admiral shares or investor shares?

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marino138
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admiral shares or investor shares?

Post by marino138 » Mon Oct 09, 2017 7:13 pm

hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?

livesoft
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Re: admiral shares or investor shares?

Post by livesoft » Mon Oct 09, 2017 7:22 pm

Target retirement funds do not have Admiral shares, do they?

I recommend you just go to brokerage account now before you learn anything about the old way that might confuse you. That is, use the new way from the get-go, so you only have one system to learn.
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MotoTrojan
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Re: admiral shares or investor shares?

Post by MotoTrojan » Mon Oct 09, 2017 7:29 pm

Agree, give the brokerage a shot sooner than later. Also, is this a tax-advantaged (401k, IRA, Roth) account? If so, I'd focus on saving, and keep the Target Fund. At some point tax-efficiency can be optimized, but really only when you have a mix of taxable and tax-advantaged assets. The Target ER of 0.16% is worth it for automatic rebalancing, until you feel more comfortable or have a new need (taxable assets).

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arcticpineapplecorp.
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Re: admiral shares or investor shares?

Post by arcticpineapplecorp. » Mon Oct 09, 2017 7:33 pm

as livesoft said...there are no admiral shares for any vanguard target date funds, only investor shares. If you want lower cost admiral shares you'd have to roll your own portfolio using the same four funds (total US stock, total international stock, total US bond, total international bond), in the same proportions. However, that would require you have at least $10,000 in EACH of those FOUR funds. But that would actually require $250,000 total because you'd want the same proportions as what you have now. Here's why:

These are the percentages in 2040 fund:

52.0% Vanguard Total Stock Market Index Fund Investor Shares
34.7% Vanguard Total International Stock Index Fund Investor Shares
9.3% Vanguard Total Bond Market II Index Fund Investor Shares
4.0% Vanguard Total International Bond Index Fund Investor Shares

So here would be the required amounts to get those percentages:

$130,000 Vanguard Total Stock Market Index Fund Investor Shares
$86,750 Vanguard Total International Stock Index Fund Investor Shares
$23,250 Vanguard Total Bond Market II Index Fund Investor Shares
$10,000 Vanguard Total International Bond Index Fund Investor Shares
$250,000 total

So since you're not there yet, you can't get the lower expense ratios AND maintain the same portfolio.

In addition, even if you could...would you want to? The TD fund automatically rebalances and smooths the glide path (reduces risk) over time. You're paying a little extra so you don't have to be bothered doing that. Save time, spend money. I think it's well worth it for most.

source: https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Kevin M
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Re: admiral shares or investor shares?

Post by Kevin M » Mon Oct 09, 2017 7:43 pm

marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
Since there are no Admiral shares for the target retirement (TR) funds, what you might be asking is whether or not it makes sense to exchange out of the TR fund into say Admiral shares of the Total Stock fund. I personally would stick with the TR fund unless you decide you don't want any international stocks nor any bonds. TR 2040 only has about 13% in bonds, so I wouldn't worry too much about losing the small bond allocation. The international stocks are at about 35% of fund holdings. At the $10K level you're losing very little to the additional expense of investor shares.

With just the one fund holding, or even with a few mutual funds, it won't make much difference whether you "upgrade" to the brokerage account or not. I tend to agree with the opinion that you might at well switch now, since at some point Vanguard may make it very uncomfortable not to switch, so you might as well switch before you get too attached to the non-brokerage account.

There is a link in my signature line to the template for requesting portfolio advice.

Kevin
||.......|| Suggested format for Asking Portfolio Questions (edit original post)

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Re: admiral shares or investor shares?

Post by pkcrafter » Mon Oct 09, 2017 7:58 pm

marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share.

Welcome marino,

No admiral shares for target funds. You can use the individual funds, but you would need at least 10k for each one to get admiral shares. Using investor shares would require 3k min for each, including the fund with the lowest allocation, so it takes quite a bit to get to admiral shares when just starting out. The expense ratio isn't going to make that much difference when total holdings are low, so holding a TR fund is a pretty good idea until you build up assets.

