How to add to my portfolio monthly without crazy fees

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

How to add to my portfolio monthly without crazy fees

Post by notwerby »

I thought i found a good fund to put my money in, (vanguard star,) but then when i went to add money to it this month, TD Ameritrade informed me there would be a 50$ fee every time i buy more. I understand a fee when you first purchase a fund, but how could you possibly be expected to pay $50 each time you add money? I have been reading these forums, and searching online, and trying to find a good investment strategy for someone who is very hands off. I do not wish to buy and sell, i dont want to have to research on a regular basis, i just want a good reliable index / mutual fund where i can put my money each month and save for retirement. (This is a Roth IRA.)

I was getting advice from a family friend who's knowledgeable about investing, but every time i ask him questions, he gives me different answers, and i'm starting to think he may be hurting more than helping. First i thought i needed commission free ETF"s, then he told me index funds, then he said the star fund would be a good middle of the road place to put my money. If i'm trying to put 450$ a month (give or take) into the market, and not worry about it, what would be my best strategy with minimal fees?
Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 7:41 pm
Location: Nowhere

Re: How to add to my portfolio monthly without crazy fees

Post by Leeraar »

Open an account directly with Vanguard. For mutual funds only.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
johnubc
Posts: 870
Joined: Wed Jan 06, 2010 5:54 am

Re: How to add to my portfolio monthly without crazy fees

Post by johnubc »

For vanguard funds - open an account at Vanguard, as there are no fees for Vanguard Funds and Vanguard ETF transactions.

At TD, they also have some ETF's that are commission free. http://research.tdameritrade.com/grid/p ... onfree.asp
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

johnubc wrote:For vanguard funds - open an account at Vanguard, as there are no fees for Vanguard Funds and Vanguard ETF transactions.

At TD, they also have some ETF's that are commission free. http://research.tdameritrade.com/grid/p ... onfree.asp
And i thought that was a good plan, but then I asked the family friend, who said "you want index funds, not ETFS." I'm not sure why, and wasn't able to get an answer out of him. We communicate via email, and i frequently get a response like "i'll call you monday to discuss," and then never hear from him lol. (Although at the same time, he kept pushing VIG, saying it was a good ETF.)

So if I initially decided on VGK for Europe, VWO for emerging markets, VIG for American market, and BND for bonds, do you have any critique of that spread? I get the feeling VIG might be a little out there when it comes to the simple bogleheads principles, do you have a better suggestion for commission free ETF for us stock market?
User avatar
riptide
Posts: 843
Joined: Thu Jul 17, 2014 2:38 pm
Location: Coastal, South Carolina

Re: How to add to my portfolio monthly without crazy fees

Post by riptide »

check out this index fund, it is low cost, and I have been told on here many times it is a great core fund for investing if you want to leave it alone- Vanguard Total Stock Market Index fund VTSMX. You can also go to the Wiki New Investors section here - it has tons of information, I know I use it.
Brokerage account-100% stocks | VG total Market 55% | VG small cap value 20% | VG Reit index 25% | | TSP Account 75C/25S | C Fund75%, S25%, | | Bonds: U.S. Treasury 5 year Note, 1 year T Bill
Logan T
Posts: 185
Joined: Sat Sep 06, 2014 1:10 pm
Location: Colorado

Re: How to add to my portfolio monthly without crazy fees

Post by Logan T »

For Commission Free ETFs at TD, I'd go with:

VTI - Vanguard Total Stock Market
VEA - Vanguard FTSE Developed Markets
VWO - Vanguard FTSE Emerging Markets
BND - Vanguard Total Bond Market

This allows you to basically do the 3-fund portfolio with Vanguard ETFs, however for international, you are using a mixture of VEA and VWO. This will also allow you to be tilted more towards emerging markets if you'd like to try for extra returns with the extra volatility.

