Stay at Fidelity vs Move to Vanguard??

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lazyrad
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Stay at Fidelity vs Move to Vanguard??

Post by lazyrad »

Hi all,
I am in the processing of consolidating my portfolio and have been weeding out my active funds over the past few months. I will post the details of my AA at some point, but here is my question:

The main Funds I have at Fidelity in my taxable account are:

Fidelity S&P 500 index FSMKX 0.10
Fidelity Ext market index FSEMX 0.10
Fidelity International Index (EAFE) FSIIX 0.10

I also have the Vanguard emerg makets ETF (VWO) to add emerging markets exposure. I will (hopefully) within one year be able to qualify for Fidelity's Advantage class, which will drop the ER on the index funds above to 0.07. New contributions are going into the above 3 funds, with periodic purchasing of VWO maintain AA targets.

I've been happy with Fidelity's customer service for my other accounts there and the mysmart cash is a great checking/cash account.

I know that many on this forum are loyal to Vanguard, but from an objective standpoint, is there a reason that I should move to Vanguard? I could also just keep what I have there in Fidelity's account and make the new contributions at Vaugard, but that seems like it's just overly complicating things.

thoughts?

thanks in advance.
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4th&Goal
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Post by 4th&Goal »

lazyrad, I think you have answered your own question.
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Post by Easy Rhino »

I also like Fidelity's service, and their cash features. Plus, their index funds have really low expenses.

The only real downside I see is that these are in a TAXABLE account. Therefore, having SP500/Extended split is going to be less tax-efficient than one big total stock market holding. And to lesser extent, having developed/emerging international is too (like when South Korea "graduates" to developed).

You might want to compare the weighted tax cost ratio of the Fidelity funds to Vanguard's TSM, and weight those against capital gains taxes you (might) have to pay when you liquidate.
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Post by Ariel »

I like working with a fund company that consistently shows they are on the side of investors. Not just low ERs on a few funds to keep up with the leading competitors, but the whole package.

Fidelity is a fine mutual-fund company. Vanguard is the cream of the crop.
Do what you will, the capital is at hazard ... - Justice Samuel Putnam (1830), as quoted by John Bogle (1994)
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lazyrad
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Post by lazyrad »

Thanks to those quick replies!

My reasoning for keeping EM separate (as compared with going with Total Int't stock market or FTSE-ex US funds), is that my personal AA that I want is a little more EM than developed. I personally want about 2:1 Developed to emerging. i know this is a little more aggressive than many would want.

Same for going with 500/Extended market separately. I'd like personally like a little more mid and small cap exposure than Total SM gives.

I haven't completely figured out the entire cost issues surrounding this. I'm not wise enough, yet :)
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Mel Lindauer
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Re: Stay at Fidelity vs Move to Vanguard??

Post by Mel Lindauer »

lazyrad wrote:Hi all,
I am in the processing of consolidating my portfolio and have been weeding out my active funds over the past few months. I will post the details of my AA at some point, but here is my question:

The main Funds I have at Fidelity in my taxable account are:

Fidelity S&P 500 index FSMKX 0.10
Fidelity Ext market index FSEMX 0.10
Fidelity International Index (EAFE) FSIIX 0.10

I also have the Vanguard emerg makets ETF (VWO) to add emerging markets exposure. I will (hopefully) within one year be able to qualify for Fidelity's Advantage class, which will drop the ER on the index funds above to 0.07. New contributions are going into the above 3 funds, with periodic purchasing of VWO maintain AA targets.

I've been happy with Fidelity's customer service for my other accounts there and the mysmart cash is a great checking/cash account.

I know that many on this forum are loyal to Vanguard, but from an objective standpoint, is there a reason that I should move to Vanguard? I could also just keep what I have there in Fidelity's account and make the new contributions at Vaugard, but that seems like it's just overly complicating things.

thoughts?

thanks in advance.
Hi lazyrad:

You've got some good, low-cost funds at Fidelity, and you seem happy there. Besides, you may incur capital gains taxes if you sold them and moved the money to Vanguard. And you'll be qualifying for even lower expenses within a year. So all that indictes you'd be better off keeping those assets at Fidelity.

Having said that, I do want to point out that one of the funds you're holding in your taxable account (the Extended Market Index) isn't very tax efficient, so you may want to think about putting new money into the Total Stock Market Index instead. And, if it wouldn't cause too big a tax headache, you might consider selling that one.

Regards,

Mel
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Post by PiperWarrior »

lazyrad wrote:Same for going with 500/Extended market separately. I'd like personally like a little more mid and small cap exposure than Total SM gives.
You might still want to do TSM+Extended. They do have overlaps, but it's not hard to emulate 500+Extended with TSM+Extended. Just reduce Extended by the amount of Extended that TSM has. This way, you get tax-efficiency plus more exposure to Extended.