The three fund portfolio. The 3-fund is a slight variation of what's in the TR funds because the TR funds also hold international bonds.

viewtopic.php?f=10&t=88005

i am torn between investor shares & admiral shares

Admiral shares use the identical funds, but at a lower cost. You would want to use them when you qualify.

...also, vanguard is prompting me to transition to a brokerage account,

Yes, VG is trying to transition everyone over to the brokerage, so you won't have any option.

any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?

Kevin has provided this link, but it's shown at the top of the post list.
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ruralavalon
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Re: admiral shares or investor shares?

Post by ruralavalon » Tue Oct 10, 2017 9:22 am

Welcome to the forum :) .
marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
Vanguard Target Retirement funds do not offer Admiral Shares.

If you use Vanguard mutual funds, then there is no benefit to moving to a brokerage account. I suggest not making the transition.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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CABob
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Re: admiral shares or investor shares?

Post by CABob » Tue Oct 10, 2017 11:19 am

i am torn between investor shares & admiral shares.
This should never be the case if you are talking about different share classes of the same fund. If you own investor shares and the fund balance gets to the point you would qualify for admiral shares Vanguard would automatically convert them.
Bob

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Re: admiral shares or investor shares?

Post by inbox788 » Tue Oct 10, 2017 12:44 pm

marino138 wrote:
Mon Oct 09, 2017 7:13 pm
I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
That's $16 you're worried about? Less than a buck and a quarter a month.

As far as the brokerage account, I'd avoid it as long as possible, but the march towards brokerage only seems unrelenting. I wish they'd create a subclass of account in the brokerage that is mutual fund only and allow me to switch out of the brokerage (at least virtually).

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randomizer
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Re: admiral shares or investor shares?

Post by randomizer » Tue Oct 10, 2017 1:16 pm

arcticpineapplecorp. wrote:
Mon Oct 09, 2017 7:33 pm
In addition, even if you could...would you want to?
Apart from the reduced expenses (not a huge deal), you can tax-loss harvest the individual holdings (probably also not a huge deal). But Boglehead investing is boring ("don't just do something, stand there!") so I personally appreciate that manual rebalancing and tax-loss harvesting give me some small thing to do from time to time.

marino138
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Re: admiral shares or investor shares?

Post by marino138 » Tue Oct 10, 2017 9:56 pm

thanks bogleheads for all the help, i'm a work in progress on anything investing related, but really enjoy it!....i absolutely love this website...i will do a better job of posting more information in the future using the financial template provided....bill

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CyclingDuo
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Re: admiral shares or investor shares?

Post by CyclingDuo » Tue Oct 10, 2017 10:18 pm

marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
It has not been mentioned, but if you transition to the brokerage account, you could own your 3 Fund (4 Fund) portfolio in ETF's. Commission free, no minimums, and lower ER fees (same ER fees as the Admiral Funds).

https://investor.vanguard.com/etf/investment-options

BND - ER of .05%
BNDX - ER of .12%
VTI - ER of .04%
VXUS - ER of .11%

marino138
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Re: admiral shares or investor shares?

Post by marino138 » Wed Oct 11, 2017 8:09 pm

CyclingDuo wrote:
Tue Oct 10, 2017 10:18 pm
marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
It has not been mentioned, but if you transition to the brokerage account, you could own your 3 Fund (4 Fund) portfolio in ETF's. Commission free, no minimums, and lower ER fees (same ER fees as the Admiral Funds).

https://investor.vanguard.com/etf/investment-options

BND - ER of .05%
BNDX - ER of .12%
VTI - ER of .04%
VXUS - ER of .11%
so, with everything considered, am I better off leaving it in the 2040 TF & building up $$ or is the 3 fund portfolio a better choice?....thanks for all your help, everyone!

remomnyc
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Re: admiral shares or investor shares?

Post by remomnyc » Wed Oct 11, 2017 9:26 pm

I would stick with the TF until you have significant amounts in taxable and deferred to purchase admiral shares in a tax efficient manner.

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CyclingDuo
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Re: admiral shares or investor shares?

