Finally thinking about making the switch from Vanguard to Fidelity

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rashad3000
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Finally thinking about making the switch from Vanguard to Fidelity

Post by rashad3000 » Tue Jan 29, 2019 9:13 am

Good morning. My wife and I currently have all of our Roth IRA money in the Retirement 2040 Fund with Vanguard. I am a creature of habit and I actually do like Vanguard a lot. However, it no longer seems like Vanguard is far and away the best company out there (which I've always heard). I am tempted to move all of our money to Fidelity with 25% going towards each of their zero expense mutual funds: Fidelity® ZERO Large Cap Index Fund (FNILX), Fidelity® ZERO Total Market Index Fund (FZROX), Fidelity® ZERO Extended Market Index Fund (FZIPX), & Fidelity® ZERO International Index Fund (FZILX). We would contribute $125/mo to each of these funds.

I am not the most "sophisticated" investor. I think the most important thing is to actually invest SOMETHING. I do want to maximize my potential with a simple approach.

We will continue putting $750/mo each into our 403(b) accounts with Vanguard, since my company doesn't use Fidelity. All of the college accounts for the kids will be with Fidelity.

Simple: Is the 4-fund strategy above a good one?

Thank you!

yougotitdude
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by yougotitdude » Tue Jan 29, 2019 9:20 am

You're going from a 85% stock 15% bond mix (Vanguard Target Retirement 2040) that automatically gets more conservative to one that is 100% stock until you change it. You're also duplicating efforts with the 3 domestic funds.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by RadAudit » Tue Jan 29, 2019 9:25 am

rashad3000 wrote:
Tue Jan 29, 2019 9:13 am
I am not the most "sophisticated" investor.
I'm not the most sophisticated commenter. But, I think you have a significant overlap among these three funds.

rashad3000 wrote:
Tue Jan 29, 2019 9:13 am
Fidelity® ZERO Large Cap Index Fund (FNILX), Fidelity® ZERO Total Market Index Fund (FZROX), Fidelity® ZERO Extended Market Index Fund (FZIPX),


It might be simpler to stay with Retirement 2040 or some other offering with a similar AA, glidepath, and / or lower cost.
Last edited by RadAudit on Tue Jan 29, 2019 9:26 am, edited 1 time in total.
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by mtmingus » Tue Jan 29, 2019 9:26 am

Make sure you know what's under the belts for each of your selections. Vanguard 2040's current components:
Vanguard Total Stock Market Index Fund Investor Shares 50.60%
Vanguard Total International Stock Index Fund Investor Shares 33.70%
Vanguard Total Bond Market II Index Fund Investor Shares** 11.00%
Vanguard Total International Bond Index Fund Investor Shares 4.70%
But your Fido funds are all stock funds.
I have accounts in both Vanguard and Fidelity. I am not discourage you to move but Vanguard has some of the best target date funds in the industry - you said you're not a "sophisticated" investor, then why not leave it to the pros and pay them a little management fees of these target date funds (for now)?

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rashad3000
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by rashad3000 » Tue Jan 29, 2019 9:29 am

Great feedback.

That's why I did the Retirement 2040 in the first place because of the ease. Sounds like my best course of action will be to stay.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by cheezit » Tue Jan 29, 2019 9:37 am

The large-cap fund and the extended-market fund are designed to be complements such that you can combine them to approximate the total market fund. I don't think you're accomplishing anything (other than a slight tilt to mid/small) by holding them in addition to total market; if you wanted to achieve that same tilt, you could do it with two funds, and if you didn't want any tilt, only one fund is necessary.

As others have noted, you would have a very different asset allocation going forward with your plan compared to what you have now.

My recommendation, worth exactly what you paid for it, is to take some time to do some research to determine a target asset allocation as part of a personal Investment Policy Statement. While you are doing this research, do not make any changes to your allocation - you're likely to go back and forth a few times wrt. what you want while you're researching things, and making constant changes to your investments is not a recipe for success. Once you have crafted an IPS, determine that cheapest way to implement it at each brokerage, decide whether a cost difference exists and whether it's enough to make switching worthwhile, and then stick with your plan.