Whatever you do, wherever you go, you should keep your mySmart cash account. It's nice! :-)
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lazyrad
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Post by lazyrad »

Hi Mel,
Thank you for your quick reply. Your wisdom and the wisdom of the others on this forum is much appreciated by us less knowledgible investors!

That being said, I was using the two separate US equity indexes for the reason to have a little more mid and small cap exposure than a TSM index alone would have.

If that's not something that you would recommend to most investors in a taxable account, please let me know. FWIW, my current AA goals are:

20 % US Large cap
20 % US Mid and Small cap
24 % Developmed markets
12 % Emerging markets
24 % Bond/Fixed income

thanks for your help! 8)
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Post by Mel Lindauer »

lazyrad wrote:Hi Mel,
Thank you for your quick reply. Your wisdom and the wisdom of the others on this forum is much appreciated by us less knowledgible investors!

That being said, I was using the two separate US equity indexes for the reason to have a little more mid and small cap exposure than a TSM index alone would have.

If that's not something that you would recommend to most investors in a taxable account, please let me know. FWIW, my current AA goals are:

20 % US Large cap
20 % US Mid and Small cap
24 % Developmed markets
16 % Emerging markets
20 % Bond/Fixed income

thanks for your help! 8)
Hi Again lazyrad:

Thanks for the nice comment.

Nothing wrong with doing that. As you may know, I'm a big fan of mid-caps. However, if you have room for that fund in your tax-deferred account, that's where I'd prefer to put it.

Regards,

Mel
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ETF's

Post by Bimmer »

Nothing wrong at all with the index funds you're using.

I also slice and dice my portfolio, and my wife's account is at Vanguard and mine is at Fidelity. Rather than transfer funds, I decided to use two ETF's in my Fidelity account - Vanguard Total Market (VTI) and Vanguard Mid-Cap (VO). In her Vanguard account I use Vanguard Total Market and Tax-Managed Small Cap, as well as some Mid-Cap Index Fund. Right now international and value funds are in tax-deferred, eventually I will buy VEU in my taxable accounts.

As long as you make sizable periodic purchases (which is what I tend to do) and buy and hold for the long-term, the transaction costs for ETF's at Fidelity ($10.95 for me now, slightly higher for others) are negligible. If you dollar cost average, this won't work.
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Post by MWCA »

Mel Lindauer wrote:
lazyrad wrote:Hi Mel,
Thank you for your quick reply. Your wisdom and the wisdom of the others on this forum is much appreciated by us less knowledgible investors!

That being said, I was using the two separate US equity indexes for the reason to have a little more mid and small cap exposure than a TSM index alone would have.

If that's not something that you would recommend to most investors in a taxable account, please let me know. FWIW, my current AA goals are:

20 % US Large cap
20 % US Mid and Small cap
24 % Developmed markets
16 % Emerging markets
20 % Bond/Fixed income

thanks for your help! 8)
Hi Again lazyrad:

Thanks for the nice comment.

Nothing wrong with doing that. As you may know, I'm a big fan of mid-caps. However, if you have room for that fund in your tax-deferred account, that's where I'd prefer to put it.

Regards,

Mel
Hello Mel,

I have seen things before that you like mid-caps. Might I ask you why?

Mw
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Post by Mel Lindauer »

MWCA wrote:Hello Mel,

I have seen things before that you like mid-caps. Might I ask you why?

Mw
Hi MWCA:

There have been lots of posts on this matter over the years, so you can do a search on "Mel's Unloved Mid-Caps" to understand some of the reasons why I like mid-caps.

You might also check out some of Trev H's posts where he compares lots of different portfolios, and you'll see how mid-caps have performed compared to other holdings.

Regards,

Mel
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Post by nisiprius »

I've been brooding about similar things. I used to have three big roughly equal accounts at TIAA-CREF (403(b)), Vanguard (taxable, rollover IRA, and Roth IRA) and Fidelity (401(k)) I'm trying to clean up and consolidate. It's not easy when you think all three places are very good! I moved all my movable stuff (CREF) from TIAA to Vanguard, and annuitized the rest, so although I still have substantial assets at TIAA it's all on autopilot now.

Last year I rolled over my 401(k) at Fidelity into a rollover IRA... and visited one of Fidelity's bank-like storefronts and have had some contact with Fidelity advisors. I've also just bought some TIPS at Fidelity, and not only do they not have fees for buying and selling them on the secondary market, but I think there is more and better information about TIPS at their website--notably, when you buy them at auction, during the auction it gives you an estimated yield, whereas you have to telephone VBS to get that.