Post by CyclingDuo » Wed Oct 11, 2017 11:11 pm

marino138 wrote:
Wed Oct 11, 2017 8:09 pm
CyclingDuo wrote:
Tue Oct 10, 2017 10:18 pm
marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
It has not been mentioned, but if you transition to the brokerage account, you could own your 3 Fund (4 Fund) portfolio in ETF's. Commission free, no minimums, and lower ER fees (same ER fees as the Admiral Funds).

https://investor.vanguard.com/etf/investment-options

BND - ER of .05%
BNDX - ER of .12%
VTI - ER of .04%
VXUS - ER of .11%
so, with everything considered, am I better off leaving it in the 2040 TF & building up $$ or is the 3 fund portfolio a better choice?....thanks for all your help, everyone!
I listed the 4 funds (both domestic and international bond ETF's) if you were interested in having the same exact fund as your target, but a bit less ER fee (same as Admiral). Your choice if you want to do it or not, but your OP made it sound like you were seeking out Admiral share ER fee pricing. Vanguard wants all of us to switch over to brokerage accounts which gives you the option to switch to the ETF version of your target fund.

It's up to you.

beehappy
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Re: admiral shares or investor shares?

Post by beehappy » Thu Oct 12, 2017 4:31 am

remomnyc wrote:
Wed Oct 11, 2017 9:26 pm
I would stick with the TF until you have significant amounts in taxable and deferred to purchase admiral shares in a tax efficient manner.
Except that by then, he'd also have cap gains taxes to worry about, not small ER differences.

OP, my advice is to start as you intend to go. Using a 3 or 4-fund portfolio of investor class index funds won't cost you more than the TF. So pick the allocation you want, then create that with a investor funds if the balances are less than admiral minimums. Then as you accumulate more in each fund and hit admiral thresholds, you can ask to move into the admiral class without triggering any tax consequences. I personally prefer the hands-off approach of index funds to ETFs since I do automatic investing. But if you want to lower costs now, you can use ETFs as suggested above to get the ERs of admiral shares without meeting the individual minimums.

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CyclingDuo
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Re: admiral shares or investor shares?

Post by CyclingDuo » Thu Oct 12, 2017 5:51 am

beehappy wrote:
Thu Oct 12, 2017 4:31 am
remomnyc wrote:
Wed Oct 11, 2017 9:26 pm
I would stick with the TF until you have significant amounts in taxable and deferred to purchase admiral shares in a tax efficient manner.
Except that by then, he'd also have cap gains taxes to worry about, not small ER differences.

OP, my advice is to start as you intend to go. Using a 3 or 4-fund portfolio of investor class index funds won't cost you more than the TF. So pick the allocation you want, then create that with a investor funds if the balances are less than admiral minimums. Then as you accumulate more in each fund and hit admiral thresholds, you can ask to move into the admiral class without triggering any tax consequences. I personally prefer the hands-off approach of index funds to ETFs since I do automatic investing. But if you want to lower costs now, you can use ETFs as suggested above to get the ERs of admiral shares without meeting the individual minimums.
Set up the ETF's as DRIPs in the brokerage account, and they are just as hands off as mutual funds.

beehappy
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Re: admiral shares or investor shares?

Post by beehappy » Thu Oct 12, 2017 6:51 am

CyclingDuo wrote:
Thu Oct 12, 2017 5:51 am
beehappy wrote:
Thu Oct 12, 2017 4:31 am
remomnyc wrote:
Wed Oct 11, 2017 9:26 pm
I would stick with the TF until you have significant amounts in taxable and deferred to purchase admiral shares in a tax efficient manner.
Except that by then, he'd also have cap gains taxes to worry about, not small ER differences.

OP, my advice is to start as you intend to go. Using a 3 or 4-fund portfolio of investor class index funds won't cost you more than the TF. So pick the allocation you want, then create that with a investor funds if the balances are less than admiral minimums. Then as you accumulate more in each fund and hit admiral thresholds, you can ask to move into the admiral class without triggering any tax consequences. I personally prefer the hands-off approach of index funds to ETFs since I do automatic investing. But if you want to lower costs now, you can use ETFs as suggested above to get the ERs of admiral shares without meeting the individual minimums.
Set up the ETF's as DRIPs in the brokerage account, and they are just as hands off as mutual funds.
Does DRIPs reinvest only dividends or new funds added to the account? I need automatic investing on a monthly basis using new contributions, not just dividends

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CyclingDuo
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Re: admiral shares or investor shares?

