Any problem opening fund "Investor", then building to "Admiral"?

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JerryinPA
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Any problem opening fund "Investor", then building to "Admiral"?

Post by JerryinPA » Wed Jun 13, 2018 2:33 pm

Is there any problem opening a fund as "Investor" shares, then over time adding to it as funds become available so that it reaches "Admiral" shares level after a few years?

This would contrast a current opening on the Investor level as opposed to waiting 1 to 3 years to get the necessary funding to open it as "Admiral".

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Pajamas
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by Pajamas » Wed Jun 13, 2018 2:36 pm

No, it's the same fund with slightly higher fees. It should convert to Admiral automatically when you reach the minimum amount. Here's a recent discussion on the topic:

viewtopic.php?t=244120

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knpstr
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by knpstr » Wed Jun 13, 2018 2:36 pm

Of course not.

When you reach the $10,000 level (or any other level that admiral is at) the shares will be exchanged for admiral shares.
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JoMoney
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by JoMoney » Wed Jun 13, 2018 2:38 pm

I'm not aware of any "problem" doing that. I think it's an ideal way to do it.... average in over time.
Don't let the slightly higher expense ratio of the investor class funds discourage you. It's likely even smaller in dollar terms then the lower % ER on a high balance in Admiral shares. Once you've reached the right dollar amount, Vanguard will convert it to the Admiral class without any taxable event.
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WhiteMaxima
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by WhiteMaxima » Wed Jun 13, 2018 2:41 pm

Not just fees. The admiral fund is behaved like an ETF with minimal trade. So lower you cap gain tax. You should build on Admiral fund if money allows.

JerryinPA
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by JerryinPA » Wed Jun 13, 2018 2:45 pm

Thanks for answering an obviously rookie question!

sport
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by sport » Wed Jun 13, 2018 2:47 pm

WhiteMaxima wrote:
Wed Jun 13, 2018 2:41 pm
Not just fees. The admiral fund is behaved like an ETF with minimal trade. So lower you cap gain tax. You should build on Admiral fund if money allows.
This is not correct. The admiral shares and investor shares are both shares in the same fund, with the same advantages and disadvantages. The only difference is the lower fees for admiral shares.

goblue100
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by goblue100 » Wed Jun 13, 2018 2:48 pm

I don't believe the exchange is automatic. As I recall, shortly after I met the balance requirement they sent me a notice asking me if I wanted to make the exchange.
Some people are immune to good advice. - Saul Goodman

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jhfenton
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by jhfenton » Wed Jun 13, 2018 2:49 pm

Opening a fund as Investor Shares and then building to Admiral Shares is a great way to go.

A conversion button will appear next to a fund on the morning after it hits the Admiral Shares threshold ($10K for most index funds and $50K for active funds). Vanguard will eventually convert a fund automatically, but you can initiate it yourself. That way, if the fund quickly dips back under the threshold due to market fluctuations, they'll still be Admiral Shares.
WhiteMaxima wrote:
Wed Jun 13, 2018 2:41 pm
Not just fees. The admiral fund is behaved like an ETF with minimal trade. So lower you cap gain tax. You should build on Admiral fund if money allows.
All share classes of a fund at Vanguard have the same tax efficiency as the other share classes. In most cases, Investor Shares, Admiral Shares, and ETF shares are share classes of the exact same fund.

swimfin
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by swimfin » Wed Jun 13, 2018 2:53 pm

https://investor.vanguard.com/investing/account-fees

Read link above. Synopsis: $20 fee annually for each fund, unless you sign up for e delivery.

mouses
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by mouses » Wed Jun 13, 2018 3:12 pm

swimfin wrote:
Wed Jun 13, 2018 2:53 pm
https://investor.vanguard.com/investing/account-fees

Read link above. Synopsis: $20 fee annually for each fund, unless you sign up for e delivery.
Only if the account balance is less than $10,000.

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nisiprius
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by nisiprius » Wed Jun 13, 2018 3:20 pm

It's easy. Yes, Vanguard "converts" Investor shares to Admiral automatically, but they can be slow about doing it. There is also a link for doing the conversion, that will show on the website when the shares are eligible for conversion, so you can do it yourself instead of waiting for them.

Their description
You may be converted automatically

We periodically review your Investor Shares mutual fund investments to see if you're eligible for Admiral Shares. If you are, we'll give you plenty of time to opt out before we convert you automatically.
You should find out how to avoid the $20 annual account fee. Admiral shares are nice but, honestly, if you do the math--it's not really all that important. It's sort of "buy a thousand, get one free."
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.

The Wizard
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by The Wizard » Wed Jun 13, 2018 3:49 pm

Apparently, based on my recent experience, eligible Investor class funds are upgraded to Admiral automatically on a quarterly basis.
So you might be waiting a month or two if waiting for Vanguard to do it.
But you can do the exchange yourself once you get over the threshold, $10k or whatever...
Attempted new signature...

omgbirdman
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by omgbirdman » Wed Jun 13, 2018 3:56 pm

If in a retirement account, you could purchase the equivalent ETF (which should have the same ER as Admiral shares) and then sell and buy into the fund once you reach 10k.

blevine
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by blevine » Thu Jun 14, 2018 7:00 am

Why not just buy ETF and keep it ?
There are many funds with no etf class, but if so, no reason to go with investor or admiral.