I'm about 90% decided that although I like Vanguard's funds better, for TIPS I definitely like Fidelity's brokerage service better than VBS, and I think from what I've seen and heard that Fidelity's brokerage is either better than or no worse than VBS. All the non-Vanguard no-transaction-fee funds I have at VBS are also no-transaction fee at Fidelity.

On the other hand, Vanguard's automatic exchanges between Vanguard funds, automatic withdrawals, etc. can be set up easily online and changed quickly. They seem like a very valuable tool for managing withdrawals and cash flow in retirement. Amazing, Fidelity doesn't seem to have anything like it.

But while I don't think Fidelity's storefronts and advisors add much value for me, I do think that if my wife ever needs advice she can get nice, safe, sound, generic advice there... and I think Fidelity does that better than Vanguard, and that the storefronts and handholding have some value. If I were to die unexpectedly I would certainly trust Fidelity more than I would trust the guy at the local savings bank who runs the bank's brand-X-brokerage-you-can-buy-mutual-funds-here-too offfice.

So, what I've about 90% decided to do is move all my VBS holdings to Fidelity's brokerage... and replace most of my rolled-over 401(k) Fidelity fund holdings with equivalent (marginally better) Vanguard funds held at Vanguard.

When I'm all done, I'll have virtually the same stuff I have now, and virtually the same account sizes at Fidelity and Vanguard as I have now... but nothing but Vanguard funds at Vanguard (no VBS, that should cut down on the 32-page statements I'm getting now), all my brokerage business at Fidelity, all my TIPS and non-Fidelity-non-Vanguard funds at Fidelity, and no actual Fidelity funds except Spartan Total Stock Market.

It's all meaningless activity but it is at least harmless and will give myself the illusion that I'm doing something constructive.
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Post by grok87 »

lazyrad wrote:Hi Mel,
Thank you for your quick reply. Your wisdom and the wisdom of the others on this forum is much appreciated by us less knowledgible investors!

That being said, I was using the two separate US equity indexes for the reason to have a little more mid and small cap exposure than a TSM index alone would have.

If that's not something that you would recommend to most investors in a taxable account, please let me know. FWIW, my current AA goals are:

20 % US Large cap
20 % US Mid and Small cap
24 % Developmed markets
12 % Emerging markets
24 % Bond/Fixed income

thanks for your help! 8)
Hi lazyrad,
I think your portfolio above looks good. The question is the best way to do it from a tax perspective. Rather than hold 20/20 S&p 500, Extended Market, why not hold 70/30 Total stock market, extended market? Since total stock market is around 72% large caps that should give you the 50/50 split between large caps and small caps that your are looking for. And ideally you would hold extended market in your tax advantaged accounts and TSM in taxable.

Here's my two cents on the Vanguard / Fidelity question:

I go with fidelity for my brokerage accounts. I think they are better than VBS. But I hold the vanguard TSM ETF rather than the fidelity mutual fund TSM. That way if I ever want to shift brokerage acconts (say to Bank of America or Wells Fargo for free trades) then I won't have to deal with liquidating fidelity's mutual funds with possibly high capital gains.

But I would only recommend this for big lump sum purchases...

cheers
grok
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Post by arrete »

I am in the processing of consolidating my portfolio and have been weeding out my active funds over the past few months.
I understand the weeding out process, but is there a real need to consolidate?

I have approximately the same amounts dollar-wise at both Fidelity and Vanguard. I do have to admit I have actual stocks (eek!) at Fidelity. In any case, I am happy splitting my portfolio up between them. It just feels safer to me. But that's just me.

Kathy
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Post by Ron »

arrete wrote:I understand the weeding out process, but is there a real need to consolidate?
Agreed! My wife/me have our retirement investments split 50/50 between Fidelity and Vanguard. Both have their good/bad points (won't go into that here).

Sometimes you just have to take the "good" of each company and ignore the "bad" (whatever is most important in your situation)...

- Ron
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Post by nisiprius »

arrete wrote:
I am in the processing of consolidating my portfolio and have been weeding out my active funds over the past few months.
I understand the weeding out process, but is there a real need to consolidate?

I have approximately the same amounts dollar-wise at both Fidelity and Vanguard. I do have to admit I have actual stocks (eek!) at Fidelity. In any case, I am happy splitting my portfolio up between them. It just feels safer to me. But that's just me.
During my accumulation phase, I didn't see any need to consolidate at all, and several advantages to not consolidating. One is having a constant point of comparison, so you don't stick with a company that's giving a raw deal just because you don't know any better. Another is if you have thoughtlessly triggered a short-term trading restriction or redemption fee in one account and impulsively want to make a move anyway, you can make an equivalent move in the other account. (Hey, I'm not saying this is a good idea... but it's possible). A third is, as you say, safety. Unlikely as it is that SIPC would have to bail out a Fidelity or a Vanguard or that either would be hit by a long-duration data-processing glitch, it's still nice think you have another place you can do if one is frozen for weeks or months.