For a 90/10 portfolio (just tossing an allocation out there, as you didn't mention what you wanted to go for) with 30% of your stocks invested in international ETFs, you could do something like this:

63% VTI
21% VEA
6% VWO
10% BND

EDIT: Looked again and you could even use VEU (Vanguard FTSE All-World ex-US) instead of VEA and VWO to make it a true 3-fund portfolio. So your 90/10 portfolio would now look like:

63% VTI
27% VEU
10% BND
Last edited by Logan T on Tue Sep 16, 2014 8:16 am, edited 1 time in total.
You really don't need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you'll be able to retire comfortably at 70. -Jonathan Pond
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

Logan T wrote:For Commission Free ETFs at TD, I'd go with:

VTI - Vanguard Total Stock Market
VEA - Vanguard FTSE Developed Markets
VWO - Vanguard FTSE Emerging Markets
BND - Vanguard Total Bond Market

This allows you to basically do the 3-fund portfolio with Vanguard ETFs, however for international, you are using a mixture of VEA and VWO. This will also allow you to be tilted more towards emerging markets if you'd like to try for extra returns with the extra volatility.

For a 90/10 portfolio with 30% of your stocks invested in international ETFs, you could do something like this:

63% VTI
21% VEA
6% VWO
10% BND

Exactly the kind of advice i was looking for, really appreciate the help. So if i do some research and decide this is the way i want to go, is there any reason i shouldn't just sell the other ones i purchased and put the money in those? I feel like it would be silly to hold on to 4 - 6 shares of 3 funds i'm not longer going to load up.
berntson
Posts: 1366
Joined: Mon Oct 29, 2012 12:10 pm

Re: How to add to my portfolio monthly without crazy fees

Post by berntson »

^ Just sell the shares in the funds you've bought. No reason to keep them.
User avatar
Taylor Larimore
Posts: 32842
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Vanguard Target Retirement Funds

Post by Taylor Larimore »

notwerby wrote: i just want a good reliable index / mutual fund where i can put my money each month and save for retirement. (This is a Roth IRA.) -- If i'm trying to put 450$ a month (give or take) into the market, and not worry about it, what would be my best strategy with minimal fees?
Notwerby:

If the Roth IRA is your only investment account, I think that the appropriate Vanguard Target Retirement Fund meets your criteria perfectly. This is a link:

VANGUARD TARGET RETIREMENT FUNDS

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Logan T
Posts: 185
Joined: Sat Sep 06, 2014 1:10 pm
Location: Colorado

Re: How to add to my portfolio monthly without crazy fees

Post by Logan T »

notwerby wrote:
Logan T wrote:For Commission Free ETFs at TD, I'd go with:

VTI - Vanguard Total Stock Market
VEA - Vanguard FTSE Developed Markets
VWO - Vanguard FTSE Emerging Markets
BND - Vanguard Total Bond Market

This allows you to basically do the 3-fund portfolio with Vanguard ETFs, however for international, you are using a mixture of VEA and VWO. This will also allow you to be tilted more towards emerging markets if you'd like to try for extra returns with the extra volatility.

For a 90/10 portfolio with 30% of your stocks invested in international ETFs, you could do something like this:

63% VTI
21% VEA
6% VWO
10% BND

Exactly the kind of advice i was looking for, really appreciate the help. So if i do some research and decide this is the way i want to go, is there any reason i shouldn't just sell the other ones i purchased and put the money in those? I feel like it would be silly to hold on to 4 - 6 shares of 3 funds i'm not longer going to load up.
Yes, just sell the funds and buy the ETFs. But I did edit my post above and I'll post it here just in case.
EDIT: Looked again and you could even use VEU (Vanguard FTSE All-World ex-US) instead of VEA and VWO to make it a true 3-fund portfolio. So your 90/10 portfolio would now look like:

63% VTI
27% VEU
10% BND
Now using VEU instead of VEA and VWO would be a slight increase in expense ratio (about 0.05% more for your international shares), but it may make it easier to balance by only having 3 funds instead of 4.
You really don't need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you'll be able to retire comfortably at 70. -Jonathan Pond
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

berntson wrote:^ Just sell the shares in the funds you've bought. No reason to keep them.
One other question, when i was reccomended VGSTX, i went and bought $1,000 worth. If i would incur a fee to sell it, am i better off just holding on to it at that point, or biting the bullet and chalking it up to beginners mistakes and washing my hands of it.
Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 7:41 pm
Location: Nowhere

Re: How to add to my portfolio monthly without crazy fees

Post by Leeraar »

Open a mutual fund account at Vanguard.

