Sshwab vs. Vanguard for index funds

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robre
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Sshwab vs. Vanguard for index funds

Post by robre »

I currently have my IRA accounts at Schwab. They are as follows:
Inherited 96 K in managed mutual funds
Roth 26K in Vanguard 2020 index
Traditional 126K in managed ETC funds.

I also have approx. 30K in brokerage account with inherited municipal bond funds.
I wish to exchange all the managed funds to an appropriate asset allocation.
My 401K is invested through J.P.Morgan. I am thinking of placing it, 210K into retirement date funds. Currently only the core holding is in S&P500 index fund. All other options are non index funds.

I intend to roll over the 401K when I retire in 7 to 10years. I am currently 59. Should I go to Vanguard or stay with Schwab?
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ogd
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Re: Sshwab vs. Vanguard for index funds

Post by ogd »

Vanguard.

Here's why: Schwab did put that money into expensive investments. Punish them. Or if that's not your thing, think of your heirs, or yourself with diminished judgment many years from now. You want someone who's on your side, not thinking of their own profits first. Vanguard is so by nature.

I do have some investments at Schwab for various reasons and I do rather like them, they're not too bad by the (low) standards of their industry. But in the case of my first broker, once I wised up to the situation, I was out of there, with prejudice. No second chances. Right now even with Schwab still on my good side, I wouldn't keep the big account anywhere other than Vanguard.
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tainted-meat
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Re: Sshwab vs. Vanguard for index funds

Post by tainted-meat »

Schwab ETFs are good. Vanguard is good.

Can't really go wrong either way.

Good luck.
stlutz
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Re: Sshwab vs. Vanguard for index funds

Post by stlutz »

I couldn't quite tell from the post, but if you are looking for target date funds, definitely Vanguard.

If you are looking to do index mutual funds, Vanguard. Their cheaper Admiral class shares are not available at Schwab.

If you prefer ETFs, it really doesn't matter as you can buy Vanguard ETFs at Schwab and Schwab ETFs at Vanguard if you so choose. If you are happy with Schwab's service, stay there; if not, then try Vanguard.
aquifer
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Re: Sshwab vs. Vanguard for index funds

Post by aquifer »

Low cost is built into Vanguard's DNA. Other companies lower their costs because they are forced to due to the massive flows out of their funds into index funds. I'm sure Schwab's funds are fine, but it's not in their nature to be low cost. What that means is that they are most likely plotting how they are going to turn this "index thing" into a profit for them. They are not concerned about YOU in the least. Their index funds are loss leaders to get you in the door. This is not a criticism of Schwab per se, they are all that way except Vanguard. That's how I look at it anyway.
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in_reality
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Re: Sshwab vs. Vanguard for index funds

Post by in_reality »

robre wrote:Should I go to Vanguard or stay with Schwab?
Schwab:

Here's why: Vanguard's brokerage is weird. They debit your account when a dividend is paid to you only to credit the account when they move the money out and then credit your sweep account again when they move the money in. No problem if it comes out to be the same but sometimes ... well they aren't always the greatest at conveying whether they debited or credited and my transaction confirmations and statements ended up being different. Not a total reason to avoid Vanguard but do be aware their brokerage is odd.

Are you using the token generator at Schwab for online security? If not, get one. It's so trivially easy to get it set up.

Vanguard's advantages are munis and target retirement funds. It's too expensive to get these mutual funds at Schwab and Vanguard doesn't offer them in an ETF so for muni you'd have to go SPDR, iShares, PowerShares, Market Vectors etc. at a slightly higher ER. Haven't looked for target retirement funds.

I didn't particularly feel Vanguard was interested in ME. They have lots of customers and even my Flagship rep. couldn't care less. Vanguard is interested in their operation and if you as a customer fit into their plans then all is peachy. Their business accommodates many people but don't be confused into thinking they care about YOU. This is not a criticism of Vanguard per se, and every place has it's limitations but Vanguard operations seem particularly inflexible.
think of your heirs, or yourself with diminished judgment many years from now
Even if you are at Vanguard and your heirs are clueless, they'll be at risk for transferring out of Vanguard into some fund showing 3 year outperformance over index funds (yes I know that performance will never continue but would your heirs). There are any number of software advisors which will recommend the "hottest" performers for you!!! The point is to educate your heirs to make good decisions.
wander
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Re: Sshwab vs. Vanguard for index funds

Post by wander »

tainted-meat wrote: Can't really go wrong either way.
+1.
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nisiprius
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Re: Sshwab vs. Vanguard for index funds

Post by nisiprius »

See http://www.bogleheads.org/wiki/Schwab

Focus on what's best for you. There are about 100 things more important than the brand name of the low-cost index fund you buy.