Post by CyclingDuo » Thu Oct 12, 2017 7:31 am

beehappy wrote:
Thu Oct 12, 2017 6:51 am
CyclingDuo wrote:
Thu Oct 12, 2017 5:51 am
beehappy wrote:
Thu Oct 12, 2017 4:31 am
remomnyc wrote:
Wed Oct 11, 2017 9:26 pm
I would stick with the TF until you have significant amounts in taxable and deferred to purchase admiral shares in a tax efficient manner.
Except that by then, he'd also have cap gains taxes to worry about, not small ER differences.

OP, my advice is to start as you intend to go. Using a 3 or 4-fund portfolio of investor class index funds won't cost you more than the TF. So pick the allocation you want, then create that with a investor funds if the balances are less than admiral minimums. Then as you accumulate more in each fund and hit admiral thresholds, you can ask to move into the admiral class without triggering any tax consequences. I personally prefer the hands-off approach of index funds to ETFs since I do automatic investing. But if you want to lower costs now, you can use ETFs as suggested above to get the ERs of admiral shares without meeting the individual minimums.
Set up the ETF's as DRIPs in the brokerage account, and they are just as hands off as mutual funds.
Does DRIPs reinvest only dividends or new funds added to the account? I need automatic investing on a monthly basis using new contributions, not just dividends
You are correct. Not as hands off as mutual funds. Logging in to purchase the shares after the automatic investment is received in the cash account at Vanguard would be required. So a few minutes of your time every month or quarter would be required. Still pretty low maintenance in our opinion.

The automatic monthly additions are only accomplished in Robo accounts for ETF's (which has a $50K minimum at Vanguard and charges .3% fee). To avoid those fees, monthly automatic investments would gather in your brokerage cash account, and then you would choose when to do the automatic DCA investment in the ETF's - be it monthly, quarterly or other time frame or market metric. No charge for that, and only takes a few minutes of your time.

Personally, we prefer that option as it allows one to purchase shares on down days. All of our current automatic investments we have set up occur at the end of the month from the paychecks - and this year, it seems like both of our automatic investments in Vanguard funds take place on big up days (which is typical in a bull market end of month window dressing).

Regardless, the point of the thread was to try and help the OP get Admiral Share pricing. Since he is far away in account balance from achieving that in mutual funds, the only alternative is the ETFs which would include logging in and purchasing the shares commission free every month or quarter. Perhaps this is considered an inconvenience for some, but the OP was asking for a lower cost way to accomplish it.
Last edited by CyclingDuo on Thu Oct 12, 2017 7:45 am, edited 1 time in total.

beehappy
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Re: admiral shares or investor shares?

Post by beehappy » Thu Oct 12, 2017 7:43 am

CyclingDuo wrote:
Thu Oct 12, 2017 7:31 am

The automatic monthly additions are only accomplished in Robo accounts for ETF's (which has a $50K minimum at Vanguard and charges .3% fee). To avoid those fees, monthly automatic investments would gather in your brokerage cash account, and then you would choose when to do the automatic DCA investment in the ETF's - be it monthly, quarterly or other time frame or market metric. No charge for that, and only takes a few minutes of your time.

Personally, we prefer that as it allows one to purchase shares on down days. All of our automatic investments we have set up occur at the end of the month from the paychecks - and this year, it seems like both of our automatic investments in Vanguard funds take place on big up days (which is typical in a bull market end of month window dressing).
Thanks. With an investment horizon of 15-20 years, it doesn't matter much to me whether purchases occur on up or down days. I also don't want to pay for a roboadvisor. I like the discipline and ease of automatic investing into a low-cost index fund for the bulk of my purchases. If the OP has such preferences too, then a mutual fund would serve him better than an ETF. With that said, I also hold ETFs in some of my accounts for portability and cost reasons.

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ruralavalon
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Re: admiral shares or investor shares?

