Taxable Investment Advice - ETF vs. Admiral Shares?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
TheDDC
Posts: 14
Joined: Mon Jan 08, 2018 11:11 am

Taxable Investment Advice - ETF vs. Admiral Shares?

Post by TheDDC » Wed Jan 10, 2018 11:06 pm

Hello all! Thank you for the advice in the Ameriprise liquidation thread.

I am looking to fund a separate taxable account with Vanguard. I notice the ERs between ETFs and Admiral Shares are basically the same with the Vanguard funds. I am leaning toward ETFs simply because they seem to be a bit more liquid and trade similar to that of a stock, both of which are preferable qualities for me. I am looking more for income from this account, but I am obviously thinking long term. It seems like ETFs offer the best of both worlds. Is there any advantage to an admiral fund for my case?

Thanks guys!

-TheDDC

MNGopher
Posts: 198
Joined: Tue Jun 16, 2015 1:44 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by MNGopher » Wed Jan 10, 2018 11:16 pm

There isn't a huge difference, but I prefer the admiral shares mutual funds. I like to buy lots in even dollar amounts and I'm saving for retirement so I don't have a need for intra-day trading.

mega317
Posts: 1475
Joined: Tue Apr 19, 2016 10:55 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by mega317 » Thu Jan 11, 2018 12:01 am

If you have a specific preference for stock-like trading (why?) then there is probably no advantage to a mutual fund that would outweigh that. Automatic investment?

TheDDC
Posts: 14
Joined: Mon Jan 08, 2018 11:11 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by TheDDC » Thu Jan 11, 2018 12:09 am

mega317 wrote:
Thu Jan 11, 2018 12:01 am
If you have a specific preference for stock-like trading (why?) then there is probably no advantage to a mutual fund that would outweigh that. Automatic investment?
Right. So then the "liquidity" aspect is appealing in case I would need to dip into the fund and find myself short of the $10,000 needed to keep my position in an admiral share. I don't see that situation happening, mind you, but anything could happen in the case of an immediate family emergency type of expense.

Since the brokerage account is being funded from a savings account with built up cash assets I really don't see myself doing anything automatic for my taxable fund.

Thanks!

-TheDDC

mega317
Posts: 1475
Joined: Tue Apr 19, 2016 10:55 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by mega317 » Thu Jan 11, 2018 12:13 am

Just be clear that the max difference in expenses between investor shares and ETFs (at $9,999) is 10 dollars a year.

User avatar
CyclingDuo
Posts: 1103
Joined: Fri Jan 06, 2017 9:07 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by CyclingDuo » Thu Jan 11, 2018 12:14 am

TheDDC wrote:
Wed Jan 10, 2018 11:06 pm
Hello all! Thank you for the advice in the Ameriprise liquidation thread.

I am looking to fund a separate taxable account with Vanguard. I notice the ERs between ETFs and Admiral Shares are basically the same with the Vanguard funds. I am leaning toward ETFs simply because they seem to be a bit more liquid and trade similar to that of a stock, both of which are preferable qualities for me. I am looking more for income from this account, but I am obviously thinking long term. It seems like ETFs offer the best of both worlds. Is there any advantage to an admiral fund for my case?

Thanks guys!

-TheDDC
The ETF's are fine - and you get Admiral pricing.

User avatar
saltycaper
Posts: 2378
Joined: Thu Apr 24, 2014 8:47 pm
Location: The Tower

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by saltycaper » Thu Jan 11, 2018 12:16 am

TheDDC wrote:
Wed Jan 10, 2018 11:06 pm

I am leaning toward ETFs simply because they seem to be a bit more liquid and trade similar to that of a stock, both of which are preferable qualities for me.
If anything, one could argue the mutual fund is more liquid, as the trade will settle more quickly--one day versus two I believe.
TheDDC wrote:
Wed Jan 10, 2018 11:06 pm

So then the "liquidity" aspect is appealing in case I would need to dip into the fund and find myself short of the $10,000 needed to keep my position in an admiral share.
I don't think liquidity is the proper term here. You can sell the mutual fund too if you need the funds. There isn't a liquidity issue because you hold the mutual fund. Also, I would not worry about having to use investor shares for a while. The cost is negligible IMO for balances that do not qualify for admiral shares.
Quod vitae sectabor iter?

TheDDC
Posts: 14
Joined: Mon Jan 08, 2018 11:11 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by TheDDC » Thu Jan 11, 2018 12:30 am

saltycaper wrote:
Thu Jan 11, 2018 12:16 am
TheDDC wrote:
Wed Jan 10, 2018 11:06 pm

I am leaning toward ETFs simply because they seem to be a bit more liquid and trade similar to that of a stock, both of which are preferable qualities for me.
If anything, one could argue the mutual fund is more liquid, as the trade will settle more quickly--one day versus two I believe.
TheDDC wrote:
Wed Jan 10, 2018 11:06 pm

So then the "liquidity" aspect is appealing in case I would need to dip into the fund and find myself short of the $10,000 needed to keep my position in an admiral share.
I don't think liquidity is the proper term here. You can sell the mutual fund too if you need the funds. There isn't a liquidity issue because you hold the mutual fund. Also, I would not worry about having to use investor shares for a while. The cost is negligible IMO for balances that do not qualify for admiral shares.
You are indeed correct about settlement time on MFs versus ETFs... As per:

https://advisors.vanguard.com/VGApp/iip ... News083117

Thanks all!

