Taxable account at Vanguard or Fidelity.

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GaryA505
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Taxable account at Vanguard or Fidelity.

Post by GaryA505 »

I need to open a taxable account of about $120000, which would be at Vanguard or Fidelity. I've yet to decide what to hold in this account, but it will probably be in some allocation of a stock index fund and intermediate-term munis.

I have a rollover IRA at Vanguard and a SEP-IRA at Fidelity. The SEP-IRA is still active through my employment so I can't roll it or combine with the Vanguard account until I leave the company. The reason I'm not sure where to put this new taxable account has to do with planning for the future. If I didn't care about that I would just put it at Vanguard.

I am totally comfortable (and competent) doing my own financial management for now. However, it is likely that at some time in the next 10 years or so (at which time I should be fully retired), I may not be willing and able to manage it myself, so at that time I'd want to consolidate everything in one place and possibly put everything in an all-in-one retirement fund. It is very likely that my wife will outlive me and she has exactly 0 motivation and ability to manage this, so I'll want to set up something simple for her when I'm gone. Fidelity has a local office here so that would be a plus if she needed to talk to someone. So, what I'm wondering is if I'm making this all more complicated if I open the new taxable account at Vanguard, and is there a way to do it any simpler? I'm familiar with doing IRA rollovers, but I don't have a clue about taxable accounts. Can you just transfer a taxable account, and what are the potential issues?
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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njboater74
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Re: Taxable account at Vanguard or Fidelity.

Post by njboater74 »

There could be some issues.

While you can generally transfer investments in-kind, I don't believe Vanguard will allow you to transfer their Admiral Class shares over to Fidelity. If you had Vanguard ETFs, those should transfer no problem and would only be subject to the Fidelity commission, which is $4.95 per trade.

You could also transfer Investor Class shares, but then you'd be subject to the higher ER, and the $49.95 trading fee at Fidelity when you go to sell.

If you definitely plan on transferring to Fidelity, then opening up the taxable at Vanguard just to transfer it later probably isn't the way to go. What funds did you plan on using at Vanguard?

On the other hand, the Fidelity office, while somewhat convenient, will press your wife to enter into their advisory services. They generally won't give free advice in their offices. They'll want her to enter into a portfolio advisory services arrangement.

Is there a reason why you don't think your wife could manage the Vanguard account? Maybe she'd be better off with Vanguard's lower cost advisory services if she's uncomfortable managing on her own.
When the mob and the press and the whole world tell you to move, your job is to plant yourself like a tree beside the river of truth and tell the whole world - 'No, YOU move'--Captain America, Boglehead
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welderwannabe
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Re: Taxable account at Vanguard or Fidelity.

Post by welderwannabe »

I am a big fan of Fidelity but Vanguard has them beat when it comes to tax exempt funds. My tax-advantaged stuff is with Fidelity, but my taxable stuff is with Vanguard.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
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GaryA505
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Re: Taxable account at Vanguard or Fidelity.

Post by GaryA505 »

njboater74 wrote: Mon Aug 14, 2017 10:42 am There could be some issues.

While you can generally transfer investments in-kind, I don't believe Vanguard will allow you to transfer their Admiral Class shares over to Fidelity. If you had Vanguard ETFs, those should transfer no problem and would only be subject to the Fidelity commission, which is $4.95 per trade.

You could also transfer Investor Class shares, but then you'd be subject to the higher ER, and the $49.95 trading fee at Fidelity when you go to sell.

If you definitely plan on transferring to Fidelity, then opening up the taxable at Vanguard just to transfer it later probably isn't the way to go. What funds did you plan on using at Vanguard?

On the other hand, the Fidelity office, while somewhat convenient, will press your wife to enter into their advisory services. They generally won't give free advice in their offices. They'll want her to enter into a portfolio advisory services arrangement.

Is there a reason why you don't think your wife could manage the Vanguard account? Maybe she'd be better off with Vanguard's lower cost advisory services if she's uncomfortable managing on her own.
Yes, everything would be Admiral Class so that's a problem. Thanks for the tip on the ETFs. I was thinking VTSAX on the stock side and VWIUX and/or VWALX on the bond side. So, instead of VTSAX I could just use VTI for the stocks, and that would transfer. There should be little or no cap gains on the muni funds so I could just sell those before the transfer. Then I'd just have to find a suitable replacement for the bond fund(s) at Fidelity.