There's a wealth of information on the Bogleheads wiki and forum to help you with the research, incidentally. The pros and cons of the Fidelity "ZERO" funds are a particularly well-discussed topic since they've been introduced.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by dunkmachine » Tue Jan 29, 2019 9:39 am

So, you're wanting to move from Vanguard to Fidelity solely for the ZERO funds? Assuming you are invested in the Vanguard equivalent funds:
  • 25% VLCAX (large cap): ER 0.05%
  • 25% VTSAX (total stock market): ER 0.04%
  • 25% VEXAX (extended market): ER 0.08%
  • 25% VTIAX (total international): ER 0.11%
Aggregate ER = 0.07%, or $70/yr per $100,000 invested. I don't think that would be worth the effort, or a reason for me to switch. Also, the ZERO funds are free because Fidelity created their own benchmark for their funds, which may or may not differ greatly from CRSP US Total Market Index, which is the benchmark for Vanguard. Also, over time, tracking error may be quite different, in which case Fidelity may not be able to match the return of their own benchmark.

Fidelity may decide to remove the zero ER's after they get enough customers and start increasing their costs. More so, you may be more inclined to start investing in other non-zero Fidelity funds that may be substantially more expensive then the Vanguard equivalent.

For simplicity, I'd just eliminate the large cap and extended market funds, and just do Total Stock Market and Total International at whatever allocation you prefer. But I don't know enough about your whole portfolio to give you a definitive answer.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Socal77 » Tue Jan 29, 2019 9:41 am

The Vanguard 2040 Target retirement is an excellent fund. As one other poster mentioned they automatically re-balance and they automatically change your asset allocation as you proceed towards retirement. These are two important tasks and are done automatically for you at very little cost (the cost of expense ratio).

My company chose Fidelity as our retirement custodian and chose to use Vanguard Target retirement funds in for our retirement fund choices, and I use the Vanguard Target 2035 retirement fund for my 401(k).

With my HSA, Taxable, and Roth, where I do not have access without buying costs to Vanguard I recently switched to a Fidelity 3 fund portfolio:

1) FZROX - Fidelity Zero Total Market Index
2) FZILX - Fidelity Zero International Index
3) FXNAX - Fidelity Zero Total US Bond Index

FZROX is basically a combination of FNILX (US Large Cap Index) and FZIPX (US Extended Market Index). So unless you want a different ratio of large to mid and small cap stocks it is much easier to use the 3 fund portfolio I mention above.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by midareff » Tue Jan 29, 2019 9:44 am

Zero is zero and sounds mighty attractive. When do you think that will actually show up as an increased portfolio value or will it all get washed away in tracking errors?

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by sixtoeight » Tue Jan 29, 2019 9:50 am

I still have my Roth IRA with Vanguard but I do agree with you in that I view Fidelity as being a better brokerage firm than Vanguard at this moment in time. I generally find Fidelity funds to be much lower in fees (zero) and some of its index funds may even outperform Vanguard in the long run. Furthermore, Fidelity's website is just so much more intuitive and easier to use. I currently use both, with my taxable account in Fidelity and non-taxable account in Vanguard.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by DB2 » Tue Jan 29, 2019 11:48 am

sixtoeight wrote:
Tue Jan 29, 2019 9:50 am
I generally find Fidelity funds to be much lower in fees (zero) and some of its index funds may even outperform Vanguard in the long run.
What gives you reason to believe this?

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by emlowe » Tue Jan 29, 2019 3:53 pm

Socal77 wrote:
Tue Jan 29, 2019 9:41 am

3) FXNAX - Fidelity Zero Total US Bond Index
FXNAX is not a Zero fund. Fidelity does not have a zero ER bond fund. The ER on FXNAX (U.S. Bond Index Fund) is 0.025 - I mean that's pretty small but it's not zero

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Socal77 » Tue Jan 29, 2019 4:12 pm

emlowe wrote:
Tue Jan 29, 2019 3:53 pm
Socal77 wrote:
Tue Jan 29, 2019 9:41 am

3) FXNAX - Fidelity Zero Total US Bond Index
FXNAX is not a Zero fund. Fidelity does not have a zero ER bond fund. The ER on FXNAX (U.S. Bond Index Fund) is 0.025 - I mean that's pretty small but it's not zero
Thanks for the correction. You're right. It's not zero. :oops:

When I looked a while ago and saw its ER of 0.025% I kind of subconsciously equated this to zero.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by bloom2708 » Tue Jan 29, 2019 4:34 pm

This seems like a "don't just do something, stand there" decision.

Fight the urge to "do something".

:|
Last edited by bloom2708 on Thu Jan 31, 2019 10:16 am, edited 1 time in total.
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by emlowe » Tue Jan 29, 2019 4:43 pm

Fidelity also has a full range of Target Date funds - just be sure to look for the index ones.