Pick one of their target date retirement funds (which year will you turn 60?).

Set up an automatic monthly purchase.

Roll all your existing Roth accounts into this one. Vanguard can tell you how.

Forget about it until the balance reaches $50,000. Then, consider investing in more than one fund. (I don't know why.)

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
Logan T
Posts: 185
Joined: Sat Sep 06, 2014 1:10 pm
Location: Colorado

Re: How to add to my portfolio monthly without crazy fees

Post by Logan T »

I also wanted to point out, that it sounds like this account is rather new and you do not have much money in it yet. The best advice might be to transfer/rollover your IRA to Vanguard and invest there for the long term. Then you could invest in mutual funds, as mutual funds can invest in partial shares (so you don't have any idle cash) and you can automate contributions. You would probably want to start with a Target Retirement Fund (https://investor.vanguard.com/mutual-fu ... etirement/#/) and once that is large enough (say $30-50,000), you could switch over to your own 3-fund portfolio. Of course you can invest in ETFs too if you'd like. There are no commissions on Vanguard Mutual Funds or ETFs with a Vanguard account.
You really don't need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you'll be able to retire comfortably at 70. -Jonathan Pond
User avatar
ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: How to add to my portfolio monthly without crazy fees

Post by ruralavalon »

Move this Roth IRA to Vanguard. Call Vanguard and they will help you do this. Since you intend to use Vanguard funds there is no reason to have the account anywhere else, and this avoids that per transaction fee.

You can use the STAR fund or any of the Target Retirement funds to start ($1k initial minimum investment) or one of the LifeStrategy funds ($3k initial minimum investment). All are well diversified balanced funds, very simple one-fund solutions to investing.

Set up an automatic monthly purchase.
Last edited by ruralavalon on Tue Sep 16, 2014 1:03 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: How to add to my portfolio monthly without crazy fees

Post by livesoft »

I am probably one of the biggest fans of ETFs on the forum and also a big fan of TDAmeritrade where I have more assets than I have at Vanguard, but based on your writings here notwerby, you really should transfer your Roth IRA from TDAmeritrade to Vanguard and buy a Target Retirement fund of index funds. That is, don't bother with ETFs and leave TDAmeritrade for Vanguard. It will suit you better and be better for you.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
gardemanger
Posts: 282
Joined: Sun Oct 13, 2013 4:06 pm

Re: How to add to my portfolio monthly without crazy fees

Post by gardemanger »

notwerby, I think you may need to get a handle on the difference between a mutual fund and an ETF. An ETF is a special form of mutual fund that can be traded like a stock. It may or may not meet your specific needs. Odds are you just want plain mutual funds and do not need to invest them in ETF form. More:

http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

gardemanger wrote:notwerby, I think you may need to get a handle on the difference between a mutual fund and an ETF. An ETF is a special form of mutual fund that can be traded like a stock. It may or may not meet your specific needs. Odds are you just want plain mutual funds and do not need to invest them in ETF form. More:

http://www.bogleheads.org/wiki/ETFs_vs_mutual_funds

I have read the differences before, but if the mutual funds at TD charge 50$ to buy and sell, and the commision free ETFS are free, why would i want a mutual fund over the latter? I saw that there are differences between the two, but neither one seemed to have any major pro or con that i could pick out for someone with my needs. That's part of the reason i'm having a hard time learning the difference. The only downside i saw to ETFS is not being able to automatically re-invest dividends.
berntson
Posts: 1366
Joined: Mon Oct 29, 2012 12:10 pm

Re: How to add to my portfolio monthly without crazy fees

Post by berntson »

notwerby wrote:
berntson wrote:^ Just sell the shares in the funds you've bought. No reason to keep them.
One other question, when i was reccomended VGSTX, i went and bought $1,000 worth. If i would incur a fee to sell it, am i better off just holding on to it at that point, or biting the bullet and chalking it up to beginners mistakes and washing my hands of it.
After reading other posts, I now agree that moving to Vanguard is the way to go. So what you can do is transfer your existing ROTH without selling the mutual funds. This will cost $75, but that's small potatoes in the grand scheme of getting your investments right. Once everything is at Vanguard, you can move money between Vanguard funds and ETFs without paying any fees.