Post by ruralavalon » Thu Oct 12, 2017 8:30 am

marino138 wrote:
Wed Oct 11, 2017 8:09 pm
CyclingDuo wrote:
Tue Oct 10, 2017 10:18 pm
marino138 wrote:
Mon Oct 09, 2017 7:13 pm
hello bogleheads,

I'm currently in a vanguard target 2040 fund (vforx) (.16% ER) that is about to cross the $10,000 threshold, which qualifies me for an admiral share. i am torn between investor shares & admiral shares...also, vanguard is prompting me to transition to a brokerage account, any advice you can give me on any of this would be greatly appreciated....i do apologize if i haven't given you enough information since i'm a newby at this....bill p.s. where do i find the financial info. template for posting?
It has not been mentioned, but if you transition to the brokerage account, you could own your 3 Fund (4 Fund) portfolio in ETF's. Commission free, no minimums, and lower ER fees (same ER fees as the Admiral Funds).

https://investor.vanguard.com/etf/investment-options

BND - ER of .05%
BNDX - ER of .12%
VTI - ER of .04%
VXUS - ER of .11%
so, with everything considered, am I better off leaving it in the 2040 TF & building up $$ or is the 3 fund portfolio a better choice?....thanks for all your help, everyone!
I suggest staying with the target retirement fund and concentrating on increasing your contributions.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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CyclingDuo
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Re: admiral shares or investor shares?

Post by CyclingDuo » Thu Oct 12, 2017 8:37 am

beehappy wrote:
Thu Oct 12, 2017 7:43 am
CyclingDuo wrote:
Thu Oct 12, 2017 7:31 am

The automatic monthly additions are only accomplished in Robo accounts for ETF's (which has a $50K minimum at Vanguard and charges .3% fee). To avoid those fees, monthly automatic investments would gather in your brokerage cash account, and then you would choose when to do the automatic DCA investment in the ETF's - be it monthly, quarterly or other time frame or market metric. No charge for that, and only takes a few minutes of your time.

Personally, we prefer that as it allows one to purchase shares on down days. All of our automatic investments we have set up occur at the end of the month from the paychecks - and this year, it seems like both of our automatic investments in Vanguard funds take place on big up days (which is typical in a bull market end of month window dressing).
Thanks. With an investment horizon of 15-20 years, it doesn't matter much to me whether purchases occur on up or down days. I also don't want to pay for a roboadvisor. I like the discipline and ease of automatic investing into a low-cost index fund for the bulk of my purchases. If the OP has such preferences too, then a mutual fund would serve him better than an ETF. With that said, I also hold ETFs in some of my accounts for portability and cost reasons.
The good news is that one doesn't have to pay for a robo. Just mentioning the option to get Admiral Share pricing for the OP in the low cost Vanguard Index Funds with such a low balance is available via the ETF's, but even though the dividends can be set up as DRIPs, the bi-weekly, or monthly, or quarterly additions set up through automatic investing (be it automatic payroll deduction, or automatic savings account transfer) would require a manual investment to avoid Robo fees. If the inconvenience of logging on, and purchasing the ETF shares every month, or quarter (which takes only a few minutes at most) is too cumbersome or "hands on" - then by all means, the OP should remain in the Target Fund at the higher ER and you should stick with your auto DCA program.

For many of us, the simple process of purchasing shares is not an inconvenient, cumbersome process - especially if it saves money for the minimal effort.

goingup
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Re: admiral shares or investor shares?

Post by goingup » Thu Oct 12, 2017 8:42 am

^Great advice to stay with TR fund. It's diversified and rebalances automatically.

marino138
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Re: admiral shares or investor shares?

Post by marino138 » Fri Oct 13, 2017 8:10 pm

if I were to transfer my 2040 tf to a brokerage account, does that change anything pertaining to the tf account?....pros vs cons...thanks again for helping this rookie out!

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Re: admiral shares or investor shares?

Post by Mel Lindauer » Fri Oct 13, 2017 9:41 pm

marino138 wrote:
Fri Oct 13, 2017 8:10 pm
if I were to transfer my 2040 to a brokerage account, does that change anything pertaining to the tf account?....pros vs cons...thanks again for helping this rookie out!
Not much changes from an investing standpoint when you use the brokerage account except that you can buy mutual funds and/or ETFs in the brokerage account. One important thing to keep in mind is that the Vanguard ETFs ERs are about the same as the Admiral class shares of the same mutual fund. At Vanguard, ETFs are just another share class of the mutual fund.
Best Regards - Mel | | Semper Fi

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