For example, the Fidelity Freedom® Index 2040 Fund (FBIFX) ER 0.14. This currently has

63% in Fidelity Total Market Index
27% in Fidelity Series Global ex U.S Index
7% in Fidelity US Bond Index
3% in Fidelity Series Long Term Treasury Bond Index

If you are happy with Vanguard, I don't think the Zero cost funds are enough of an incentive to move. I like Fidelity because the website is so much better, and there is a physical office close by that does come in handy from time to time

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by KyleAAA » Tue Jan 29, 2019 4:43 pm

I don't think it makes sense to switch just to use a different set of index funds that are insignificantly cheaper. If you hate the Vanguard website or value being able to visit a Fidelity office, those are good reasons to switch. I've only needed to visit a Fidelity branch once, but on that one occasion it was extremely convenient. If you are a factor investor and prefer using non-Vanguard ETFs to reach your desired factor loadings, that could be a good reason to switch (free iShares trades and a better brokerage platform at Fidelity). But going from Vanguard total stock market index to Fidelity total stock market index or vice versa isn't going to move the needle.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Finridge » Tue Jan 29, 2019 5:14 pm

rashad3000 wrote:
Tue Jan 29, 2019 9:13 am
Good morning. My wife and I currently have all of our Roth IRA money in the Retirement 2040 Fund with Vanguard. I am a creature of habit and I actually do like Vanguard a lot. However, it no longer seems like Vanguard is far and away the best company out there (which I've always heard). I am tempted to move all of our money to Fidelity with 25% going towards each of their zero expense mutual funds: Fidelity® ZERO Large Cap Index Fund (FNILX), Fidelity® ZERO Total Market Index Fund (FZROX), Fidelity® ZERO Extended Market Index Fund (FZIPX), & Fidelity® ZERO International Index Fund (FZILX). We would contribute $125/mo to each of these funds.

I am not the most "sophisticated" investor. I think the most important thing is to actually invest SOMETHING. I do want to maximize my potential with a simple approach.

We will continue putting $750/mo each into our 403(b) accounts with Vanguard, since my company doesn't use Fidelity. All of the college accounts for the kids will be with Fidelity.

Simple: Is the 4-fund strategy above a good one?

Thank you!
I have accounts at both Vanguard and Fidelity. Fidelity is a great company, but in my opinion it is not better than Vanguard.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Jack FFR1846 » Tue Jan 29, 2019 5:29 pm

midareff wrote:
Tue Jan 29, 2019 9:44 am
Zero is zero and sounds mighty attractive. When do you think that will actually show up as an increased portfolio value or will it all get washed away in tracking errors?
I seem to remember someone saying "You get what you don't pay for".

What tracking error? Tracking error doesn't necessarily mean lower returns. Could go either way. Anyways, the indexes being tracked are non-licensed indexes that Fidelity put together. You could compare funds (I do), but you can't compare FZROX to another fund that tracks the same index because there are none.

These days, low cost has gone to an extreme. I look at me spreadsheet of funds with $2.3M in investments and the highest fee is on Vanguard's developed international fund at 0.07%. While this is tiny compared to when an average cost was 1%, but today, it's no longer a low cost leader.

I have not yet moved my Vanguard account, nor my VTI sitting at TDAmeritrade but I think about it often.
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by midareff » Tue Jan 29, 2019 6:21 pm

Jack FFR1846 wrote:
Tue Jan 29, 2019 5:29 pm
midareff wrote:
Tue Jan 29, 2019 9:44 am
Zero is zero and sounds mighty attractive. When do you think that will actually show up as an increased portfolio value or will it all get washed away in tracking errors?
I seem to remember someone saying "You get what you don't pay for".

What tracking error? Tracking error doesn't necessarily mean lower returns. Could go either way. Anyways, the indexes being tracked are non-licensed indexes that Fidelity put together. You could compare funds (I do), but you can't compare FZROX to another fund that tracks the same index because there are none.

These days, low cost has gone to an extreme. I look at me spreadsheet of funds with $2.3M in investments and the highest fee is on Vanguard's developed international fund at 0.07%. While this is tiny compared to when an average cost was 1%, but today, it's no longer a low cost leader.

I have not yet moved my Vanguard account, nor my VTI sitting at TDAmeritrade but I think about it often.
Then go for the gusto Jack. Pick the right day to be out on transfer and you could wash several years fees.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Dottie57 » Tue Jan 29, 2019 7:26 pm

emlowe wrote:
Tue Jan 29, 2019 4:43 pm
Fidelity also has a full range of Target Date funds - just be sure to look for the index ones.

