Admiral vs Institutional Plus shares

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Colorado Guy
Posts: 10
Joined: Sun Nov 05, 2017 1:57 pm

Admiral vs Institutional Plus shares

Post by Colorado Guy » Sun Nov 05, 2017 4:46 pm

I stumbled onto this forum a few months ago when doing some consolidation work, and feel both fortunate to have found the forum, but also recognizing my lack of knowledge.Been reading through the posts daily, as people are being very informative in their responses.

At 64, I am ignorant :oops: of many basic financial concepts that one would expect one would know at this point in life. Having had a number of work positions in life, I recently started to consolidate the IRAs and 401ks into Vanguard. Once consolidated, I "qualified" for a Vanguard Flagship rep who assisted in my asset allocation. As of today, about 1/2 of my funds are in a Vanguard IRA, in Admiral shares. The other 1/2 is in a former company's 401k system, with whom I am no longer working with, which permits me to invest in Institutional and Institutional Plus shares. The 401k does not have an option to buy into Admiral Shares.

My core question: Should I move all the funds from my 401k (with Institutional Plus shares) into my IRA (with Vanguard Admiral Shares), or leave them where they were? The Vanguard rep essentially told me it was a choice, and not really compelling to either move or leave them in place, as the Institutional Plus shares have the lowest fees in the options that are available to me. Regarding performance of the Admiral vs Institutional Plus shares, I cannot tell if one is significantly better than the other. One of my concerns is the 401k management fees. Transitioning to Admiral could eliminate those costs.

I don't know if the following is relevant or not to the question above, but included as I see similar information in other questions such as these.

FYI, I have more in common with "Bob" than an experienced "boglehead." With my various 401k and IRAs, once they were set up, I basically ignored them, very similar to your "Bob" example. Until a few months ago, could not have told you what the status of any of the funds were.

Am 64 years old, intending to work for a few more years, methinks, although I expect to be transitioning to a part time position at some point.

I am inquiring about my pension benefits, and will have that information within a month or so.

Most of the current allocation is as follows:

Mutual Funds
Vanguard Prime Money Market Fund 22%
Vanguard Total International Stock Index Fund Admiral Shares 24%
Vanguard Total Stock Market Index Fund Admiral Shares 54%

IRA
Vanguard Intermediate Term Investment Grade Fund Admiral Shares 20%
Vanguard Short Term Investment Grade Fund Admiral Shares 13%
Vanguard Total International Stock Index Fund Admiral Shares 7%
Vanguard Total Bond Market Index Fund Admiral Shards 33%
Vanguard Total International Bond Index Fund Admiral Shares 28%

Older 401k
Vanguard Developed Markets Index Fund Institutional Plus Shares 16%
Vanguard Emerging Markets Stock Index Fund Institutional Shares 3%
Vanguard Institutional Index Fund Institutional Plus Shares 22%
Vanguard Mid-Cap Index Fund Institutional Plus Shares 5%
Vanguard Small-Cap Index Fund Institutional Plus Shares 5%
Vanguard Total Bond Market Index Fund Institutional Plus Shares 49%

dbltrbl
Posts: 881
Joined: Thu Mar 01, 2007 11:52 am

Re: Admiral vs Institutional Plus shares

Post by dbltrbl » Sun Nov 05, 2017 5:43 pm

Leave it at old 401K, as they typically have lower expense ratios than admiral shares. If you are also being charged new 5 dollars a month tax(fees) by Vanguard in that account you may move it to an IRA, admiral shares. Rep was correct it is not a big deal one way or other.

Colorado Guy
Posts: 10
Joined: Sun Nov 05, 2017 1:57 pm

Re: Admiral vs Institutional Plus shares

Post by Colorado Guy » Sun Nov 05, 2017 6:28 pm

Dbltrbl,

Thanks for the confirmation. Needed to hear that from someone other than the Vanguard rep. As I mentioned, am trying to get up to speed with what I should be doing, as I am trying to get to the point of knowing what I don't know.

User avatar
Dale_G
Posts: 3084
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 81

Re: Admiral vs Institutional Plus shares

Post by Dale_G » Sun Nov 05, 2017 11:36 pm

Colorado Guy said,
One of my concerns is the 401k management fees.
There will be a negligible difference between the performance of the Institutional Plus class funds and the Admiral class funds. The only difference will be the few hundredth of 1% difference in the expense ratios.

But, what about the separate 401k management fees? Are there 401k fees - and if so, what do they amount to percentage wise? If there is a 401k fee, it surely makes the cost of your Institutional Plus funds higher than what Admiral funds would cost at Vanguard.

When you compare the performance of the Institutional and Admiral funds the difference in expense ratios is accounted for - but any 401k fee is not accounted for.

Dale
Volatility is my friend

User avatar
mhc
Posts: 3730
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

Re: Admiral vs Institutional Plus shares

Post by mhc » Mon Nov 06, 2017 9:05 am

As others have said the performance difference is probably not a big deal.

401k can provide more protections against creditors as compared to IRAs. I think this may vary by state.

As one ages, having a simpler portfolio is beneficial.

Just a few other things to consider.

Colorado Guy
Posts: 10
Joined: Sun Nov 05, 2017 1:57 pm

Re: Admiral vs Institutional Plus shares

Post by Colorado Guy » Mon Nov 06, 2017 10:25 am

Mhc and Dale,

Thank you. From a simplicity standpoint, I had thought of moving from the 401k to the IRA, but for now I will be leaving the funds where they are. Once I retire, I will probably change this into one simple set of funds, but I don't need to do that today.

Just got off the phone with Vanguard, and my annual 401k management fee is $43/annually, which is more than reasonable. So, the concern regarding 401 management fees was laid to rest. Hopefully I won't need the creditor protection services, but it is nice to know that it is there.

FYI, am currently "self managing" the 401k funds in a 50/50 split, while Vanguard is managing the IRA funds (this year, anyway). Self management provides me with an opportunity to get more involved with my investments as I ramp up my knowledge base, while observing Vanguard management on the IRA funds is also instructive.

Post Reply