Irrational fears?

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Keiser2015
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Irrational fears?

Post by Keiser2015 » Fri Sep 08, 2017 11:40 am

I have two strange fears; and they don't have anything to do about market volatility or risk.

First fear: I log into my Vanguard account sometime in the future, and everything is gone or zero (number of shares/dollar values, etc.). I then call Vanguard support, and they can't locate my account.

Second fear: After decades of saving/investing inside my Vanguard account, I go to sell a portion of my mutual funds. (Example would be selling Total Stock Index Fund in a taxable account for the purchase of a new car.) I go online and submit the sell. The money never gets to my bank account. Vanguard customer support states they transferred the sale/money properly. The bank doesn't see the money/transfer. I would feel really bad if I spent 40 years saving money, and could never get the money out. I have transfered money out of Prime Money Market Fund, and it worked just fine. So, I don't believe it should be a problem. I am tempted to sell a small portion of my taxable account (VTSAX), just to see how it all works (including receiving the cash, and later filing taxes).

Please confirm that these are "ridiculous fears", and that you have first hand knowledge that this would never happen.

Thank you!

livesoft
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Re: Irrational fears?

Post by livesoft » Fri Sep 08, 2017 11:42 am

Ha! I think we have seen reports of them happening on the forum. Fear on!
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ved
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Re: Irrational fears?

Post by ved » Fri Sep 08, 2017 11:44 am

Haven't you heard that BogleHeads use a "buy and hold" strategy?
We never sell :-)

alex_686
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Re: Irrational fears?

Post by alex_686 » Fri Sep 08, 2017 11:47 am

These are basically irrational.

For your holdings, a 3rd party holds your account holdings, not Vanguard. You should have confirms and account statements.

For your wire, Vanguard can put a trace on the wire that they made and figure out exactly where it has gone.

FYI, I have worked in a Custody and Reconciliation department. I can't recall a single case in 30 years of a firm losing (as in misplacing) its clients money that they did not fix with a few phone calls. The possible exception of Madoff and he explicated avoided the regulated market which Vanguard is part of.

A more rational fear would be fraud by identify theft. Somebody stealing your money from Vanguard by impersonating you.

Grt2bOutdoors
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Re: Irrational fears?

Post by Grt2bOutdoors » Fri Sep 08, 2017 11:51 am

Keiser2015 wrote:
Fri Sep 08, 2017 11:40 am
I have two strange fears; and they don't have anything to do about market volatility or risk.

First fear: I log into my Vanguard account sometime in the future, and everything is gone or zero (number of shares/dollar values, etc.). I then call Vanguard support, and they can't locate my account.
Keep a paper hard copy of your yearly summary statements detailing the activity by account.
Second fear: After decades of saving/investing inside my Vanguard account, I go to sell a portion of my mutual funds. (Example would be selling Total Stock Index Fund in a taxable account for the purchase of a new car.) I go online and submit the sell. The money never gets to my bank account. Vanguard customer support states they transferred the sale/money properly. The bank doesn't see the money/transfer. I would feel really bad if I spent 40 years saving money, and could never get the money out. I have transfered money out of Prime Money Market Fund, and it worked just fine. So, I don't believe it should be a problem. I am tempted to sell a small portion of my taxable account (VTSAX), just to see how it all works (including receiving the cash, and later filing taxes).
While errors do occur from time to time, errors are temporary, can be researched and resolved in a relatively timely manner. Why incur a possible taxable gain?
Please confirm that these are "ridiculous fears", and that you have first hand knowledge that this would never happen.
There are many safeguards in place, while I do not know first hand what they are and nor should we because the best way for it work is not to disclose what those methods are in the first instance. If you don't feel comfortable, redeem it all, now. (don't do that). Yes, these are ridiculous fears. There are some things you should be fearful of, this is not one of them.

Thank you!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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saltycaper
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Re: Irrational fears?

Post by saltycaper » Fri Sep 08, 2017 11:55 am

Keiser2015 wrote:
Fri Sep 08, 2017 11:40 am

Please confirm that these are "ridiculous fears", and that you have first hand knowledge that this would never happen.
I don't think it's possible to have firsthand knowledge that something will never happen. You only can have firsthand knowledge of something that did happen.

Your specific fears may be approaching the ridiculous, but if you extend them to nefarious actors (theft) or inaccessibility of funds due to technical issues, they're not out of the realm of possibility. I think the probability is small. But small probabilities notwithstanding, if the consequences are great, and the costs to guard against the event or reduce its impact are not onerous, why not do so? I myself do not keep all assets with one broker.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

Keiser2015
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Re: Irrational fears?