I think she could handle it, but she doesn't. I've tried to get her interested in it but haven't made much progress (yet).

I just want to keep my choices open. I think the potential cap gains would be the biggest consideration, if I needed to sell the stock fund. I have seen several threads here on that subject.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
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retiredjg
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Re: Taxable account at Vanguard or Fidelity.

Post by retiredjg »

I agree that Vanguard has a much bigger and cheaper list of tax-exempt bond funds. However, once retired, are you sure you'll need tax-exempt bonds? If not Fido could serve you just as well.

If you "catch the bus" first, maybe she could consolidate everything with Vanguard PAS. Yes, there would be a charge but apparently she does not wish to learn this herself and they will not steer her wrong.
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njboater74
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Re: Taxable account at Vanguard or Fidelity.

Post by njboater74 »

Yes, I'd ask Vanguard directly about transferring Admiral class shares. It seems like people on this forum have had different experiences. I wouldn't ask Fidelity, as the decision to allow Admiral class to transfer would be Vanguard's.

Fidelity doesn't have as good a lineup for munis as Vanguard's, IMHO. I'm invested in Vanguard Tax Exempt (VTEB) ETF at Fidelity.

You might also ask Vanguard about converting VTSAX to VTI (the ETF class) and whether there would be a capital gain from that. If not, then you can transfer VTI to Fidelity in kind. Or just buy VTI to begin with.

I agree with previous poster about the need for munis in retirement. Maybe there won't be any. Any interest income, even from tax-exempt bonds, will cause more of your social security benefits to become taxable.
When the mob and the press and the whole world tell you to move, your job is to plant yourself like a tree beside the river of truth and tell the whole world - 'No, YOU move'--Captain America, Boglehead
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GaryA505
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Re: Taxable account at Vanguard or Fidelity.

Post by GaryA505 »

welderwannabe wrote: Mon Aug 14, 2017 10:44 am I am a big fan of Fidelity but Vanguard has them beat when it comes to tax exempt funds. My tax-advantaged stuff is with Fidelity, but my taxable stuff is with Vanguard.
When I was looking at TE bond funds at the two, I thought Vanguard had better choices. I have plenty of tax-advantaged space in the two IRA accounts so I could probably follow your idea. That might mean the $120k would probably all go in MUNIs, which I have considered before and should be easy to sell and transfer.

Vanguard IRA - $200k (currently in Wellesley, Wellington, and Global Minimum Volatility, no bond funds)
Fidelity SEP-IRA - $220 (currently in some small caps and PONDX)
Scottrade - $60 (all in PRWCX - T. Rowe Price Cap Apprec, and I will probably move this to Vanguard)
New taxable account - $120

My overall AA is currently about 50/50, but I plan to move towards 40/60 as I get closer to retirement. Since my SEP-IRA is active I can balance with the new money going in.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
acanthurus
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Re: Taxable account at Vanguard or Fidelity.

Post by acanthurus »

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Earl Lemongrab
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Re: Taxable account at Vanguard or Fidelity.

Post by Earl Lemongrab »

njboater74 wrote: Mon Aug 14, 2017 12:02 pm Yes, I'd ask Vanguard directly about transferring Admiral class shares. It seems like people on this forum have had different experiences. I wouldn't ask Fidelity, as the decision to allow Admiral class to transfer would be Vanguard's.
I don't think that is accurate. It's the receiving custodian that determines whether the fund will be accepted.
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njboater74
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Re: Taxable account at Vanguard or Fidelity.

Post by njboater74 »

This is an older thread, but at one point, Vanguard may have had issues transferring Admiral Class shares to another custodian.

viewtopic.php?t=72548
When the mob and the press and the whole world tell you to move, your job is to plant yourself like a tree beside the river of truth and tell the whole world - 'No, YOU move'--Captain America, Boglehead
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