As I prepare for retirement, I see reasons for consolidating. One is that my situation is such that I do expect to need to draw down my assets for retirement.

1) As one's account size shrinks, gradually one starts to lose Pirate status, then Corsair status, then even Privateer status, and one starts to get hit with nuisance fees.

2) Another is that managing the withdrawals is more complicated if there's more than one account.

3) Finally, I enjoy tinkering with accounts (it's probably not good for me or my accounts but there you have it) but my wife doesn't, so sometime in the next twenty years I think I need to get things whittled down so that withdrawals are pretty much on autopilot. Sweep everything into one "retirement income" fund, set up automatic transfers into the checking account, and look at it once a year to see whether it's shrinking too fast...
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Post by FinanceGeek »

I stay with Fidelity because I want to own ETFs, and frankly their brokerage commission structure is head and shoulders above VG.
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Fidelity vs Vanguard

Post by DRJ »

Interesting discussion. I was planning to liquidate my small (10% of investments) Fidelity account and move the money over to Vanguard funds. But now I'm wondering why. After all, I do like Fidelity's money market checking account and some of the other features they offer.

Now, I'd like to ask what is perhaps a really silly question. Can anyone recommend a handy-dandy tool that will let me search for Fidelity Funds that are closely similar to Vanguard funds? I know that I can use Fund Compare to compare funds that I identify. And I know that I can generate a broad list of funds in the same asset class. But is there a tool that will let me enter a fund name and will output a list of funds from other families that offer similar holdings?
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Re: Fidelity vs Vanguard

Post by Mel Lindauer »

DRJ wrote:Interesting discussion. I was planning to liquidate my small (10% of investments) Fidelity account and move the money over to Vanguard funds. But now I'm wondering why. After all, I do like Fidelity's money market checking account and some of the other features they offer.

Now, I'd like to ask what is perhaps a really silly question. Can anyone recommend a handy-dandy tool that will let me search for Fidelity Funds that are closely similar to Vanguard funds? I know that I can use Fund Compare to compare funds that I identify. And I know that I can generate a broad list of funds in the same asset class. But is there a tool that will let me enter a fund name and will output a list of funds from other families that offer similar holdings?
Hi DRJ:

Depending on which funds one is invested in at Fidelity, and whether the investments at Fidelity are in a taxable or tax-deferred account, certainly enters into the picture (and our recommendation to stay or go), as in the case of the original poster.

In many cases, we would recommend the switch to Vanguard if it can be done with little or no tax consequenses, and if the resulting portfolio would offer the investor a benefit, such as lower costs. Obviously, another consideration is that many of us prefer the simplicity of having all of our assets in one low-cost place.

Regards,

Mel
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Post by SpringMan »

FinanceGeek wrote:I stay with Fidelity because I want to own ETFs, and frankly their brokerage commission structure is head and shoulders above VG.
True unless you are a Flagship client.

Best,
Best Wishes, SpringMan
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Re: Fidelity vs Vanguard

Post by DRJ »

Mel Lindauer wrote: In many cases, we would recommend the switch to Vanguard if it can be done with little or no tax consequenses, and if the resulting portfolio would offer the investor a benefit, such as lower costs. Obviously, another consideration is that many of us prefer the simplicity of having all of our assets in one low-cost place.
Thank you, Mel. That makes sense. So I guess I'll go ahead and liquidate my smattering of small Fidelity funds, and transfer the money to Vanguard. The tax impact will be minimal.

As for money market checking - I've used Fidelity Cash Reserves(FDRXX) for many years as my primary checking account. So I guess I'll stick with that. The funny thing is, when I read about FDRXX on Fidelity's Web site, it says the check writing minimum is $500. But I write small checks all the time, and never had a problem. Sometimes I also make small deposits - without problems. I'm not sure why this is, but hate to mess with a good thing.
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Re: Fidelity vs Vanguard

Post by nisiprius »

Oh, another thing I like better about Fidelity. Their website lets you superimpose "hypothetical growth of $10,000" curves for funds from any family, whereas Vanguard only lets you compare different Vanguard funds.

A very interesting exercise. When you compare FSTMX and VTSMX (total stock market), the curves are so identical you can't even see that there are two of them. Not so with FBIDX and VBMFX (both supposedly total bond market).
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Re: Fidelity vs Vanguard

Post by Ron »

DRJ wrote:I write small checks all the time, and never had a problem. Sometimes I also make small deposits - without problems. I'm not sure why this is, but hate to mess with a good thing.
FDRXX is held as part of your "core account" (where trade cash is held during buying/selling).