UpperNwGuy
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by UpperNwGuy » Thu Jun 14, 2018 7:30 am

Some forum members have reported here that Vanguard has unilaterally changed the cost basis of their shares from SpecID to Average Cost as part of the conversion from Investor Shares to Admiral Shares, and it has been a bit of a chore to convince Vanguard to restore the shares to SpecID. Watch that aspect closely when you make the conversion.

goingup
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by goingup » Thu Jun 14, 2018 8:53 am

omgbirdman wrote:
Wed Jun 13, 2018 3:56 pm
If in a retirement account, you could purchase the equivalent ETF (which should have the same ER as Admiral shares) and then sell and buy into the fund once you reach 10k.
The cost difference is so tiny it seems unnecessary to start with ETFs then transition to Admiral shares. For a $3,000 holding of VTI (ER.04) vs VTSMX (Investor shares ER .14) the annual difference is $3. I find using mutual funds (rather than ETFs) easy because of being able to set up automatic purchases in whole dollar amounts at Vanguard. ETFs have many great features, but hands-off automation is not what they're about.

Starting with Investor shares is great, and the way many of us started at Vanguard. Do sign up for "e-delivery" so that account fees are waived. :beer

sport
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by sport » Thu Jun 14, 2018 9:25 am

blevine wrote:
Thu Jun 14, 2018 7:00 am
Why not just buy ETF and keep it ?
There are many funds with no etf class, but if so, no reason to go with investor or admiral.
ETFs require dealing with spreads, whole shares only, limit orders, market orders, premiums, discounts, etc. Mutual funds are simple to buy and sell. Just enter the dollar amount you want to transact. I am an experienced mutual fund investor and I have no need or desire to use an ETF. ETFs can be useful if you want to hold Vanguard funds at another broker. However, if you hold Vanguard funds at Vanguard, ETFs are a needless complication.

blevine
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by blevine » Thu Jun 14, 2018 9:39 am

Compared to most things I do in life, buying/selling ETFs are among the simpler tasks.
Maybe making cereal for breakfast is easier, but then again there are so many choices of cereal, how do you pick ?

sport
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by sport » Thu Jun 14, 2018 10:05 am

blevine wrote:
Thu Jun 14, 2018 9:39 am
Compared to most things I do in life, buying/selling ETFs are among the simpler tasks.
Maybe making cereal for breakfast is easier, but then again there are so many choices of cereal, how do you pick ?
Sure, but we are not comparing ETFs with cereal. We are comparing ETFs with mutual funds.

UpperNwGuy
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by UpperNwGuy » Thu Jun 14, 2018 10:43 am

sport wrote:
Thu Jun 14, 2018 9:25 am
blevine wrote:
Thu Jun 14, 2018 7:00 am
Why not just buy ETF and keep it ?
There are many funds with no etf class, but if so, no reason to go with investor or admiral.
ETFs require dealing with spreads, whole shares only, limit orders, market orders, premiums, discounts, etc. Mutual funds are simple to buy and sell. Just enter the dollar amount you want to transact. I am an experienced mutual fund investor and I have no need or desire to use an ETF. ETFs can be useful if you want to hold Vanguard funds at another broker. However, if you hold Vanguard funds at Vanguard, ETFs are a needless complication.
Well stated! I much prefer mutual funds for the reasons given above. And I eagerly await the day when Vanguard’s patent expires so Schwab, Fidelity, and others can make their ETFs a share class of their mutual funds. Is it 2022?

Glockenspiel
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by Glockenspiel » Thu Jun 14, 2018 10:56 am

Nope. I did that with all my funds. Started with $3k and built it up to $10k over time. Now they all have more than $10k so I've switched them all to Admiral.

itsgot8
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by itsgot8 » Thu Jun 14, 2018 11:39 am

mouses wrote:
Wed Jun 13, 2018 3:12 pm
swimfin wrote:
Wed Jun 13, 2018 2:53 pm
https://investor.vanguard.com/investing/account-fees

Read link above. Synopsis: $20 fee annually for each fund, unless you sign up for e delivery.
Only if the account balance is less than $10,000.
And that only applies if you are not signed up for e-delivery.

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ruralavalon
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by ruralavalon » Thu Jun 14, 2018 12:26 pm

omgbirdman wrote:
Wed Jun 13, 2018 3:56 pm
If in a retirement account, you could purchase the equivalent ETF (which should have the same ER as Admiral shares) and then sell and buy into the fund once you reach 10k.
Why bother. The impact of the expense ratio difference between Investor Shares and ETF shares on a $3k investment is just $3 per year.

Just go ahead and start with Investor Shares.
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Chadnudj
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by Chadnudj » Thu Jun 14, 2018 12:31 pm

goblue100 wrote:
Wed Jun 13, 2018 2:48 pm
I don't believe the exchange is automatic. As I recall, shortly after I met the balance requirement they sent me a notice asking me if I wanted to make the exchange.
Same here....which raises an interesting question:

When I chose to convert from Investor to Admiral Shares (after I had accumulated enough to be sure it won't dip down below that level again), my cost basis (I do Specific ID) was lost for the Investor Share classes. I'm sure it's tracked somewhere by Vanguard, but I can't see it. Anyone else have this problem?

goblue100
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Re: Any problem opening fund "Investor", then building to "Admiral"?

Post by goblue100 » Thu Jun 14, 2018 12:54 pm

I'm pretty sure the cost basis carries over. For instance, if I go to personal performance and select only one fund that was converted a year ago, the chart goes back to 2012. All of that history was for the investor shares. If you go to the cost basis page, the investor fund is not there anymore, but the cost basis is now tracked in the admiral fund. This is a good thing, because otherwise you would have a capital gain or loss when the transfer occurs.


https://investor.vanguard.com/mutual-fu ... ral-shares
"What happens during the conversion?
We'll move all of the money you have in an eligible Investor Shares mutual fund into the same fund's lower-cost Admiral™ Shares. You'll receive a transaction confirmation once the conversion is complete.
In addition, your cost basis information and account options will carry over. (You'll receive a separate confirmation for your account options.)"
Some people are immune to good advice. - Saul Goodman

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