[Should I buy Vanguard funds or Fidelity?]

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wingman
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[Should I buy Vanguard funds or Fidelity?]

Post by wingman » Thu Feb 02, 2017 5:56 pm

[Moved into a stand-alone thread from: Moving away from Fidelity 401K choices to lower cost funds/ETFs --admin LadyGeek]

I have opened a BrokerageLink account but have not yet transferred money into it. Based on my conversations with Fidelity today my 401(k) allows me to make payroll deposits to BrokerageLink and set up automatic investing in mutual funds or ETFs. If I invest in Fidelity funds there are no transaction fees. If I invest in Vanguard funds there is a $75 fee for the first purchase of each fund but after that there is no fee for payroll transactions. There would be a fee if I rebalance by selling shares of one fund and buying another but I figure I can get around this by adjusting the payroll purchase percentages to rebalance.

My question is this: would I be better to pay the one time fee and buy Vanguard funds or Fidelity equivalents where available?

My goal is to invest in the total market, on a capital weighted basis, including real estate. I don't need to out perform the market, I just don't want to significantly underperform it.This concept makes a lot of sense to me and I am a disciplined investor by nature, however I am new to this strategy and need help in applying it. I am 48 and hope to retire in 10-15 years. I invest the maximum in my 401(k) every year.

Thanks for your help

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FelixTheCat
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by FelixTheCat » Thu Feb 02, 2017 6:06 pm

Stick with Fidelity funds since you have a Fidelity account. See https://www.bogleheads.org/wiki/Three-fund_portfolio
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wingman
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by wingman » Sat Feb 11, 2017 3:43 pm

Thanks for the reply. Sorry it took so long for me to reply back. I have been pouring over this site reading about different Boglehead allocations and opinions. There is literally a wealth of knowledge here. :moneybag I wish I had this kind of advice 25 years ago when I first started. :oops: I always followed a buy and hold philosophy but unfortunately I didn't understand about expenses until recently. My expenses were not as high as many but they were higher than I realized. Initially I was not sure about the three fund approach. I thought maybe I should diversify further, possibly with real estate, commodities, or even Gold. After reading many different opinions from many different writers, most of whom are probably much more knowledgeable about investing than I am, I came to the conclusion that the three fund portfolio is the right strategy for me. While there are many different allocation models I realized that I was making it more complicated than it needed to be. Perfection is the enemy of good enough. I have transferred my Roth IRA to Vanguard and will be investing with a mix of 45% VTSMX Total Stock Market Index, 20% VGTSX Total International Stock Market Index and 35% VBMFX Total Bond Market Index. I am also setting up a brokerage account in my 401K and investing in the same mix with comparable Fidelity funds. That mix might be a little on the aggressive side but I am comfortable with that. Thanks for pointing me in the right direction and for all of the great resources on this site.

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nisiprius
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by nisiprius » Sat Feb 11, 2017 4:13 pm

Given a choice between Vanguard Total Stock Market Index Fund, Vanguard Total International Stock Market Index Fund, Vanguard Total Bond Market Index Fund, and their three corresponding Fidelity index funds, Fidelity Total Market Index Fund, Fidelity Total International Index Fund, and Fidelity U.S. Bond Index Fund...

...assuming the choice was between Vanguard investor shares and Fidelity investor shares,
or between Vanguard Admiral shares and Fidelity Premium shares

...if I had to pay a transaction fee of $75 for one fund family and no transaction fee for the other fund family, I would choose the no-fee fund family. Either way, whichever it was. And with no hesitation.
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retiredjg
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by retiredjg » Sat Feb 11, 2017 4:43 pm

wingman wrote:My question is this: would I be better to pay the one time fee and buy Vanguard funds or Fidelity equivalents where available?

The Fidelity equivalents are the better choice in this case. They cost is essentially the same as Vanguard or they may even cost less since you can get the lower ER funds from Fidelity as your balance increases. I don't think (not positive) you can buy Admiral Shares of Vanguard funds at Fido. I guess you might be able to use the ETFs though.