If you have no other reasons for leaving Schwab, I would not leave them just to substitute Vanguard index funds for close-equivalent Schwab index funds. Transferring brokerage accounts is often a nuisance, and, better the devil you know.

I had an account at Schwab for about three years. Good firm. (The reason I left them because at that time, circa 2002, and under a different CEO, they did something involving account maintenance fees that infuriated me).
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Jack FFR1846
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Re: Sshwab vs. Vanguard for index funds

Post by Jack FFR1846 »

Schwab will allow you to buy/sell Schwab ETFs for no fee. Because of this, I plan to open a taxable account with them (after I pay my son's college tuition and have the money). SCHB is US broad market ETF with a very low ER (from memory, 0.04%). Being an ETF, I plan to buy and hold and when it's time to pull money out, I would only pay the long term cap gains rather than ordinary income that a mutual fund would bring.

I don't see the firm itself as important whatsoever. Vanguard is a leader in lowering costs, but their online utility is 20 years behind the industry. Fidelity follows Vanguard with costs and has spartan advantage index funds. Their mins tend to be lower than Vanguard and their online utility leads the industry. Schwab is great for in house ETFs. If they have what you want, they can keep your costs lower than Vanguard or Fidelity.

Make your choice based on your own need.
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dodecahedron
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Re: Sshwab vs. Vanguard for index funds

Post by dodecahedron »

Jack FFR1846 wrote:Schwab will allow you to buy/sell Schwab ETFs for no fee. Because of this, I plan to open a taxable account with them (after I pay my son's college tuition and have the money). SCHB is US broad market ETF with a very low ER (from memory, 0.04%). Being an ETF, I plan to buy and hold and when it's time to pull money out, I would only pay the long term cap gains rather than ordinary income that a mutual fund would bring.
Equity mutual funds don't need to generate ordinary income any more than ETFs do. Passively managed index mutual funds from Vanguard generally just have dividends and capital gains distributions, and Vanguard does a great job of minimizing the latter or at worst making sure they qualify for LT treatment. So at worst, buying and holding mutual funds loses a bit of deferral on the LT gains. I will say that 4 bp expense ratio you cite from Schwab does beat Vanguard ETF and Admiral mutual funds.
dbr
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Re: Sshwab vs. Vanguard for index funds

Post by dbr »

Where you invest, meaning where your accounts are, and what you invest in, meaning what company's mutual funds, ETF's, other kinds of assets, are two separate questions.

I suspect a good answer is that if you are going to invest in mutual funds from Vanguard, then you should certainly invest at Vanguard. Any other combination of investments would seem to be better done at a different company, such as Schwab. You can invest at both, holding Vanguard mutual funds at Vanguard, and other things elsewhere. You can also hold Vanguard ETF's and everything else at Schwab.

You could hold Schwab mutual funds, but it is likely you would prefer Vanguard funds as far as mutual funds go.

If you invest at Schwab, you should make sure no one there is talking to you about what to invest in or taking a fee to manage your assets. The same is true at Vanguard.
chaz
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Re: Sshwab vs. Vanguard for index funds

Post by chaz »

I prefer Vanguard.
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placeholder
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Re: Sshwab vs. Vanguard for index funds

Post by placeholder »

ogd wrote:Schwab did put that money into expensive investments. Punish them.
How do you know how the investments got into the managed funds?
Pizzasteve510
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Re: Sshwab vs. Vanguard for index funds

Post by Pizzasteve510 »

I want to thank everyone in these forums for some very thoughtful topics...this is my first post.

Removed personal info.
Last edited by Pizzasteve510 on Fri Sep 19, 2014 10:14 am, edited 2 times in total.
Topic Author
robre
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Re: Sshwab vs. Vanguard for index funds

Post by robre »

Thanks for all your help. I use to be at Vanguard, the went to Schwab when my mother died. I ask them for managed funds because I felt I couldn't deal with the accounts. Lesson learned, I will move back to Vanguard and "Stay the course". I admit, I didn't realize all the fees they would charge me and the amount of managed funds they would place me in. I will start the transfer this week.
Karamatsu
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Re: Sshwab vs. Vanguard for index funds

Post by Karamatsu »

I think they both have advantages and disadvantages, but if you're already at Schwab, the simplest thing is just to stay put and just change the investments. Schwab is an excellent brokerage and I'm sure they would help you do that.
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