need the 500k so will buy the funds then just leave them alone for the next 5 -10 years. Thanks in advance.
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Re: How to split retirement funds.

Postby Padlin » Thu Jan 31, 2013 4:01 am

Read the wiki on the 3 fund portfolio and donate the 1.5% to charity.
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Re: How to split retirement funds.

Postby dickenjb » Thu Jan 31, 2013 9:39 am

Yes read about the 3 fund portfolio. In addition to the 1.5% there will be other costs, expense ratios > Vanguard's rock bottom 0.1%, invisible costs from excessive trading of the mutual funds, etc.

Let the brokers find another sucker.
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Re: How to split retirement funds.

Postby Johm221122 » Thu Jan 31, 2013 9:46 am

For best answer use this link
viewtopic.php?t=6212
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Re: How to split retirement funds.

Postby Grt2bOutdoors » Thu Jan 31, 2013 9:48 am

dallas01 wrote:I have been reading this site for some time now and sure enjoy it. I am retiring in 90 days at age 55 and have a 50k pension and 300k in cash. I will be rolling over 500k from my 401k and thought I would split it into three to five different funds with Vanguard. I have two brokers pursuing me to get the funds and invest them for me. Bottom line is besides the fees to buy what they suggest there is the 1.5% annual brokers fees. Do any of you smart folks see any reason not to just split up the 500k myself and avoid the broker? I do not need the 500k so will buy the funds then just leave them alone for the next 5 -10 years. Thanks in advance.


Hello and welcome to the forum!
Of course they are pursuing you - if you go with them, you will have paid for their vacation to Tahiti,their property tax bill or their kids tuition for half a semester. What's not to like? :greedy

For .0067 ($50) you can either buy some of these great books on the recommended reading list - The Four Pillars of Investing - William Bernstein, The Only Guide to Investing You'll Ever Need (2nd ed) - Larry Swedroe, The Little Book of Common Sense Investing - John Bogle and All About Asset Allocation - Rick Ferri or just "rent" them from your local library and do it yourself. Then you can take the money saved and enjoy an all expense paid trip to Tahiti as a retirement present to yourself. :beer
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Re: How to split retirement funds.

Postby Boglenaut » Thu Jan 31, 2013 9:55 am

For the $500K, 1.5% is $7,500/year. On top of that, you'll have trading fees and if in ETF's, ER's. So say you'll pay $8,000-$10,000/year every year.

If you just got into some Vanguard Admiral shares, you are looking at $300-450 range depending on your specific funds.

Not only that, a 3-fund to 5-fund Vanguard portfloio most likely perform better with less risk than what the broker would do for you.

By the way, why so much in cash?
Last edited by Boglenaut on Thu Jan 31, 2013 9:57 am, edited 1 time in total.
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Re: How to split retirement funds.

Postby livesoft » Thu Jan 31, 2013 9:57 am

Boglenaut wrote: On top of that, you'll have trading fees and if in ETF's, ER's.

Mutual funds have the same ERs and the same trading fees.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: How to split retirement funds.

Postby Boglenaut » Thu Jan 31, 2013 10:02 am

livesoft wrote:
Boglenaut wrote: On top of that, you'll have trading fees and if in ETF's, ER's.

Mutual funds have the same ERs and the same trading fees.


True, if the broker says I am going to put you in BND, VTI, and VGSUX (ETFs for Bond, TSM and Total Intl) and keep you there, then ER and trading fees are a wash. But I doubt that is what would happen.

More likely he'll be in and out of indivual stocks or funds with higher ER's.
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Re: How to split retirement funds.

Postby JW Nearly Retired » Thu Jan 31, 2013 10:03 am

dallas01 wrote:I have been reading this site for some time now and sure enjoy it. I am retiring in 90 days at age 55 and have a 50k pension and 300k in cash. I will be rolling over 500k from my 401k and thought I would split it into three to five different funds with Vanguard. I have two brokers pursuing me to get the funds and invest them for me. Bottom line is besides the fees to buy what they suggest there is the 1.5% annual brokers fees. Do any of you smart folks see any reason not to just split up the 500k myself and avoid the broker? I do not need the 500k so will buy the funds then just leave them alone for the next 5 -10 years. Thanks in advance.

Of course you should avoid the broker. You don't need to pay anybody to help you to invest at Vanguard. Brokers are a needless and completely useless expense. Just call Vanguard (1-800-284-7245) and invest directly with them without incurring any middleman fees at all. No fees at all to invest. You will only pay Vanguard's rock bottom expense ratios of something like 0.1%/yr and that's all. That's what most of us here do.
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Re: How to split retirement funds.

Postby EternalOptimist » Thu Jan 31, 2013 4:25 pm

Do it yourself. Keep it simple as mentioned above and let it go. Sounds like you are in good shape. I've been retired for 2 years with no pension and do it myself. Good luck :sharebeer
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Re: How to split retirement funds.

Postby ResNullius » Thu Jan 31, 2013 4:31 pm

Don't believe a word that salesman (financial advisor) says. Run and run fast to get away from him. Invest the money yourself in Vanguard. Three funds would be more than enough, and two would do just fine. Almost anything would be better than going with the financial advisor, who is nothing more than a glorified thief. Good luck.
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Re: How to split retirement funds.

Postby dallas01 » Thu Jan 31, 2013 4:42 pm

Thanks for input as I appreciate it. The question on all the cash is a good one and is due to the selling of a home. I will put half or so in something but not sure what that is. Thanks again, this is a wonderful place to exchange ideas and get help.
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Re: How to split retirement funds.

Postby caroljm36 » Thu Jan 31, 2013 4:43 pm

I know it's tempting to let a broker handle everything, plus they shower you with attention at first so that's flattering...but really, you can learn a lot very quickly if you hang around here more and read a couple books. Especially since you will be retired soon.

Don't give into the temptation to let someone take the responsibility off your hands.
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Re: How to split retirement funds.

Postby Jay69 » Thu Jan 31, 2013 5:01 pm

Start with reading the Bogleheads Guide to Investing in 91 days, at day 94 read Rick Ferri's All About Asset Allocation, days 95 and 96 spend some time here and ask a few questions while you read up on the 3 fund portfolio. Day 97 move your funds to your favorite place, after about 3-4 days when your funds post buy like a big dog.

Take the next 30+ years and enjoy, congrats you made it and welcome to Bogleland.
"Out of clutter, find simplicity” Albert Einstein
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Re: How to split retirement funds.

Postby pennstater2005 » Thu Jan 31, 2013 9:15 pm

If you've been lurking here for awhile and doing some reading I see no reason why you couldn't handle your own money. The three fund portfolio as suggested by others is an excellent idea as is starting with a good investment book. And keep asking questions. Good luck.
To hell with circumstances; I create opportunities. - Bruce Lee
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