For example, the Fidelity Freedom® Index 2040 Fund (FBIFX) ER 0.14. This currently has

63% in Fidelity Total Market Index
27% in Fidelity Series Global ex U.S Index
7% in Fidelity US Bond Index
3% in Fidelity Series Long Term Treasury Bond Index

If you are happy with Vanguard, I don't think the Zero cost funds are enough of an incentive to move. I like Fidelity because the website is so much better, and there is a physical office close by that does come in handy from time to time
I would go with FBIFX. It s soooo easy and the managers take care of rebalancing. The ER is fine too!

It takes behavioral risk out of your investing.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by SpaceCommander » Wed Jan 30, 2019 6:32 am

Funny you should mention it: I have an appointment today at my local Fidelity office. After 20 years at Vanguard, I'm moving everything to Fidelity. A couple of reasons:
1. Vanguard is no longer the low cost leader.
2. Customer service has been disappointing in recent years
3. The straw that broke this camel's back was a new policy in their brokerage that customers cannot purchase leveraged or bear etfs. This is a self directed brokerage account, but this nanny firm won't give us access to certain products. I think Vanguard wants to protect its customers from themselves. Thank you very much, but I can do without the hand holding. I usually don't use these products, but if I want to hedge a long position in my taxable account with a bear fund, that's MY business. I won't stand for a firm that simply refuses to execute my order because they know better than I what's best.

Thanks Vanguard, it's been nice, but I'll be moving 7 figures to a competitor with lower costs and better customer service.
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by ruralavalon » Wed Jan 30, 2019 9:43 am

rashad3000 wrote:
Tue Jan 29, 2019 9:13 am
Good morning. My wife and I currently have all of our Roth IRA money in the Retirement 2040 Fund with Vanguard. I am a creature of habit and I actually do like Vanguard a lot. However, it no longer seems like Vanguard is far and away the best company out there (which I've always heard). I am tempted to move all of our money to Fidelity with 25% going towards each of their zero expense mutual funds: Fidelity® ZERO Large Cap Index Fund (FNILX), Fidelity® ZERO Total Market Index Fund (FZROX), Fidelity® ZERO Extended Market Index Fund (FZIPX), & Fidelity® ZERO International Index Fund (FZILX). We would contribute $125/mo to each of these funds.

I am not the most "sophisticated" investor. I think the most important thing is to actually invest SOMETHING. I do want to maximize my potential with a simple approach.

We will continue putting $750/mo each into our 403(b) accounts with Vanguard, since my company doesn't use Fidelity. All of the college accounts for the kids will be with Fidelity.

Simple: Is the 4-fund strategy above a good one?

Thank you!
You say that you "do like Vanguard a lot", are using Vanguard Tarhget Retirement 2040 Fund in your Roth IRAs, and are "not the most 'sophisticated' investor". My suggestion is to stay with Vanguard and continue to use Vanguard Target Retirement 2040 (VFORX) ER 0.15%.

The "4-fund strategy" you outline is not a good strategy, three domestic stock funds overlap and duplicate each other.
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Nthomas » Wed Jan 30, 2019 9:48 am

KyleAAA wrote:
Tue Jan 29, 2019 4:43 pm
...If you are a factor investor and prefer using non-Vanguard ETFs to reach your desired factor loadings, that could be a good reason to switch (free iShares trades and a better brokerage platform at Fidelity)...
All ETFs trade free now at VG.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by anil686 » Wed Jan 30, 2019 11:55 am

I like the Fidelity Freedom Index Target date funds better - I have that in my Roth. I like that they use on US bonds and I like the domestic to international ratio better at 2/3 to 1/3 international. Frankly, I can't imagine too much of a difference btw the VG and Fidelity target date funds due to the composition being so close, but we all have preferences. To me, Coke tastes similar but not identical to Pepsi - and I like one more than the other. I feel the same way about the target date funds IMO... But back to the OP - you are not diversifying by investing in overlap in the domestic stock funds. In addition, be careful about the costs - when you get down to a few basis points, other things matter more than costs such as how well they track the index, tax efficiency in a taxable account and securities lending will be greater than the cost difference. I'm not saying whether or not to switch, I'm just saying looking at ER as the only reason is not a holistic view when we are talking about such low ERs in general. Also comparing a 3 fund with a target date fund is not apples to apples - they are comparing Red apples to Granny Smith apples - one rebalances on a schedule determined by the behavior of the investor (what ever that is) and one is rebalanced almost daily within tight bands - they will not be identical and should differ by much more than their difference in expense ratios (pretty easy to see on portfoliovisualizer.com). Hope that helps...