I also agree with the suggestions to pick a one-fund portfolio. So once you transfer everything, you would sell what you have an put it in Vanguard LifeStyle Growth. You can then setup automatic monthly deposits for maximal simplicity.
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: How to add to my portfolio monthly without crazy fees

Post by livesoft »

notwerby wrote: The only downside i saw to ETFS is not being able to automatically re-invest dividends.
This is a misperception on your part. One can automatically re-invest the dividends from ETFs for free at almost all brokers and that includes TDAmeritrade and Vanguard.
Wiki This signature message sponsored by sscritic: Learn to fish.
berntson
Posts: 1366
Joined: Mon Oct 29, 2012 12:10 pm

Re: How to add to my portfolio monthly without crazy fees

Post by berntson »

livesoft wrote:I am probably one of the biggest fans of ETFs on the forum and also a big fan of TDAmeritrade where I have more assets than I have at Vanguard...
By the way livesoft, what do you like about TDAmeritrade in comparisons to Vanguard? Since I use only ETFs anyway, I've been thinking about a switch.
User avatar
FelixTheCat
Posts: 2035
Joined: Sat Sep 24, 2011 12:39 am

Re: How to add to my portfolio monthly without crazy fees

Post by FelixTheCat »

Leeraar wrote:Open an account directly with Vanguard. For mutual funds only.
+1

This is an easy decision. :-)
Felix is a wonderful, wonderful cat.
placeholder
Posts: 8421
Joined: Tue Aug 06, 2013 12:43 pm

Re: How to add to my portfolio monthly without crazy fees

Post by placeholder »

berntson wrote:By the way livesoft, what do you like about TDAmeritrade in comparisons to Vanguard? Since I use only ETFs anyway, I've been thinking about a switch.
For me a big reason was a nice bonus and reimbursement for transfer fees along with the excellent selection of commission free ETFs.
User avatar
CABob
Posts: 5091
Joined: Sun Feb 25, 2007 7:55 pm
Location: Southern California

Re: How to add to my portfolio monthly without crazy fees

Post by CABob »

notwerby,
Most of the replies on this conversation are suggesting and recommending that you transfer the account to Vanguard and hold either index funds or a fund of funds in it.
For some reason you seem to be reluctant to do that and are talking about reasons to stay with TD Ameritrade. Can you tell us why you are reluctant to transfer the account? If you desired you could keep the account invested in the STAR fund.
Bob
User avatar
MossySF
Posts: 2361
Joined: Thu Apr 19, 2007 9:51 pm
Contact:

Re: How to add to my portfolio monthly without crazy fees

Post by MossySF »

If you want to stay with TD Ameritrade but also keep your investing simple, there are iShares ETFs that look roughly like Vanguard's Lifestyle funds:

AOA iShares Aggressive Allocation
AOR iShares Growth Allocation
AOM iShares Moderate Allocation
AOK iShares Conservative Allocation

Relatively higher ERs though so I'd probably go with the transfer to Vanguard option.
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: How to add to my portfolio monthly without crazy fees

Post by livesoft »

berntson wrote:
livesoft wrote:I am probably one of the biggest fans of ETFs on the forum and also a big fan of TDAmeritrade where I have more assets than I have at Vanguard...
By the way livesoft, what do you like about TDAmeritrade in comparisons to Vanguard? Since I use only ETFs anyway, I've been thinking about a switch.
I think I have written this up before, so I had better go check unless I contradict myself. Back in a moment.

