Unsure of my Roth IRA

[mamani]

My dad started me on a Roth IRA with Dodge & Cox, and I've been contributing to it for over 15 years now. Recently, I've begun doing more research on investing with low cost index funds. I currently have Roth IRA investments in DODGX/stock, DODFX/international, DODBX/balanced, and DODIX/income funds. They have all been good investments, but the expense ratios are .51%, .62%, .51%, and .41%. Based on what I've read, having low expense ratios and turn-over, should I / can I switch to a new investment company for my Roth IRA?

[RetirementClass2021]

My dad started me on a Roth IRA with Dodge & Cox, and I've been contributing to it for over 15 years now. Recently, I've begun doing more research on investing with low cost index funds. I currently have Roth IRA investments in DODGX/stock, DODFX/international, DODBX/balanced, and DODIX/income funds. They have all been good investments, but the expense ratios are .51%, .62%, .51%, and .41%. Based on what I've read, having low expense ratios and turn-over, should I / can I switch to a new investment company for my Roth IRA?

If you want to move your Roth to Fidelity, Vanguard or Schwab give one of them a call and they will walk you through the transfer procedure. You then can convert you present funds into funds of your choice.

[retired@50]

My dad started me on a Roth IRA with Dodge & Cox, and I've been contributing to it for over 15 years now. Recently, I've begun doing more research on investing with low cost index funds. I currently have Roth IRA investments in DODGX/stock, DODFX/international, DODBX/balanced, and DODIX/income funds. They have all been good investments, but the expense ratios are .51%, .62%, .51%, and .41%. Based on what I've read, having low expense ratios and turn-over, should I / can I switch to a new investment company for my Roth IRA?

Welcome to the forum.

Generally speaking, yes, you can switch investment companies.

Is the current account held directly with Dodge & Cox?

If so, you can call your NEW investment company (also known as a custodian) and ask for the account to be transferred in-kind. This will keep your current funds in place during the transfer. Then, once you have the account transferred, you can sell what you don't like, and use the proceeds to buy what you'd prefer to own in your Roth IRA.

Whether or not you "should" do this is up to you.

Are you paying any fees besides the expense ratios, like to an adviser?

Regards,

[retire2022]

op

Yes you can rollover your Dodge & Cox Roth IRA account to another custodian (Fidelity, Vanguard, Charles Schwab or any of them) see IRS chart:

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

[arcticpineapplecorp.]

My dad started me on a Roth IRA with Dodge & Cox, and I've been contributing to it for over 15 years now. Recently, I've begun doing more research on investing with low cost index funds. I currently have Roth IRA investments in DODGX/stock, DODFX/international, DODBX/balanced, and DODIX/income funds.

welcome to the group.

1. why this particular mix of investments? Seems to me you have two stock funds (stock and international), a bond fund (income) and a mix of stock and bond fund (balanced). Usually people who hold a balanced fund want an all in one fund so they don't have to rebalance their portfolio between their stock funds and bond funds as they get off kilter. So why hold individual stock and bond funds and then also hold a balanced fund in addition?

2. Not sure what else you have, but if you have tax deferred account (pretax 401k, etc) bonds are better in those accounts, which allows for stock in the Roth (rather than bond and/or balanced which contains bonds). You want the most growth in the Roth (which would be stocks) and bonds would be better in tax deferred accounts.

3. We don't know your overall allocation currently vs. desired and what else you might have in the mix, so you might want to edit your post according to Asking Portfolio Questions

[GerryL]

My dad started me on a Roth IRA with Dodge & Cox, and I've been contributing to it for over 15 years now. Recently, I've begun doing more research on investing with low cost index funds. I currently have Roth IRA investments in DODGX/stock, DODFX/international, DODBX/balanced, and DODIX/income funds. They have all been good investments, but the expense ratios are .51%, .62%, .51%, and .41%. Based on what I've read, having low expense ratios and turn-over, should I / can I switch to a new investment company for my Roth IRA?

My very first mutual fund was Dodge&Cox Stock. I chose it for my traditional IRA (before Roth was invented) because of the relatively low ER. Low for a managed fund. I never added any new $$$ to the IRA. It did very well over the years and was still going gangbusters even through 2009. Gradually I learned more about investing and about index funds and built up the 401k and Roth accounts that became available to me.

By the time I retired 20+ years after starting with DODGX, I finally bit the bullet and sold it all to invest in Vanguard index funds in order to consolidate and simplify my portfolio. It was a hard decision to make since it had done so well, and the ER wasn't outrageous when compared to so many other actively managed funds. I've never gone back to figure out whether I might have done better by leaving it in with Dodge&Cox. (What's the point?)

Continue educating yourself about investing and then decide what you want to do. For example, all index or a combination of index and actively managed? Once you are comfortable with your decision, execute it. Then commit. Avoid the temptation to back test to see if you would have more money if you could change the past. Avoid the temptation to keep tweaking. Good luck in your investing future.

[mamani]

Thank you! This was all great advice. Once I rollover my account to another custodian, should I sell and buy new index funds gradually? Are there increments and amounts that would be better? I plan to keep it simple and switch to 70% stock / 30% bond index funds that I can essentially leave alone till I retire.