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by KyleAAA » Wed Jan 30, 2019 12:27 pm

Nthomas wrote:
Wed Jan 30, 2019 9:48 am
KyleAAA wrote:
Tue Jan 29, 2019 4:43 pm
...If you are a factor investor and prefer using non-Vanguard ETFs to reach your desired factor loadings, that could be a good reason to switch (free iShares trades and a better brokerage platform at Fidelity)...
All ETFs trade free now at VG.
True, but Fidelity is a better brokerage platform and has a better website, not to mention physical offices in case you have a problem. If you'll be using ETFs rather than Mutual Funds anyway, Fidelity is better so long as you don't have to pay a commission. Which you don't for iShares.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by lostdog » Wed Jan 30, 2019 12:29 pm

ruralavalon wrote:
Wed Jan 30, 2019 9:43 am
rashad3000 wrote:
Tue Jan 29, 2019 9:13 am
Good morning. My wife and I currently have all of our Roth IRA money in the Retirement 2040 Fund with Vanguard. I am a creature of habit and I actually do like Vanguard a lot. However, it no longer seems like Vanguard is far and away the best company out there (which I've always heard). I am tempted to move all of our money to Fidelity with 25% going towards each of their zero expense mutual funds: Fidelity® ZERO Large Cap Index Fund (FNILX), Fidelity® ZERO Total Market Index Fund (FZROX), Fidelity® ZERO Extended Market Index Fund (FZIPX), & Fidelity® ZERO International Index Fund (FZILX). We would contribute $125/mo to each of these funds.

I am not the most "sophisticated" investor. I think the most important thing is to actually invest SOMETHING. I do want to maximize my potential with a simple approach.

We will continue putting $750/mo each into our 403(b) accounts with Vanguard, since my company doesn't use Fidelity. All of the college accounts for the kids will be with Fidelity.

Simple: Is the 4-fund strategy above a good one?

Thank you!
You say that you "do like Vanguard a lot", are using Vanguard Tarhget Retirement 2040 Fund in your Roth IRAs, and are "not the most 'sophisticated' investor". My suggestion is to stay with Vanguard and continue to use Vanguard Target Retirement 2040 (VFORX) ER 0.15%.

The "4-fund strategy" you outline is not a good strategy, three domestic stock funds overlap and duplicate each other.
+1

What if Fidelity decided to remove the ZERO ER from the funds? Vanguard has a better business model.
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by emlowe » Wed Jan 30, 2019 12:46 pm

lostdog wrote:
Wed Jan 30, 2019 12:29 pm

+1

What if Fidelity decided to remove the ZERO ER from the funds? Vanguard has a better business model.
The non-zero Fidelity Total Market Index (FSKAX) is also cheaper than Vanguard at 1.5bp (0.015). Sure, Fidelity could raise the ERs at any time, but they seem pretty set on competing in the low-cost index area - they have recently made a big push to lower ERs and consolidate fund classes into cheaper ones.

So Yes, Fidelity could change direction and raise all their ERs, but I personally think this risk is very low. In fact, can anyone recall a time when a major player actually raised ERs on an index fund?

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by azianbob » Wed Jan 30, 2019 7:59 pm

I agree with everyone there is a lot of overlap. You should just do 75% in the total find and 25% in the international, or if you want more non large cap exposure you can do like 50% to large cap and 25% to extended and then 25% to international.

I would wait and see how their funds do before moving over because they are proprietary so it hasnt been proven if they will equal or do better than regular index funds.

Also you can move your Vanguard stuff to
75% VTI (0.04%)
25% VEA (0.07%)

and then basically for every $1000 you would only be paying $1.10 to have a similar setup as Fidelity ... not sure if $1.10 is worth going through all the hassle of moving over when you don't know how those new zero funds track. Even if you had $1 million that is only $1100 a year.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by bondsr4me » Thu Jan 31, 2019 8:17 am

With all the competitive pricing going on, I see no reason not to switch.
I wouldn't be the least bit concerned about ANY of them raising costs any time soon....just too competitive.

As of now, I have accounts at Fidelity, Schwab and Vanguard (and $33 at TDAmeritrade).

I don't really have a favorite but I do like Fidelity and Schwab much better than VG.
Both Schwab and Fidelity have very good websites (very important to me).
I like Schwab's StreetSmartEdge better than Fidelity's ActiveTraderPro.

Vanguard is "ok", but just "ok"....you don't get what you aren't willing to pay for.

If you want to make a switch, do it.
If you have holdings at VG you don't want to let go, just do an "in-kind transfer".

Initiate the transfer at Fidelity; they will do the rest.