TDAmeritrade has
Real-time Level II quotes and charting
Real-time updating of transaction info including pending things, so you know where your money is at all times
Dividends paid and credited promptly and they show up on the web site (see e.g.: http://www.bogleheads.org/forum/viewtop ... =1&t=87742 )
Cash bonuses for new large contributions or transfers
A nearby walk-in office for those last minute (Dec 31st) things like donating shares to charity
Better 1099B statements when downloading into TT. This was the case in the old "non-covered" days. I don't know if Vanguard has improved or not. But WellsTrade is even better than TDAmeritrade and Fidelity.

See also: http://www.bogleheads.org/forum/viewtop ... 5#p2158265
Wiki This signature message sponsored by sscritic: Learn to fish.
Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 7:41 pm
Location: Nowhere

Re: How to add to my portfolio monthly without crazy fees

Post by Leeraar »

livesoft wrote:
berntson wrote:
livesoft wrote:I am probably one of the biggest fans of ETFs on the forum and also a big fan of TDAmeritrade where I have more assets than I have at Vanguard...
By the way livesoft, what do you like about TDAmeritrade in comparisons to Vanguard? Since I use only ETFs anyway, I've been thinking about a switch.
I think I have written this up before, so I had better go check unless I contradict myself. Back in a moment.

TDAmeritrade has
Real-time Level II quotes and charting
Real-time updating of transaction info including pending things, so you know where your money is at all times
Dividends paid and credited promptly and they show up on the web site (see e.g.: http://www.bogleheads.org/forum/viewtop ... =1&t=87742 )
Cash bonuses for new large contributions or transfers
A nearby walk-in office for those last minute (Dec 31st) things like donating shares to charity
Better 1099B statements when downloading into TT. This was the case in the old "non-covered" days. I don't know if Vanguard has improved or not. But WellsTrade is even better than TDAmeritrade and Fidelity.

See also: http://www.bogleheads.org/forum/viewtop ... 5#p2158265
Maybe Victoria can develop some sort of Myers-Briggs or Morningstar Style chart for Bogleheads posters.

Whatever that is, I am clearly in an opposite corner from livesoft!

L.
Last edited by Leeraar on Wed Sep 17, 2014 8:58 am, edited 1 time in total.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")
User avatar
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Re: How to add to my portfolio monthly without crazy fees

Post by Bustoff »

livesoft wrote: TDAmeritrade has
Real-time Level II quotes and charting
Real-time updating of transaction info including pending things, so you know where your money is at all times
Dividends paid and credited promptly and they show up on the web site (see e.g.: http://www.bogleheads.org/forum/viewtop ... =1&t=87742 )
Cash bonuses for new large contributions or transfers
A nearby walk-in office for those last minute (Dec 31st) things like donating shares to charity
Better 1099B statements when downloading into TT. This was the case in the old "non-covered" days. I don't know if Vanguard has improved or not. But WellsTrade is even better than TDAmeritrade and Fidelity.

See also: http://www.bogleheads.org/forum/viewtop ... 5#p2158265
Hmm, so how does TDAmeritrade make money from passive investors ?
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: How to add to my portfolio monthly without crazy fees

Post by livesoft »

Brokers make their money in various ways. Not everyone does the no-commission, no trading thing. Here are some ways:

1. Pay 0.01% on cash sweep accounts while investing the money at 1%. This generates hundreds of millions of dollars of revenue. It doesn't really matter what the actual interest rates are because there is always a spread.
2. Get paid for sending trading to certain exchanges or dark pools.
3. Providing margin loans to customers and charging them interest on those loans.
4. Bid/ask spreads of bonds and CDs.
5. Commissions on stocks, options, and other products.
6. When they reinvest dividends for you, they really capture all the spread.

Here is an old article about #1 and #3 above: http://www.maxfunds.com/?q=node/8 but it gives you an idea:
E*TRADE now makes more from net interest income than they do from stock trading commissions. According to E*TRADE, customer cash “…[is] a low cost source of funding.” Other big brokers also make big dollars from lending their customers money.
One can also ask, "How does Vanguard make money from passive investors?" :)
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Re: How to add to my portfolio monthly without crazy fees

Post by Bustoff »

Thanks livesoft - I had not previously seen your linked threads ... very informative.
User avatar
Taylor Larimore
Posts: 32842
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

How does Vanguard make money? They don't.