Save your money. Use these.

https://www.fidelity.com/mutual-funds/f ... ndex-funds

kgoodrich
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by kgoodrich » Fri Feb 17, 2017 5:53 pm

Hello All,

Similar situation here....Currently rolling over my wife's Roth IRA to Vanguard and she has a previous employer 401k plan with Fidelity that I was initially thinking of rolling into a Vanguard IRA, but would it be wiser to just keep it with Fidelity? The 401k plan with Fidelity would be required to be moved to an IRA as well. Any thoughts on which would be the wiser move would be appreciated

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ruralavalon
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by ruralavalon » Fri Feb 17, 2017 7:36 pm

Simple, if at Fidelity use Fidelity Index funds and if at Vanguard use Vanguard Index funds. So in your case use Fidelity and avoid the extra fee.
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livesoft
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by livesoft » Fri Feb 17, 2017 8:00 pm

kgoodrich wrote:Hello All,

Similar situation here....Currently rolling over my wife's Roth IRA to Vanguard and she has a previous employer 401k plan with Fidelity that I was initially thinking of rolling into a Vanguard IRA, but would it be wiser to just keep it with Fidelity? The 401k plan with Fidelity would be required to be moved to an IRA as well. Any thoughts on which would be the wiser move would be appreciated

I think it would be no difference between the two choices, so neither wiser nor unwiser. I had a Fidelity 401(k) and rolled it over to TDAmeritrade account. Took about 5 days total time.
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kgoodrich
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by kgoodrich » Fri Feb 17, 2017 10:35 pm

Thanks for responses, I appreciate the input

pyld76
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by pyld76 » Sat Feb 18, 2017 11:55 am

kgoodrich wrote:Hello All,

Similar situation here....Currently rolling over my wife's Roth IRA to Vanguard and she has a previous employer 401k plan with Fidelity that I was initially thinking of rolling into a Vanguard IRA, but would it be wiser to just keep it with Fidelity? The 401k plan with Fidelity would be required to be moved to an IRA as well. Any thoughts on which would be the wiser move would be appreciated


Does the 401k plan have either Fido or Vanguard index funds or asset classes with better expense ratios? And can yo clarify "would be required to move?" (Is the balance below the plan's force out threshold?)

For instance: if the 401k has the institutional classes of fidelity index funds, your expenses would likely go up by rolling it to a VG IRA.

If you have access to good funds with institutional pricing with the 401k and meet the minimum to avoid force out provisions, there are some good reasons not to roll out. Costs being one. Potentially having a Traditional IRA in the way of future Roth backdoor contributions are another.

kgoodrich
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by kgoodrich » Fri Feb 24, 2017 5:41 pm

Sorry for the late reply pyld76
Yes, the classes of the funds are institution or premium. However, as the quote from the net benefits Fidelity site shows we are forced to roll it over or cash it out. Thoughts??

From the website..."It’s time to take control of your benefits

You have accumulated a balance in the University of Arizona Health Network (UAHN) 401(k) Retirement Plan (the “Plan”). The Plan was terminated and is no longer offered to current and former employees.

As a result, you have a limited-time election period — between February 1 and March 17, 2017 — during which you must decide what to do with your balance.

Use this website to elect a distribution option, including a rollover and lump sum cash payment. Make your election by 11:59 p.m. Pacific Time on March 17, 2017.

We encourage you to invest the time to consider your options and make the decision that is best for you.

Otherwise, any remaining balance will be automatically distributed from the plan. If the value of your UAHN 401(k) benefit is:
•Greater than $1,000, an IRA will be established for you at the direction of Banner Health and your benefit will be automatically rolled over into that account.
•$1,000 or less, your benefit will be paid automatically as a cash distribution, minus the required mandatory 20% federal tax withholding and any required state or local tax withholding.

Any Money Purchase Plan benefit for which you don't make an election will be automatically rolled over to an insurance company provider or financial institution."

kgoodrich
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Re: [Should I buy Vanguard funds or Fidelity?]

Post by kgoodrich » Fri Feb 24, 2017 6:16 pm

Just figured out that there is a way to keep the previous employers plan. Kinda confusing since there was 4 different 401k/403b accounts with the previous employer plan, but I can now see the new employer has 2 of the 403b/401k accounts that my wife can roll the other accounts into. Thanks for the help

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