Good luck.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Wiggums » Thu Jan 31, 2019 8:35 am

A lot of good responses on this question. I currently have accounts at Fidelity and Vanguard. I don’t think you can go wrong with Vanguard, Fidelity or Schwab. I personally would not switch but it would not stop me from opening an account and and trying the other platforms. I think you’ll find their pluses and minuses to each vendor.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by ruralavalon » Thu Jan 31, 2019 8:42 am

bondsr4me wrote:
Thu Jan 31, 2019 8:17 am
With all the competitive pricing going on, I see no reason not to switch.
I wouldn't be the least bit concerned about ANY of them raising costs any time soon....just too competitive.

. . . . .

If you want to make a switch, do it.
. . . . . .
The expense ratio differences are tiny, and so have a very small impact. On a $100k investment in total stock market, the difference between 0.04% and 0.00% for an expense ratio is a trivial $40 annually.

OP says "I actually do like Vanguard a lot", so has no reason to switch.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by sambb » Thu Jan 31, 2019 8:43 am

Fidelity far better service than vanguard. Would definitely consider having money in both and see how it goes.

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gasdoc
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by gasdoc » Thu Jan 31, 2019 1:27 pm

emlowe wrote:
Wed Jan 30, 2019 12:46 pm
lostdog wrote:
Wed Jan 30, 2019 12:29 pm

+1

What if Fidelity decided to remove the ZERO ER from the funds? Vanguard has a better business model.
The non-zero Fidelity Total Market Index (FSKAX) is also cheaper than Vanguard at 1.5bp (0.015). Sure, Fidelity could raise the ERs at any time, but they seem pretty set on competing in the low-cost index area - they have recently made a big push to lower ERs and consolidate fund classes into cheaper ones.

So Yes, Fidelity could change direction and raise all their ERs, but I personally think this risk is very low. In fact, can anyone recall a time when a major player actually raised ERs on an index fund?
I don't disagree with your statement, but you don't actually consider the "zero" funds to be zero expenses to run the funds, do you? The cost is obviously hidden somewhere (a conversation for another thread). I recently moved my HSA to Fidelity because of its no fee approach whereas Vanguard does not accept HSA funds, but the rest of my invested money will stay at Vanguard, where there are no games being played- that is, the ER is what it actually costs to run the funds.

gasdoc

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emlowe
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by emlowe » Thu Jan 31, 2019 2:21 pm

All mutual funds, including VG have those same hidden costs - generally, those costs wash out in the hidden "revenues" the fund can make.

Is Fidelity losing money on FZROX? Maybe - it might be a loss leader for them. Or perhaps it breaks even based on the hidden revenues, and the cheaper costs to run the fund because it tracks a Fidelity index. I don't know

I would not expect Fidelity to be trying to make extra money in this fund by boosting the hidden costs - in fact, I can't think of any good reason for Fidelity to do that. It's easier for Fidelity to just try to upsell you to it's expensive managed funds (why make 4-5 bp when I can make 70-100). That said, yes, of course, Fidelity could be doing something to boost those hidden fees in FZROX.

I think the biggest risk with FZROX is that is tracks the "Fidelity U.S. Total Investable Market Index" while the standard index is "Dow Jones U.S. Total Stock Market Index" AKA "CRSP US Total Market Index" which is tracked by Vanguard Total Stock (VTSAX) and Fidelity Total Stock (FSKAX). And there is a risk that it is non-transferable to another brokerage.

So if you want the standard index - at Fidelity you can use FSKAX at 1.5bp - or you can use iShares Total Market (ITOT) at 3bp if you are so inclined.

But, all said, Vanguard and the Vanguard funds are organized specifically to be customer cost friendly since they are owned by same - so yes, I'd agree it's great to have some choices and VG is a great choice and personally I would not switch to Fidelity simply because of the cost of FZROX or FSKAX.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by southerndoc » Thu Jan 31, 2019 8:52 pm

When switching, keep in mind that Zero funds are not available in SE 401(k)'s or HSA's. I'm not sure if they are available in SEP's or other IRA's.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Socal77 » Fri Feb 01, 2019 6:40 am

southerndoc wrote:
Thu Jan 31, 2019 8:52 pm
When switching, keep in mind that Zero funds are not available in SE 401(k)'s or HSA's. I'm not sure if they are available in SEP's or other IRA's.
I just switched to FZILX and FZROX in my Fidelity HSA from iShares. Not sure what you mean about Zero funds not available in Fidelity HSA.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by southerndoc » Fri Feb 01, 2019 10:36 am