Post by Taylor Larimore »

One can also ask, "How does Vanguard make money from passive investors?" :)
They don't. Vanguard has no stockholders taking profits from our returns. Vanguard operates at cost. Any "profit" is returned to investors in their mutual fund returns.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

CABob wrote:notwerby,
Most of the replies on this conversation are suggesting and recommending that you transfer the account to Vanguard and hold either index funds or a fund of funds in it.
For some reason you seem to be reluctant to do that and are talking about reasons to stay with TD Ameritrade. Can you tell us why you are reluctant to transfer the account? If you desired you could keep the account invested in the STAR fund.
I'm actually not at all reluctant to do that, other than whatever fees i may incur from closing my account and moving over. I actually thought of going to vanguard at first, but the person who was sort of helping me with advice said he used TD and was fond of it; i called their customer service, felt like they answered my questions well and just pulled the trigger. I just didn't want to keep jumping around, i figured the difference between the successful investors and the unsuccessful ones weren't decided by which firm they invested through.

That being said, i was going to call vanguard today and ask them about moving over, even before i saw this post. I was coming back here just now to ask why people recommended the target date fund through vanguard for someone with a small account balance. Why start there and then switch over to the 3 fund portfolio after the fact, when you have more money? (But i do love the idea of owning just ONE fund, that i can put money into as i come by it, until i feel more comfortable.) Just curious. Thanks all for the help.
User avatar
Taylor Larimore
Posts: 32842
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Vanguard target funds.

Post by Taylor Larimore »

That being said, i was going to call vanguard today and ask them about moving over, even before i saw this post. I was coming back here just now to ask why people recommended the target date fund through vanguard for someone with a small account balance. Why start there and then switch over to the 3 fund portfolio after the fact, when you have more money? (But i do love the idea of owning just ONE fund, that i can put money into as i come by it, until i feel more comfortable.) Just curious. Thanks all for the help.
notwerby:

Vanguard's target funds and The Three Fund Portfolio are virtually the same. If all my funds were in a tax-advantaged account, I would have my entire portfolio in one maintenance-free target fund designed by Vanguard experts.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
User avatar
CABob
Posts: 5091
Joined: Sun Feb 25, 2007 7:55 pm
Location: Southern California

Re: How to add to my portfolio monthly without crazy fees

Post by CABob »

notwerby wrote:I was coming back here just now to ask why people recommended the target date fund through vanguard for someone with a small account balance. Why start there and then switch over to the 3 fund portfolio after the fact, when you have more money? (But i do love the idea of owning just ONE fund, that i can put money into as i come by it, until i feel more comfortable.) Just curious. Thanks all for the help.
Because the target date funds have a $1000 fund minimum and you are charged expenses which are the prorated expenses of the investor share funds which are contained. The individual investor share funds have a $3000 minimum and you need $10000 to be converted to Admiral shares (assumming my memory is correct).
Bob
User avatar
Taylor Larimore
Posts: 32842
Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

One fund or three?

Post by Taylor Larimore »

I was coming back here just now to ask why people recommended the target date fund through vanguard for someone with a small account balance. Why start there and then switch over to the 3 fund portfolio after the fact, when you have more money? (But i do love the idea of owning just ONE fund, that i can put money into as i come by it, until i feel more comfortable.) Just curious. Thanks all for the help.
notwerby:

Personally, I would not switch over to The Three Fund Portfolio when my target fund becomes larger. In my opinion, one-fund, maintenance-free simplicity (no rebalancing), is more valuable than the small savings from individual Admiral funds.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
john94549
Posts: 4638
Joined: Tue Jul 26, 2011 8:50 pm

Re: How to add to my portfolio monthly without crazy fees

Post by john94549 »

I can't imagine anyone would pay a front-load of over 10% each month. Get your account over to Vanguard.
epictetus
Posts: 796
Joined: Sat Mar 10, 2007 5:43 pm

Re: How to add to my portfolio monthly without crazy fees

Post by epictetus »

strongly suggest you listen to Taylor Larimore's input.