[Wiggums]

Thank you! This was all great advice. Once I rollover my account to another custodian, should I sell and buy new index funds gradually? Are there increments and amounts that would be better? I plan to keep it simple and switch to 70% stock / 30% bond index funds that I can essentially leave alone till I retire.

No tax implications for selling within a Roth. Money that’s already in the market, I would sell what you don’t want, and buy what you do want to hold right away.

Since the Roth space is so valuable, I hold only the Vanguard total Stock market there. a fund that is likely to have the most growth potential. (Since it grows tax free).

[retire2022]

Thank you! This was all great advice. Once I rollover my account to another custodian, should I sell and buy new index funds gradually? Are there increments and amounts that would be better? I plan to keep it simple and switch to 70% stock / 30% bond index funds that I can essentially leave alone till I retire.

As discussed above “articpineapplecorp” posted a link: asking questions, if you go back to your original post, use pencil icon and edit in your particulars more specific responses to your situation could be addressed.

Asking questions:

viewtopic.php?f=1&t=6212

[Doctor Rhythm]

Thank you! This was all great advice. Once I rollover my account to another custodian, should I sell and buy new index funds gradually? Are there increments and amounts that would be better? I plan to keep it simple and switch to 70% stock / 30% bond index funds that I can essentially leave alone till I retire.

You ask a common question in this forum: should I do transaction X all at once (sometimes called lump sum) or incrementally (sometimes called dollar cost averaging)? Purely from a financial standpoint, lump sum is more likely to be superior, but many people have a strong psychological aversion to loss and would be happier with dollar cost averaging.

In your case, it doesn’t sound like you’re making huge changes to asset classes if (as I’m assuming) your current allocation is already close to your 70/30 goal. You are therefore swapping stocks for stocks, fixed income for fixed income. Thus, there’s likely little risk for major loss if you do everything at once, so I’d move all your money into the new low cost index funds immediately.

[tibbitts]

Thank you! This was all great advice. Once I rollover my account to another custodian, should I sell and buy new index funds gradually? Are there increments and amounts that would be better? I plan to keep it simple and switch to 70% stock / 30% bond index funds that I can essentially leave alone till I retire.

D&C funds were pretty popular around here until recently and I'm not seeing any reason for you to rush to move anything. You dad might even have bought those funds after reading some Boglehead posts from back in the day. Even Bogle had good things to say about D&C funds. You could do a lot worse than to just leave the funds as-is, but if you want to move them, that's fine too.

[ruralavalon]

Welcome to the forum .

My dad started me on a Roth IRA with Dodge & Cox, and I've been contributing to it for over 15 years now. Recently, I've begun doing more research on investing with low cost index funds. I currently have Roth IRA investments in DODGX/stock, DODFX/international, DODBX/balanced, and DODIX/income funds. They have all been good investments, but the expense ratios are .51%, .62%, .51%, and .41%. Based on what I've read, having low expense ratios and turn-over, should I / can I switch to a new investment company for my Roth IRA?

Yes, you can rollover this IRA to an IRA at a low cost index fund provider like Vanguard, Fidelity or Schwab.

In my opinion any one of the three would be a good choice.

By the way Dodge and Cox funds are excellent funds, even though actively managed. Morningstar (9/6/2019), "Be Thankful That You Don't Compete Against Vanguard", link. "After reading this column, Morningstar’s Russ Kinnel informed me that Jack Bogle told him that Dodge & Cox was his favorite fund family. “My God, they’re boring,” said Bogle. You can’t ask for a higher fund-family compliment than that."

Nevertheless I prefer index funds from Vanguard.

Thank you! This was all great advice. Once I rollover my account to another custodian, should I sell and buy new index funds gradually? Are there increments and amounts that would be better? I plan to keep it simple and switch to 70% stock / 30% bond index funds that I can essentially leave alone till I retire.

I suggest making the change all at once. I see no benefit to buying your new funds gradually.

[the_wiki]

Dodge and Cox are pretty good funds. I wish the fees were lower, but they have covered their fees over the last 15 years that you've owned them. Here's an 80/20 3-fund portfolio comparing Vanguard and Dodge and Cox with after fee returns:

https://www.portfoliovisualizer.com/bac ... tion6_2=20

If you go back a little further, they significantly outperformed during the early days of the 2000-2003 recession so the 20 year return is much better than vanguard.

So I would not be in a rush to switch out. And sometimes in the course of seeking fee optimization, you end up "changing horses" at the wrong point in time or it introduces new behavioral problems that cost you more in the long run. So make sure you watch for that. Going from having like 10 fund options to 10,000 can sometimes make you feel you need to have more complicated portfolio. If you do switch, keep it boring and simple with the same exact fund types you had before.

The one change I would make if you stay at D&C is the Balanced fund. You have both 3 seperate funds for US Stock, International Stock and Bonds, but then you also hold the Balanced fund. That Balanced fund just already holds US, International Stock, and Bonds. So you are basically investing in the same thing 2 ways. But holding both just makes it harder to manage your allocations and see what you are investing in, and probably means you have more in bonds than you want for your age. I would just pick one or the other and go either just all in on the Balanced fund, or sell it and spread the money across the 3 individual funds. Same goes I guess if you switched to Vanguard or whatever. Don't need both an all-in-one fund and separate funds, do one or the other.