Trying to decide between Vanguard and Betterment for long term holdings
Trying to decide between Vanguard and Betterment for long term holdings
If I had $10,000 saved up, which would be wiser? Investing it in Betterment.com - go heavy on stocks ETFs minimal bonds (with a .25% annual fee). Or putting all $10,000 into the VTSAX fund at Vanguard with .05% in annual fees.
I realize Betterment's fees are on top of the Vanguard ETF's they use. However, does Betterment, with Tax Loss Harvesting, and other options, make my money "work harder" for me than simply having it sit in VTSAX?
I realize Betterment's fees are on top of the Vanguard ETF's they use. However, does Betterment, with Tax Loss Harvesting, and other options, make my money "work harder" for me than simply having it sit in VTSAX?
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Re: Trying to decide between Vanguard and Betterment for long term holdings
What's wrong with a life-strategy fund?
Rick Ferri
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Re: Trying to decide between Vanguard and Betterment for long term holdings
The Life Strategy funds are good, but they have Long Term and Short Term Capital Gains Distributions that I don't see with VTSAX. Plus their fees are 0.14%. I had looked at them, but thought they seemed comparable to the Betterment offerings.Rick Ferri wrote:What's wrong with a life-strategy fund?
Rick Ferri
Re: Trying to decide between Vanguard and Betterment for long term holdings
This! TLH is just tax deferment. After some gains, you hopefully will never worry about losses from your basis. Take the .25 difference of $25+ for the next 30 years and run. That's $750+ on $10k, $7500+ on $100k, and up from there!Jake-R wrote:putting all $10,000 into the VTSAX
Re: Trying to decide between Vanguard and Betterment for long term holdings
The problem with the Robo advisers that use Vanguard products is that their TLH may create "Wash Sale" complications if you hold the same, or similar securities, in accounts of your own outside the Robo world. The same issues apply to the "alternate" funds Robos use to accomplish TLH.
The closest helping hand is at the end of your own arm.
Re: Trying to decide between Vanguard and Betterment for long term holdings
Go with vanguard. Even if you like Betterment's allocations today they could change the mix to something you don't agree with later and it will be a tax nightmare trying to unwind it.
Re: Trying to decide between Vanguard and Betterment for long term holdings
Vanguard.
Learn to TLH yourself and don't do it until there is a real market crash. You can bank years' worth of losses in a good crash.
Learn to TLH yourself and don't do it until there is a real market crash. You can bank years' worth of losses in a good crash.
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Re: Trying to decide between Vanguard and Betterment for long term holdings
I agree with this - these are services, not investment companies. There is a big difference as these can be bought perhaps easier because they do not have any underlying investments of it's own. In a taxable account that can be a big deal. In a tax advantaged account - I agree a LS fund at VG is what I prefer - JMO though...rmelvey wrote:Go with vanguard. Even if you like Betterment's allocations today they could change the mix to something you don't agree with later and it will be a tax nightmare trying to unwind it.
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Re: Trying to decide between Vanguard and Betterment for long term holdings
I would consider an all in one Target or Lifestrategy fund from Vanguard.
John C. Bogle: “Simplicity is the master key to financial success."
Re: Trying to decide between Vanguard and Betterment for long term holdings
Are people suggesting life strategy funds because OP said "long term holdings"? At what point should the general 3-fund portfolio be used as opposed to LS fund?
Re: Trying to decide between Vanguard and Betterment for long term holdings
I guess LS is being suggested because it's more comparable to Betterment (versus just VTSAX)?TexasEng wrote:Are people suggesting life strategy funds because OP said "long term holdings"? At what point should the general 3-fund portfolio be used as opposed to LS fund?
I like set it and forget it funds and roboadvisors for tax deferred accounts.
I don't like all in one funds and roboadvisors for taxable accounts because 1) you cannot add to or withdraw from a specific asset class 2) if your needs or circumstances change, you have to realize gains to get out. I finally got everything out of Betterment and into a 3 fund at Vanguard thanks to the recent dips.
Re: Trying to decide between Vanguard and Betterment for long term holdings
$10,000.00 is chump change today per investing, buying a car , Etc. don't concern yourself with " tax harvesting," it ain't worth the effort and backfires many times say experts. A Life-Strategy fund by the Vanguard Group is the better option for you, in my laymans opinion. Rick Ferri, I see, recommends it also. That, to me, says it all!
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Re: Trying to decide between Vanguard and Betterment for long term holdings
I thought there was an annual limit to how much you can take on a 1040 - going on memory isn't it (a paltry) 3K max/year, and you have to roll over the rest to following years?retiredjg wrote:Vanguard.
Learn to TLH yourself and don't do it until there is a real market crash. You can bank years' worth of losses in a good crash.
Re: Trying to decide between Vanguard and Betterment for long term holdings
I like the lifestrategy fund idea too, though don't necessarily pick the most aggressive one. I would estimate that not much more than 15% of the population could watch the growth version (~80% equity) go through a 2000-2003 scenario, and not flinch. It's more important to pick one you'd stick with during the worst of times, than to simply pick with one with the highest estimated long-term return (which would always be the one with the most equities).
30% equities is more my speed, which is why I'd probably go with Target retirement income even if I'm not retired
I prefer just doing more of the work myself (e.g. saving more), than watching my portfolio fluctuate by double digits on a frequent basis, but that's just me.
30% equities is more my speed, which is why I'd probably go with Target retirement income even if I'm not retired

Last edited by azanon on Wed Mar 16, 2016 10:59 am, edited 1 time in total.
Re: Trying to decide between Vanguard and Betterment for long term holdings
Vanguard. 

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: Trying to decide between Vanguard and Betterment for long term holdings
I am going to use Vanguard.
60% - VTSAX
40% - VLGSX
60% - VTSAX
40% - VLGSX
Re: Trying to decide between Vanguard and Betterment for long term holdings
Jake-R wrote:I am going to use Vanguard.
60% - VTSAX
40% - VLGSX
If it's not too late, VSMGX is your ticker. For about $5 more/year they're going to rebalance for you on the fly. That's a great deal!
Re: Trying to decide between Vanguard and Betterment for long term holdings
There is no limit to how much of a loss you can realize. For example, during a crash, people might bank $100k of losses. Or more.azanon wrote:I thought there was an annual limit to how much you can take on a 1040 - going on memory isn't it (a paltry) 3K max/year, and you have to roll over the rest to following years?retiredjg wrote:Learn to TLH yourself and don't do it until there is a real market crash. You can bank years' worth of losses in a good crash.
But as for using the losses, yes, it is $3k a year. However, I don't know if that is per person or per return cause I don't do this (no taxable account).
But in addition to that $3k a year reduction in taxes, you now have carryover losses that will offset any realized gains in the future. In other words, if you want to make changes in taxable but have unrealized gains you don't want to pay taxes on, you have those losses banked that will offset gains. This gives you more flexibility in working with your taxable account.
My point is that it is not necessary to do the little tax loss harvests that the robos like Betterment are doing for people constantly. Every few years, the market is going to give you an opportunity to bank some big losses that you can use for several years. No need to deal with all the buying and selling done by the robos.
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Re: Trying to decide between Vanguard and Betterment for long term holdings
Switched to VSMGX. That is a good dealazanon wrote:Jake-R wrote:I am going to use Vanguard.
60% - VTSAX
40% - VLGSX
If it's not too late, VSMGX is your ticker. For about $5 more/year they're going to rebalance for you on the fly. That's a great deal!