Post by Keiser2015 » Fri Sep 08, 2017 12:04 pm

Thank you for the replies.

Is having copies of Vanguard account statements, "valid proof" that you have a Vanguard account? I am sure Vanguard could use the account numbers listed on the statements, and track your account history back.

There is probably some kind of auditing done on the ACH and/or wire transfers, to track down why a transaction wasn't completed.

I am trying to think this all through before consolidating most of my assets with Vanguard. I am trying to hash out whether I want to keep intermediate term savings (car fund/slush fund) within Vanguard or Ally Bank. Ideally, I would like to have my intermediate spending needs inside taxable stock index funds, then sell & rebalance my total portfolio within IRA. Just worried about the sell part, because haven't sold stock index fund before.

Sorry for my ramblings!

Tamalak
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Re: Irrational fears?

Post by Tamalak » Fri Sep 08, 2017 12:19 pm

There is safety in numbers.

You are one of millions of people invested in Vanguard. The scenarios you describe, I think, have never happened. If they DID happen to someone, the chances are one in millions that it would be you. You are a pigeon in a mountain of pigeons, whether or not there is a fox you need not fear it.

PFInterest
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Re: Irrational fears?

Post by PFInterest » Fri Sep 08, 2017 12:21 pm

lol both of those have happened to people. welcome to technology.

Jack FFR1846
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Re: Irrational fears?

Post by Jack FFR1846 » Fri Sep 08, 2017 12:42 pm

I don't think that's at all irrational.

Here's a situation that happened to me yesterday. My work ESPP shares sold in my eTrade account. Not yet settled. Balance on the order of $17k. I go back the next day (yesterday) and the section now says the order was complete and the shares settled but the balance is zero. I decide to wait a day. I wait to this morning and the $17k is back. I make my transfer to my credit union and all is good.
Bogle: Smart Beta is stupid

msk
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Re: Irrational fears?

Post by msk » Fri Sep 08, 2017 1:06 pm

This actually happened to me. Asked my local bank branch (abroad) to wire transfer $140k to my TDAmeritrade brokerage account. Normally I see my new balance there the next day, sometimes on the same day. Nothing! TDAmeritrade claimed to know nothing about it even after a week. Asked me to trace through my bank. Bank claimed they only debit my account after a successful wire transfer, hence by their logic it must have been a success. Scanned the wire transfer details/confirmation and emailed it to TDAm. Latter confirmed receipt but claimed to have returned it forthwith because detailed client data was lacking. Back to my branch. They said all foreign wires go via head office and they cannot find any funds having been returned. By now two months have passed, with my $140k disappeared. Contacted somebody I knew at the bank's head office and he initiated a "fraud alarm". Finally somebody took it seriously and found my money at some correspondent bank in NY where TDAm had returned the deposit. Two months with $140k vanished :oops: Whenever I open a brokerage account I always make a buy and sell a small holding and transfer the money to my own bank account as a test before I send the bulk of my planned investment. And even after all such testing, I still had $140k disappearing for two months...

Keiser2015
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Re: Irrational fears?

Post by Keiser2015 » Fri Sep 08, 2017 1:20 pm

I am so sorry you had to deal with that msk. A lost/missing 140K would stress me out, and I'd call the bank/investment firm every day.

If you feel like a bank or investment firm lost your money/account; and they can't reconcile it (fraud protection, auditing, etc.) Should you hire a lawyer to help fix your problem?

dbr
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Re: Irrational fears?

Post by dbr » Fri Sep 08, 2017 1:28 pm

I have never heard of anyone being permanently deprived of their property by such a thing except maybe the occasional debit card account getting wiped out by fraud. There are lots of people who have had accounts or portions of accounts disappear into technology limbo for some length of time or another. Probably the most common is suspected or actual fraudulent activity which results in accounts being locked and no one will say anything to anyone about it.

Among the defenses are saving paper trails, whether actual paper or electronic downloads, and diversifying across service providers. "Not peeking" at one's accounts is utterly stupid as people should be aware of what is going on with some decent frequency, such as monthly. I like to have alerts set for accounts as much as possible as well.

Case in point, we stopped in progress theft of $800 from a friends debit card account while noticing a spurious charge was "pending" and notified the fraud line immediately.

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Toons
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Re: Irrational fears?

Post by Toons » Fri Sep 08, 2017 1:29 pm

99.9999999999%
Of what we worry about never happens.
Life is short.
Worry Robs you of that time and your energy and accomplishes nothing positive.
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

garlandwhizzer
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Re: Irrational fears?