you can move your IRA to Vanguard and then buy one fund in your IRA.
that is all you will need. just add money to it when you can. the fund itself will do all the work for you re: rebalancing, etc.

one fund and you're done. it really can be that easy
Focus on what you can control
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

I know its been a while since the last post on this thread, but i wanted to ask about the switching to vanguard suggestions. In this thread most people seem to suggest going to vanguard, yet if you google vanguard vs td ameritrade, it seems split down the middle. I see people saying TD's commission free ETFS are great, and you can maintain a vanguard 3 fund portfolio that way. So yes, if i was starting from scratch, i'd go to vanguard, but why is it worth 75$ to switch over at this point? Sure i would prefer one fund over three, but its not like its beyond my ability to manage 3. I'm still unclear of why it would be worth throwing away the 75$, even if in the grand scheme of things its a small amount.
CantPassAgain
Posts: 577
Joined: Fri Mar 15, 2013 8:49 pm

Re: How to add to my portfolio monthly without crazy fees

Post by CantPassAgain »

notwerby wrote:I know its been a while since the last post on this thread, but i wanted to ask about the switching to vanguard suggestions. In this thread most people seem to suggest going to vanguard, yet if you google vanguard vs td ameritrade, it seems split down the middle. I see people saying TD's commission free ETFS are great, and you can maintain a vanguard 3 fund portfolio that way. So yes, if i was starting from scratch, i'd go to vanguard, but why is it worth 75$ to switch over at this point? Sure i would prefer one fund over three, but its not like its beyond my ability to manage 3. I'm still unclear of why it would be worth throwing away the 75$, even if in the grand scheme of things its a small amount.
For me it was for Vanguard's target date retirement funds, and the fact that I could buy them with no commission. Vanguard had the best target date funds on the market at the time, IMO. They are very simple if you look under the hood. A single "fund of funds" containing exactly what a boglehead would want, at rock bottom cost: Total Stock Market Index fund, Total International Stock Market Index fund, and Total Bond Market Index fund. Pick the one with the allocation you want and you're done.

Since then they have added a Total International Bond Market Index Fund which has caused some hand-wringing amongst some, but to me it hardly matters. Also, Fidelity now has target date index funds that anyone can buy (in the past these were available only to retirement plans). So that's an option that might be good for you as well. If you look into that make sure you find the target date Index Funds, as they have other target date funds that are not based on indexes and contain a confusing hodgepodge of lots of different funds. And they're expensive.

So to answer your question: Is it worth $75 to transfer? For me it absolutely yes. I have no interest in manually rebalancing and keeping track of 3, 4 different funds in addition to my 401K (and my spouse's 401K). For you? Only you can answer that.
User avatar
BL
Posts: 9874
Joined: Sun Mar 01, 2009 1:28 pm

Re: How to add to my portfolio monthly without crazy fees

Post by BL »

It wasn't worth paying $50 to buy the Star there (when you could have bought it for free at Vanguard) but I agree that it would be worth it to transfer even if they charge you $75 to get out (Vanguard doesn't charge you anything to get in or out!). I like mutual funds but if I really wanted ETFs someday, I would buy them at Vanguard's brokerage.

I still have my original Star at Vanguard, but also have index funds and Target Retirement Income. Have you decided what % bonds you want? That is an important decision. Many of the later TR funds have only 10% bonds, which I consider very aggressive, compared to Star which is 40% bonds. Some suggest a starting point of "age in bonds", which some others consider rather conservative. There is no harm in leaving it in Star at Vanguard while you figure it out. There is no cost to buy or sell. (Another option when you have $3,000 is the Life Strategy Aggressive (20% bonds), Moderate (40%), Conservative (60%), or Income (80%).) One fund is definitely the way to go, maybe forever.

I suggest you do some reading on the Wiki (Getting Started) and/or read this short book (16 pages) by Boglehead, William Bernstein:
If You Can http://www.etf.com/docs/IfYouCan.pdf
Topic Author
notwerby
Posts: 30
Joined: Fri Jun 06, 2014 10:06 am

Re: How to add to my portfolio monthly without crazy fees

Post by notwerby »

Thanks all.
Post Reply