Socal77 wrote:
Fri Feb 01, 2019 6:40 am
southerndoc wrote:
Thu Jan 31, 2019 8:52 pm
When switching, keep in mind that Zero funds are not available in SE 401(k)'s or HSA's. I'm not sure if they are available in SEP's or other IRA's.
I just switched to FZILX and FZROX in my Fidelity HSA from iShares. Not sure what you mean about Zero funds not available in Fidelity HSA.
Maybe they opened it up. I asked why they aren't available in their Self-Employed 401(k) and was told they aren't available in qualified retirement or health savings accounts. I honestly hadn't checked in my HSA to see if they are available.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Socal77 » Fri Feb 01, 2019 8:09 pm

southerndoc wrote:
Fri Feb 01, 2019 10:36 am
Socal77 wrote:
Fri Feb 01, 2019 6:40 am
southerndoc wrote:
Thu Jan 31, 2019 8:52 pm
When switching, keep in mind that Zero funds are not available in SE 401(k)'s or HSA's. I'm not sure if they are available in SEP's or other IRA's.
I just switched to FZILX and FZROX in my Fidelity HSA from iShares. Not sure what you mean about Zero funds not available in Fidelity HSA.
Maybe they opened it up. I asked why they aren't available in their Self-Employed 401(k) and was told they aren't available in qualified retirement or health savings accounts. I honestly hadn't checked in my HSA to see if they are available.
I see. I just wanted to add in case anyone was thinking of using them in their Fidelity HSA. It worked for me. I also use them in my taxable. :)

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Gadget » Sat Feb 02, 2019 4:08 pm

Socal77 wrote:
Fri Feb 01, 2019 8:09 pm
southerndoc wrote:
Fri Feb 01, 2019 10:36 am
Socal77 wrote:
Fri Feb 01, 2019 6:40 am
southerndoc wrote:
Thu Jan 31, 2019 8:52 pm
When switching, keep in mind that Zero funds are not available in SE 401(k)'s or HSA's. I'm not sure if they are available in SEP's or other IRA's.
I just switched to FZILX and FZROX in my Fidelity HSA from iShares. Not sure what you mean about Zero funds not available in Fidelity HSA.
Maybe they opened it up. I asked why they aren't available in their Self-Employed 401(k) and was told they aren't available in qualified retirement or health savings accounts. I honestly hadn't checked in my HSA to see if they are available.
I see. I just wanted to add in case anyone was thinking of using them in their Fidelity HSA. It worked for me. I also use them in my taxable. :)
What is your marginal tax bracket? I don't think you want the Fidelity zero funds in a taxable account. You don't really want any non-Vanguard mutual fund in a taxable account. You want ETFs or Vanguard mutual funds in taxable to maximize tax efficiency.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Socal77 » Sat Feb 02, 2019 8:25 pm

Gadget wrote:
Sat Feb 02, 2019 4:08 pm
Socal77 wrote:
Fri Feb 01, 2019 8:09 pm
southerndoc wrote:
Fri Feb 01, 2019 10:36 am
Socal77 wrote:
Fri Feb 01, 2019 6:40 am
southerndoc wrote:
Thu Jan 31, 2019 8:52 pm
When switching, keep in mind that Zero funds are not available in SE 401(k)'s or HSA's. I'm not sure if they are available in SEP's or other IRA's.
I just switched to FZILX and FZROX in my Fidelity HSA from iShares. Not sure what you mean about Zero funds not available in Fidelity HSA.
Maybe they opened it up. I asked why they aren't available in their Self-Employed 401(k) and was told they aren't available in qualified retirement or health savings accounts. I honestly hadn't checked in my HSA to see if they are available.
I see. I just wanted to add in case anyone was thinking of using them in their Fidelity HSA. It worked for me. I also use them in my taxable. :)
What is your marginal tax bracket? I don't think you want the Fidelity zero funds in a taxable account. You don't really want any non-Vanguard mutual fund in a taxable account. You want ETFs or Vanguard mutual funds in taxable to maximize tax efficiency.
22%. Would you elaborate?

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fortfun
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by fortfun » Sat Feb 02, 2019 8:29 pm

Remember, Fidelity has low rates now because of Vanguard.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Gadget » Sat Feb 02, 2019 9:37 pm

Socal77 wrote:
Sat Feb 02, 2019 8:25 pm
22%. Would you elaborate?
Read the tax efficiency section of this from the wiki:
https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds

You don't want mutual funds in a taxable account unless they are Vanguard mutual funds. ETFs are more tax efficient, except for Vanguard mutual funds because they own a patent on ETF/mutual fund dual share classes.

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rashad3000
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by rashad3000 » Sat Feb 02, 2019 9:43 pm

Great responses. Thank you all!