-TheDDC

livesoft
Posts: 58387
Joined: Thu Mar 01, 2007 8:00 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by livesoft » Thu Jan 11, 2018 5:29 am

I recommend you try both mutual fund and an ETF in order to see which type matches your personality better. If you buy mutual fund shares of many (not all) vanguard mutual funds, then you can convert in a taxless way to ETF shares. But you cannot convert from ETF shares to Admiral shares without creating taxes if you have capital gain.

So please try both and tell us what you think of them.
This signature message sponsored by sscritic: Learn to fish.

TheDDC
Posts: 14
Joined: Mon Jan 08, 2018 11:11 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by TheDDC » Sat Jan 13, 2018 11:18 pm

livesoft wrote:
Thu Jan 11, 2018 5:29 am
I recommend you try both mutual fund and an ETF in order to see which type matches your personality better. If you buy mutual fund shares of many (not all) vanguard mutual funds, then you can convert in a taxless way to ETF shares. But you cannot convert from ETF shares to Admiral shares without creating taxes if you have capital gain.

So please try both and tell us what you think of them.
That's good to know. Thank you. Do I need to worry if I were to convert from Investor share to Admiral share? Is that conversion an easy process, done automatically, or would I need to involve an agent for that?

-TheDDC

spoonfork
Posts: 21
Joined: Fri Oct 13, 2017 9:16 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by spoonfork » Sun Jan 14, 2018 12:35 am

Once it meets the requirements for Admiral they'll switch it over eventually. You can also just click on a button that shows up next to the fund to upgrade.

TG2
Posts: 128
Joined: Sat Nov 25, 2017 6:50 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by TG2 » Sun Jan 14, 2018 1:35 am

One thing to keep in mind is that depending on where you have your account you may not be able to purchase Admiral shares. I was unable to buy them in my account, so had to buy ETF's instead.

It looks like the OP has his account with Vanguard so it shouldn't be a problem, but it may be for people with accounts elsewhere.

livesoft
Posts: 58387
Joined: Thu Mar 01, 2007 8:00 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by livesoft » Sun Jan 14, 2018 6:54 am

TheDDC wrote:
Sat Jan 13, 2018 11:18 pm
. Do I need to worry if I were to convert from Investor share to Admiral share? Is that conversion an easy process, done automatically, or would I need to involve an agent for that?
I don't understand the question. Why would you care or worry either way? The process could be not easy, not done automatically or involve an agent ... or none of those things and it shouldn't even matter to you.
This signature message sponsored by sscritic: Learn to fish.

TheDDC
Posts: 14
Joined: Mon Jan 08, 2018 11:11 am

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by TheDDC » Sun Jan 14, 2018 12:48 pm

livesoft wrote:
Sun Jan 14, 2018 6:54 am
TheDDC wrote:
Sat Jan 13, 2018 11:18 pm
. Do I need to worry if I were to convert from Investor share to Admiral share? Is that conversion an easy process, done automatically, or would I need to involve an agent for that?
I don't understand the question. Why would you care or worry either way? The process could be not easy, not done automatically or involve an agent ... or none of those things and it shouldn't even matter to you.
Over time I would like to take advantage of the lowest ER possible, so, yes, it would be something I would care about. I would prefer not to have to sell and repurchase to get the advantage.

-TheDDC

stan1
Posts: 5163
Joined: Mon Oct 08, 2007 4:35 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by stan1 » Sun Jan 14, 2018 12:51 pm

One advantage of ETFs: If you ever decide you want to move your holdings to another brokerage you can easily do so. Not true with Admiral shares of a mutual fund which must be held at Vanguard although you can convert to ETFs later. WIth tax advantaged accounts you can easily liquidate and buy something else. Not so with funds in a taxable account if you want to defer capital gains taxes. Taking a long term view in taxable is important.
Last edited by stan1 on Sun Jan 14, 2018 12:55 pm, edited 2 times in total.

livesoft
Posts: 58387
Joined: Thu Mar 01, 2007 8:00 pm

Re: Taxable Investment Advice - ETF vs. Admiral Shares?

Post by livesoft » Sun Jan 14, 2018 12:52 pm

As long as your Vanguard mutual funds are held at Vanguard, then you do not need worry about conversion from Investor to Admiral because there is no selling and repurchase involved. It may not happen automatically in a timely fashion and what someone like me calls easy may not be what someone like you calls easy.
This signature message sponsored by sscritic: Learn to fish.

Post Reply