Dosen't matter if it is part of your IRA or Income Management Account (IMA), there are no minimums or charges for checking. See:

http://personal.fidelity.com/products/checking/?bar=c

for details.

I've stated previously that my wife/me split our accounts between Fidelity & Vanguard. This is one of those reasons why we keep with Fidelity (Vanguard would charge us $30 <each> a year for this service).

Another thing on the service side (not talking about investments), Fidelity considers all our accounts at all institutions for our "rating" of "Private Access" customer ($1M+), whereas Vanguard will only "rate" us on just our holdings at Vanguard. I have a direct contact at Fidelity due to this.

We'll certainly keep our Vanguard funds due to their "advantages" (we've had Health Care over 10 years), but we'll keep Fidelity due to their advantages of customer tools (e.g. IMA, RIP, and the associated interfaces). This incudes the fact that Vanguard's planning tool (Financial Engines) cannot be used effectively for someone in retirement (like us) whereas Fidelity's Retirement Income Planner can (and is linked to the IMA to graphically show you your "burn rate" actual vs. planned).

Again, we're taking the "best from both".

- Ron
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lazyrad
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Post by lazyrad »

Again, Thanks to everyone for their valuable viewpoints.

I think that I will probably stay at Fidelity, but after listening to several other here, I might switch things up a little bit, in order to minimize some tax consequences. As others have said, I've been happy with the brokerage services and I will soon be able to invest in slightly larger chunks into the market, making ETFs a more useful tool for me.

Here's what I am thinking:

Switch from Fidelity's S&P500 to their Total SM index
Buy the Vanguard Extended market ETF to add mid/small cap exposure to my desired level

I will keep the Fidelity's EAFE index fund now since it's expenses are really low and the VEU etf has an expense ratio 0.25, and It's cheaper for me to S&D with Fidelity's International index for developed markets and add the Vanguard emerging markets ETF (VWO) for Em exposure.

The other advantage (in my mind) is that I could keep my periodic investments into Fidelity's TSM and EAFE funds, while adding into the ETFs every other month or so in larger denominations. I would be adding in large enough amounts that the brokerage fees (10.95$) wouldn't be that big a deal in the long run.

Is this sensible? If my understanding of ETFs vs Mutual funds is correct, the tax implications of this would be better (holding extended market as an ETF instead of a mutual fund in a taxable account).

Thanks again for all your help. I think this is some of the best free, unbiased advice out there and incredibly helpful for someone like me.
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Post by arrete »

At the risk of being viewed as a renegade, I was just at the local Fidelity office Friday. [Explanation - I inherited some stocks. My husband not only inherited stocks - he got a boatload of GE stock when he worked there - you can't just sell this stuff without huge tax consequences]. Anyway, I asked about the limit on the amount of a check, and it turns out they've done away with it.

They've also done away with fees for opening small amount accounts - such as for a child - UNLESS the money is in mutual funds. Stocks - no fee. Mutual funds - fee for small accounts.

I was there to start depleting my little IRA I have with them. My really big IRA is with Vanguard. I hope that recoups my reputation to some degree. :)

Kathy
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grok87
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Renegade?

Post by grok87 »

Kathy,
Many of us have accounts at Fidelity and Vanguard so you are definitely not a renegade!

cheers,
grok

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Fidelity vs. Vanguard

Post by Almost there »

Just a question to everyone who has contributed to this great discussion. If I have have IRA funds at both companies, will I have to take a distribution from both when I retire at 66?
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Re: Fidelity vs Vanguard

Post by fte »

Ron wrote:
DRJ wrote: Another thing on the service side (not talking about investments), Fidelity considers all our accounts at all institutions for our "rating" of "Private Access" customer ($1M+), whereas Vanguard will only "rate" us on just our holdings at Vanguard. I have a direct contact at Fidelity due to this.
is this for real? how would one go about setting this up? how can they verify assets at other institutions?
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Post by Bigfoothunter »

If you have a Fidelity store nearby and need "advice" then that is a good choice, but I find the online representatives to be of little help. If you have a good idea of what you are looking for and reasonably knowledgeable, then in my mind Vanguard is the way to go as the telephone representatives (most of the time) have good knowledge and with larger accounts you get personal representative who is very knowledgeable. I particularly like Vanguard for a committed low cost structure, where at Fidelity is also low cost to reasonable cost. It is really in my mind whether you see value in going to the store front. Bigfoot
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Re: Fidelity vs Vanguard

Post by Ron »

fte wrote:
Ron wrote:
DRJ wrote: Another thing on the service side (not talking about investments), Fidelity considers all our accounts at all institutions for our "rating" of "Private Access" customer ($1M+), whereas Vanguard will only "rate" us on just our holdings at Vanguard. I have a direct contact at Fidelity due to this.
is this for real? how would one go about setting this up? how can they verify assets at other institutions?
This was done with my Fidelity rep (one on one meeting at the local office). BTW, Vanguard knows of my wife/me's total holdings (including outside of Fidelity/Vanguard) through our annual review (by Vanguard). For more info, you can go to fidelity.com and search for "private access".