Socal77
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Socal77 » Sun Feb 03, 2019 6:21 am

Gadget wrote:
Sat Feb 02, 2019 9:37 pm
Socal77 wrote:
Sat Feb 02, 2019 8:25 pm
22%. Would you elaborate?
Read the tax efficiency section of this from the wiki:
https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds

You don't want mutual funds in a taxable account unless they are Vanguard mutual funds. ETFs are more tax efficient, except for Vanguard mutual funds because they own a patent on ETF/mutual fund dual share classes.
Hmm. I read it. It doesn't detail exactly how the taxes might cost me. I just switched from iShares ETF's too so this may have not been optimal if they were better.

The main reason I switched was to be able to buy fixed amounts automatically like $100 whereas with iShares I have to buy the share amount..

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by sixtoeight » Tue Feb 26, 2019 4:22 pm

DB2 wrote:
Tue Jan 29, 2019 11:48 am
sixtoeight wrote:
Tue Jan 29, 2019 9:50 am
I generally find Fidelity funds to be much lower in fees (zero) and some of its index funds may even outperform Vanguard in the long run.
What gives you reason to believe this?
Because of personal experience and if you look at their 1, 5, or 10 year performance. Not by much though but still slightly better in returns.

Independent George
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by Independent George » Tue Feb 26, 2019 5:50 pm

rashad3000 wrote:
Tue Jan 29, 2019 9:13 am
Good morning. My wife and I currently have all of our Roth IRA money in the Retirement 2040 Fund with Vanguard. I am a creature of habit and I actually do like Vanguard a lot. However, it no longer seems like Vanguard is far and away the best company out there (which I've always heard). I am tempted to move all of our money to Fidelity with 25% going towards each of their zero expense mutual funds: Fidelity® ZERO Large Cap Index Fund (FNILX), Fidelity® ZERO Total Market Index Fund (FZROX), Fidelity® ZERO Extended Market Index Fund (FZIPX), & Fidelity® ZERO International Index Fund (FZILX). We would contribute $125/mo to each of these funds.

I am not the most "sophisticated" investor. I think the most important thing is to actually invest SOMETHING. I do want to maximize my potential with a simple approach.

We will continue putting $750/mo each into our 403(b) accounts with Vanguard, since my company doesn't use Fidelity. All of the college accounts for the kids will be with Fidelity.

Simple: Is the 4-fund strategy above a good one?

Thank you!
I think switching to Fidelity is fine, but I don't think you need the Large Cap and Extended Market indices on top of Total Market and Total International. Extended market makes sense if you want to use a factor investing approach, but since you go out of the way to mention not being a sophisticated investor, I would just stick with Total Market and Total International in a 70/30 ratio. And as mentioned by others above, I would also recommend adding a total bond market fund according to your risk tolerance.

The best reason to go to Fidelity is for better customer service. It's never been an issue for me, but enough people have complained about Vanguard that I believe it's a legitimate reason to switch.

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rashad3000
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by rashad3000 » Tue Feb 26, 2019 8:16 pm

Hey everyone. Thanks for the valuable replies.

We’ve decided to stick with Vanguard.

I like the diversification of the Retirement 2045 Fund. I’m comfortable just throwing everything in there and letting it sit.

yogesh
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by yogesh » Tue Feb 26, 2019 11:12 pm

rashad3000 wrote:
Tue Feb 26, 2019 8:16 pm
Hey everyone. Thanks for the valuable replies.

We’ve decided to stick with Vanguard.

I like the diversification of the Retirement 2045 Fund. I’m comfortable just throwing everything in there and letting it sit.
Good decision. Why complicate things from excellent 1 fund that automatically rebalances, reduces risk over time by adjusting allocation and does this all for ver with low fees.
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

SweetAeromotion
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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by SweetAeromotion » Wed Feb 27, 2019 12:19 am

As already stated, the three domestic U.S. zero fee funds at Fidelity overlap each other.

FNILX = S+P 500 tracking
(overlaps)
FZROX = Total U.S. market
(overlaps)
FZIPX = Extended market tracking


If you use Morningstar's XRay tool, you would find that FZROX is basically the same as 85% FNILX and 15% FZIPX.

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Re: Finally thinking about making the switch from Vanguard to Fidelity

Post by sarabayo » Wed Feb 27, 2019 3:24 am

rashad3000 wrote:
Tue Feb 26, 2019 8:16 pm
Hey everyone. Thanks for the valuable replies.

We’ve decided to stick with Vanguard.

I like the diversification of the Retirement 2045 Fund. I’m comfortable just throwing everything in there and letting it sit.
Am I reading correctly that you switched from Retirement 2040 (mentioned in your initial post) to Retirement 2045? Why?

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