Post by garlandwhizzer » Fri Sep 08, 2017 1:31 pm

All of us have irrational fears. The question is how much we allow irrational fears to affect our judgement and determine our behavior. Vanguard is a totally reputable company, IMO offering the best stewardship for its clients of all financial companies. Basically almost any outcome in financial markets cannot be completely ruled out. However, when you spend considerable mental energy on avoiding one chance in ten million outcomes, it is unlikely to improve your investment results. IMO sound decision-making deals with probable, rather than fantasy-derived, inputs.

Garland Whizzer

goingup
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Re: Irrational fears?

Post by goingup » Fri Sep 08, 2017 1:31 pm

It is irrational. I admit to having held my breath once or twice while the computer pauses before the balance appears. Irrational.

Vanguard has 20 million clients and manages $4 trillion in assets. If they ever somehow misplaced your money they would make you whole. I have ACH'd money to them and from them at least 100 times flawlessly.

There is the rare instance of a fumble by some custodian at some point in time. It happens but it's rare and the money never just disappears.

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patrick013
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Re: Irrational fears?

Post by patrick013 » Fri Sep 08, 2017 1:39 pm

Keeping copies of your buy/sell confirmations on your hard
drive and also copies of your full account statements at
least 2-3 times a year on your hard drive is an adequate audit
trail as others have stated. The brokerage company has the
same and if some govt. involvement needed you're covered
information wise.
age in bonds, buy-and-hold, 10 year business cycle

visualguy
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Re: Irrational fears?

Post by visualguy » Fri Sep 08, 2017 1:50 pm

alex_686 wrote:
Fri Sep 08, 2017 11:47 am
A more rational fear would be fraud by identify theft. Somebody stealing your money from Vanguard by impersonating you.
Yes - that would be a reasonable fear. This is a serious concern for some people I know, and they have the bulk of their financial assets in accounts that don't allow on-line transfers, and have very strict checks and verification on any transactions that involve moving financial assets.

I wonder what the policy of on-line brokerages and banks is on this. Would they compensate you eventually in such cases, or could you just lose your money? It's hard to find information about this.

staythecourse
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Re: Irrational fears?

Post by staythecourse » Fri Sep 08, 2017 1:57 pm

Great I wasn't worried about either until you mentioned it. Now I have another set of anxieties to add to my ever growing list. :D

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Earl Lemongrab
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Re: Irrational fears?

Post by Earl Lemongrab » Sat Sep 09, 2017 1:12 pm

People choose what they worry about. Very few, for instance, worry about getting struck by debris thrown up on the highway while driving. Yet that is a very real, although unlikely, danger. Every year it happens to multiple people, with consequences all the way up to death. Yet almost no one spends the money to get an armored windshield installed.

I worry about the items you mention about as much as I worry about stuff flying through my windshield, that is not much at all.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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TD2626
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Re: Irrational fears?

Post by TD2626 » Sat Sep 09, 2017 2:42 pm

I think that it's very reasonable to think that one could, over the short term, loose access to their assets - that the assets would be temporarily frozen or lost, or that things could be in limbo, etc. However, it is fairly unreasonable to think that a substantial sum in the end - it could take weeks, even months, for things to get straightened out. Lots of stress, headaches, phone calls, etc. But in the end I think it would be very likely that issues would be resolved fairly. There is never any 100% certainly, though - anything's possible. One may want to read this article https://www.bogleheads.org/wiki/Vanguar ... custodians and previous forum discussions. If it's really preventing sleeping well at night, having a similar fund at another institution (with another login, so one wouldn't get everything hacked at once) is likely reasonable. (For example, the S&P 500 index funds at Vanguard and Fidelity are for most practical purposes equivalent).

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blueblock
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Re: Irrational fears?

Post by blueblock » Sat Sep 09, 2017 5:50 pm

Do you have fears about using paper money, worrying that it isn't worth the paper it's printed on? :twisted:

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nisiprius
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Re: Irrational fears?

Post by nisiprius » Sat Sep 09, 2017 6:10 pm

Strange fits of passion have I known,
And I will dare to tell--
But in the forum's ear alone--
What once to me befell.

I checked my money every day,
And watched it close and well;
I entered it, the careful way,
In every spreadsheet cell.

At 3 a.m. one rainy night,
A thought came to my head;
I logged into the Vanguard site,
My brain was full of dread.

What black and wayward thoughts can slide
Into the mind at dawn!
"O mercy," to myself I cried,
"If all my money's gone!"

--William Wordsworth (adapted)

(Original)
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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SimpleGift
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Re: Irrational fears?

Post by SimpleGift » Sat Sep 09, 2017 7:31 pm

^^^ Every now and then, nisiprius, you come up with such a brilliant, original post that, as a Forum member, I feel we are not deserving. Thanks!
Cordially, Todd

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