My monthly Private Access statement from Fidelity shows all the various holdings, regardless of holding company, and is used to review your status with the company.

Also, Vanguard "knows" our total account holdings (they are on VG's FE tool) just as Fidelity (who uses their "Full View" product).

I guess Fidelity looks at the "possibility" of converting your non-Fidelity accounts to be in their "stable" (however, they never said or "pushed" this point). Vanguard seems to say that they are only interested in what you actually commited to them, not just a "what if". Probably tied to each firm's marketing processes.

- Ron
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Post by david99 »

I have a Fidelity and Vanguard Total Stock Market Index Fund --- the Vang. Total Stock Market fund had no capital gains in 2007, but the Fidelity fund had capital gains. So Vang. funds may be more tax efficient.
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arrete
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Re: Fidelity vs. Vanguard

Post by arrete »

Almost there wrote:Just a question to everyone who has contributed to this great discussion. If I have have IRA funds at both companies, will I have to take a distribution from both when I retire at 66?
I don't think you are required to take a distribution until 70 1/2. Even then, it's a percentage. You could deplete one account and then the other. Or you could combine them.

Since, as I've mentioned, I have a small one at Fidelity, I'm just going to deplete that one. Then I'll decided whether to start on Vanguard or use my after tax stuff. Depends on tax consequences, etc.

Hope someone knows more about the required distribution at 70 1/2 than I do

Kathy
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Re: Fidelity vs. Vanguard

Post by Ron »

arrete wrote:
Almost there wrote:Just a question to everyone who has contributed to this great discussion. If I have have IRA funds at both companies, will I have to take a distribution from both when I retire at 66?
I don't think you are required to take a distribution until 70 1/2. Even then, it's a percentage. You could deplete one account and then the other. Or you could combine them.

Since, as I've mentioned, I have a small one at Fidelity, I'm just going to deplete that one. Then I'll decided whether to start on Vanguard or use my after tax stuff. Depends on tax consequences, etc.

Hope someone knows more about the required distribution at 70 1/2 than I do

Kathy
Kathy,

U R correct. You only need to take out the RMD against the total of your holdings, regardless of where they are held. No need to combine, nor withdraw proporationally against all accounts.

- Ron
orchidmil
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Post by orchidmil »

On the original question of Vanguard or Fidelity.

I am at both. Why ??

It is much less costly to trade stocks at Fidelity. So if you buy stocks, ETF's or CEF's you need an account at Fidelity. Also the stock buying screen at Vanguard is not really for other than an occasional buy..

Fidelity and Vanguard both have some excellent Funds.

If you buy non-Vanguard - Non-Fidelity funds then you need an account at Vanguard as they charge much less to do this than Fidelity.

A case to have an account at both depending on what you do in the stock market.

Orchidmil
waitforit
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Post by waitforit »

I'm doing something similar. 401ks are at Fido, Roth Ira's @ Fido and Vanguard.

I'm actually moving the Roths to wellsfargo - I can still buy VG funds, but I can also get access to ETFs covering asset classes I cannot invest in easily via Fido or VG (such as international small / value).
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Fidelity vs. Vanguard

Post by Almost there »

nisiprius
A very interesting exercise. When you compare FSTMX and VTSMX (total stock market), the curves are so identical you can't even see that there are two of them. Not so with FBIDX and VBMFX (both supposedly total bond market).
Nisiprius - Please help me here: I could not find any difference on Total Bonds between FBIDX vs VBMFX. What am I missing other than the 0.12 expense ratio?
Almost there
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SpringMan
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Post by SpringMan »

I complained about Vanguard brokerage, VBS, delaying their 1099s needed for income tax in another thread. I commented that Fidelity got their 1099s out in time. When Vanguard's 1099s were available I finished an submitted my income tax. Now, after taxes have been mailed in, I get a "corrected 1099" from Fidelity. Thanks a lot Fido. I now appreciate Vanguard delaying a couple weeks to get it right the first time. I wish Fidelity would have done the same.
Regards,
Best Wishes, SpringMan
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nisiprius
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Re: Fidelity vs. Vanguard

Post by nisiprius »

Almost there wrote:
nisiprius
A very interesting exercise. When you compare FSTMX and VTSMX (total stock market), the curves are so identical you can't even see that there are two of them. Not so with FBIDX and VBMFX (both supposedly total bond market).
Nisiprius - Please help me here: I could not find any difference on Total Bonds between FBIDX vs VBMFX. What am I missing other than the 0.12 expense ratio?
Almost there
Did you actually overlay the curves as I suggested?
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turntablist100
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Post by turntablist100 »

Im new to investing and recently chose to go with fidelity due to the fact they wave the 2500 minimum investment for an IRA when you do automatic investing of atleast $200 a month. Originally, however I did want to go with vanguard but they have a 3000 minimum.

Some Questions...

1. Fidelity 2045 Vs. Vanguard 2045

Im wondering if its worth it to eventually transfer my IRA to vanguard because of the lower expense ratio. Fidelity had a managed fund of .83 expense ratio and vangaurd is an index fund with .19 expense ratio. I used some calculations (im no expert) but I found that fidelity in the long run would have to out-perform the vanguard index by 0.67% in order to break even due to the fact that the savings of the vanguard index would be compounded over time.

Now index vs. managed funds have been argued however ive seen the numbers and it seems that index funds are usually on par if not better than managed funds so i figure why pay the extra expense?


2. Fidelity Account vs. ING Direct

After thinking about it though i thought it would be nice to have all my finances (IRA, Stocks, Banking) in one place and the fidelity brokerage accounts right now usually are averaging 4% using tax free funds.

However, ING Direct is attractive as well and i could use sharebuilder to buy stocks for as low as $4 dollars vs. fidelity's $19.99. I figured id start with ING and buy stocks... make interest on my extra cash in saving then transfer to fidelity.... however i found that ING charges $16 to sell stocks and $50 to close the account.

I did call vanguard and they were very nice and said i could transfer my fidelity investments to them via "asset transfer" and not have to pay taxes, so that was nice.

Not looking for any concrete answers per say after all my investing just started but in the long run whats is better to do?
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PiperWarrior
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Post by PiperWarrior »

Welcome to the forum!
turntablist100 wrote:1. Fidelity 2045 Vs. Vanguard 2045

Im wondering if its worth it to eventually transfer my IRA to vanguard because of the lower expense ratio. Fidelity had a managed fund of .83 expense ratio and vangaurd is an index fund with .19 expense ratio. I used some calculations (im no expert) but I found that fidelity in the long run would have to out-perform the vanguard index by 0.67% in order to break even due to the fact that the savings of the vanguard index would be compounded over time.

Now index vs. managed funds have been argued however ive seen the numbers and it seems that index funds are usually on par if not better than managed funds so i figure why pay the extra expense?
Short answer: Go ahead and transfer.

Long answer: You are worried about the right problem. You have to pay more at Fidelity. Actually, there are a couple of hidden costs. Actively managed funds tend to have a larger cash position so that managers can buy stocks whenever they want to, and you know that the stock market does better than a money market fund in the long term. Also, they trade often. Whenever they trade, they have to pay bid-ask spreads. All these things add up. So actively managed funds must add significantly more value to be on par with index funds. The problem is that we don't know which actively managed fund will be a tomorrow's winner.
turntablist100 wrote:2. Fidelity Account vs. ING Direct

After thinking about it though i thought it would be nice to have all my finances (IRA, Stocks, Banking) in one place and the fidelity brokerage accounts right now usually are averaging 4% using tax free funds.

However, ING Direct is attractive as well and i could use sharebuilder to buy stocks for as low as $4 dollars vs. fidelity's $19.99. I figured id start with ING and buy stocks... make interest on my extra cash in saving then transfer to fidelity.... however i found that ING charges $16 to sell stocks and $50 to close the account.

I did call vanguard and they were very nice and said i could transfer my fidelity investments to them via "asset transfer" and not have to pay taxes, so that was nice.

Not looking for any concrete answers per say after all my investing just started but in the long run whats is better to do?
I don't recommend you buy individual stocks. You could buy ETFs, but even then you have to be making fairly large purchases infrequently for ETFs to make sense. I would stick with Vanguard mutual funds.
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Post by Joe S »

Except for the basic index funds, Vanguard has much lower expenses for domestic and international stock funds.
Vanguard has cheaper bond funds across the board.
Fidelity has more funds (too many for me).
Fidelity has a better/cheaper brokerage, and you can buy most of the non-Admiral Vanguard funds for $75.
Philosophically, Vanguard is far more investor-friendly.
Ideally, use two accounts: Fidelity for brokerage and Vanguard for funds.
Live Free or Diehard
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Post by Live Free or Diehard »

turntablist100 wrote:Im new to investing and recently chose to go with fidelity due to the fact they wave the 2500 minimum investment for an IRA when you do automatic investing of atleast $200 a month. Originally, however I did want to go with vanguard but they have a 3000 minimum.
Another option at Vanguard is to go with the STAR Fund. It has an initial minimum investment of $1000. That assumes you have $1000 to invest.
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turntablist100
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Post by turntablist100 »

Does Vanguard have a brokerage account that would make interest on cash that isnt invested yet? if so what is the current yield?

Once I have 3000 in my fidelity IRA i will transfer it to Vanguard


livefree: ill look into the star fund thanks
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Post by Midpack »

They are both good places to keep your money. I had all my money with Fido for about 10 years, most of my holdings were individual stocks and some active funds, and I was reasonably happy with them. However, about 5 years ago I moved to Vanguard to convert my holdings primarily to index funds (thanks to W Bernstein, among others). And I sold off the last of my individual stocks in 2006, so Vanguard made more sense. I see that Fido now offers more index funds and lower expenses, but Vanguard still leads in both categories (and they're more tax efficient). Service was generally good at Fido, but there were some minor lapses that pushed my "loyalty." I missed the checkwriting capability at first, but with electronic transfers to my bank, it's a non-issue. I will say Vanguard's statements are still a lot clumsier than Fido, but I assume one day Vanguard will address this. And I am a Flagship client, so I get some other nice bennies at Vanguard.
You only live once...
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Post by PiperWarrior »

turntablist100 wrote:Does Vanguard have a brokerage account that would make interest on cash that isnt invested yet? if so what is the current yield?
Vanguard's brokerage is quite expensive although their cash sweep is OK.

https://personal.vanguard.com/us/accoun ... ontent.jsp

Here is the information about Prime Money Market Fund, the cash sweep fund:

https://personal.vanguard.com/us/FundsS ... IntExt=INT

The compound yield is currently 3.40%.
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Fidelity vs. Vanguard

Post by diehard »

I just became a Boglehead and am reading this debate regarding where to put money. I recently moved away from my investment advisor and, at present, have my accounts split between Schwab and TD Ameritrade. Is it more efficient to have my accounts with Vanguard or being able to buy anything through Schwab or TD?
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PiperWarrior
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Re: Fidelity vs. Vanguard

Post by PiperWarrior »

diehard wrote:I just became a Boglehead and am reading this debate regarding where to put money. I recently moved away from my investment advisor and, at present, have my accounts split between Schwab and TD Ameritrade. Is it more efficient to have my accounts with Vanguard or being able to buy anything through Schwab or TD?
Your choice depends on what you want to do and how much money you have. If you want to set up a fairly basic portfolio consisting of

Total Stock Market (domestic large blend)
FTSE All-World ex-US (international large blend)
Small-Cap Value
REIT Index
Total Bond Market
Inflation Protected Securities

then Vanguard is the way to go. If you don't have a lot of money (say, $500K), Vanguard brokerage is pretty expensive. If that applies to you, and you want to have access to asset classes that Vanguard does not offer, then you might want to consider other brokers. These areas include but are not limited to:

Commodities
International REIT
International Small-Cap
International Small-Cap Value
International bond
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turntablist100
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Post by turntablist100 »

If im in it for the long haul does it really matter what brokerage i use? My investments are pretty basic right now...

Fidelity Freedom Fund 2045 (fffgx) - IRA
Fidelity Money Market Fund (fptxx) - Cash not invested yet
Individual Stocks - Long Term Holdings
401K - Contribute up to my match

So far Fidelity seems pretty straight forward with good customer service. Besides moving to Vanguard for lower expense ratios are there any other reasons to transfer my assets?

Even though my savings are basic, I consider them to be solid. What would be my next move if i wanted to take investing to the next level?

BTW - all the contributions to this post/topic have been very informative

thanks!
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PiperWarrior
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Post by PiperWarrior »

turntablist100 wrote:If im in it for the long haul does it really matter what brokerage i use?
I think so. I would lower the costs as much as I reasonably can. The costs do not add up but compound.
turntablist100 wrote:So far Fidelity seems pretty straight forward with good customer service.
I like their customer service.
turntablist100 wrote:Besides moving to Vanguard for lower expense ratios are there any other reasons to transfer my assets?
I don't see much, but the costs are a big factor in mutual fund investing.
turntablist100 wrote:Even though my savings are basic, I consider them to be solid. What would be my next move if i wanted to take investing to the next level?
I don't know what you know, so here are random things off the top of my head.

- lower the costs as much as you can.
- read more books.
- learn about value tilt, REIT, and commodities.
- learn about modern portfolio theory, standard deviation, sharpe ratio, etc.
- make more and/or spend less money so you can invest more.
- if you max out both 401(k) and Roth IRA and are starting a taxable account, learn about tax.
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