Getting Started: USAA vs Vanguard?

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LA11
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Getting Started: USAA vs Vanguard?

Post by LA11 » Fri Jun 03, 2016 1:54 am

I'm a college student starting out investing my summer earnings and this site has been very helpful with how! I currently have my checking and savings with Navy Federal, along with a credit card (which I pay off monthly). For investing, I'd like to buy the standard Vanguard Total Stock Market Index Fund (VTSMX) and Bond Fund (VBMFX), along with Intl Total Stock and Bond. I am tempted to join USAA and purchase the Vanguard portfolios through them as I have eligibility through my parents and have only heard praises on their customer service, which seems to top Vanguard's in the postings I've read.

However, I have read concerns about (a) transaction fees involved in buying Vanguard through USAA and (b) not being able to buy Admiral shares through USAA (not applicable to me yet but hopefully soon). Although, USAA's fund marketplace does list Admiral shares, so getting some mixed signals there. This is where I'm a bit unsure of what to think/pick...

The bottom line: Does it matter if I become a USAA member vs buy straight from Vanguard? Why?

Thanks!

dbltrbl
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Re: Getting Started: USAA vs Vanguard?

Post by dbltrbl » Fri Jun 03, 2016 4:29 am

Buy straight from Vanguard. You are dealing directly. For the funds you suggest and your age, you do not need much customer service. You can still become a member of USAA for insurance or other services but buy Vanguard MFs directly.

red5
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Re: Getting Started: USAA vs Vanguard?

Post by red5 » Fri Jun 03, 2016 4:31 am

I don't exactly know if it matters or not. But consider using USAA for your banking and insurance needs and Vanguard for your investing needs. That is what I do and am happy with that.

b4real
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Re: Getting Started: USAA vs Vanguard?

Post by b4real » Fri Jun 03, 2016 4:58 am

red5 wrote:I don't exactly know if it matters or not. But consider using USAA for your banking and insurance needs and Vanguard for your investing needs. That is what I do and am happy with that.
+1
We've been doing this for more than 35 years.

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Cernel
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Re: Getting Started: USAA vs Vanguard?

Post by Cernel » Fri Jun 03, 2016 5:14 am

red5 wrote:I don't exactly know if it matters or not. But consider using USAA for your banking and insurance needs and Vanguard for your investing needs. That is what I do and am happy with that.
+2
This works for me, as well. I find USAA very good for my Insurance needs and Vanguard very good for my Investment needs.

Chris C
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Re: Getting Started: USAA vs Vanguard?

Post by Chris C » Fri Jun 03, 2016 5:23 am

+3

I use NFCU for all my banking, USAA for all my insurance, and Vanguard for investing. I've been very happy with this setup, and it's easy to transfer money between these institutions if needed.

retiredjg
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Re: Getting Started: USAA vs Vanguard?

Post by retiredjg » Fri Jun 03, 2016 8:34 am

Buy Vanguard through Vanguard. There would be some kind of transaction fee for each purchase if you buy at USAA. USAA does receive high praise for services other than investing though.

BogleBoogie
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Re: Getting Started: USAA vs Vanguard?

Post by BogleBoogie » Fri Jun 03, 2016 8:51 am

Cernel wrote:
red5 wrote:I don't exactly know if it matters or not. But consider using USAA for your banking and insurance needs and Vanguard for your investing needs. That is what I do and am happy with that.
+2
This works for me, as well. I find USAA very good for my Insurance needs and Vanguard very good for my Investment needs.
+4 (I included family!)

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Gort
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Re: Getting Started: USAA vs Vanguard?

Post by Gort » Fri Jun 03, 2016 9:06 am

Similar to others, this is what I do:
Investing: Vanguard
Banking: NFCU
Insurance: USAA.
All great companies and excellent customer service.

dbr
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Re: Getting Started: USAA vs Vanguard?

Post by dbr » Fri Jun 03, 2016 9:17 am

It would be a general rule that one should buy and hold Vanguard mutual funds at Vanguard.

However, if you are want to evaluate buying and holding such funds at USAA it is your homework assignment to actually look up the commission schedule for trading at USAA and evaluate the impact of that on your costs. Note that Vanguard funds can be purchased as mutual fund share classes or as ETF share classes (the commissions are different). Part of your homework would be to look up the expense ratios for Vanguard Admiral share classes and ETFs compared to investor level funds. Hint: A big factor in how this works out is how frequently you buy and sell and in what size lots. An investor making frequent purchases in small amounts would be killed on transaction costs which can be avoided by either trading at Vanguard or finding a broker that will offer an account with free trades for ETFs.

Disclaimer: I hold Vanguard funds and ETFs at brokers rather than at Vanguard, but I am retired and make few trades in larger lots. I am currently running a cost drag on the portfolio of about 0.02% due to trading and an overall cost drag of about 0.13%. I don't really have a motivation to eliminate that 0.02% by moving investments to Vanguard from places that are more than satisfactory otherwise. Anyway, one of those places is the directed brokerage account in a 410K where there is no choice to be had.

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Runaway
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Re: Getting Started: USAA vs Vanguard?

Post by Runaway » Fri Jun 03, 2016 10:13 am

+4

USAA for insurance and banking, Vanguard for investing.

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ruralavalon
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Re: Getting Started: USAA vs Vanguard?

Post by ruralavalon » Fri Jun 03, 2016 10:55 am

Runaway wrote:+4

USAA for insurance and banking, Vanguard for investing.
+5, isn't unanimity nice :D .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

navyitaly
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Re: Getting Started: USAA vs Vanguard?

Post by navyitaly » Fri Jun 03, 2016 11:12 am

If you want to use USAA for funds..consider Fidelity since they use the Fidelity system...FSTMX is a suitable alternative and you prob won't notice a difference in return. FSTMX is the Fidelity Total Stock Market Fund and the ER is lower (.10 vs .16). Most Fidelity funds are fee free with USAA.

KelKapel
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Re: Getting Started: USAA vs Vanguard?

Post by KelKapel » Fri Jun 03, 2016 1:38 pm

red5 wrote:I don't exactly know if it matters or not. But consider using USAA for your banking and insurance needs and Vanguard for your investing needs. That is what I do and am happy with that.
+6
I have been with USAA for over 10 years and they are fantastic. I JUST moved an IRA from USAA to Vanguard because its cheaper. I highly recommend USAA for all insurance though. Their checking is great as well.

Topic Author
LA11
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Re: Getting Started: USAA vs Vanguard?

Post by LA11 » Fri Jun 03, 2016 3:26 pm

Thanks all! Very helpful and yes, love the unanimity! :thumbsup

dbr
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Re: Getting Started: USAA vs Vanguard?

Post by dbr » Fri Jun 03, 2016 3:31 pm

LA11 wrote:Thanks all! Very helpful and yes, love the unanimity! :thumbsup
Actually if one takes transaction costs out of the picture I would probably place several possible brokers ahead of Vanguard to hold Vanguard funds. In fact being relatively unaffected by transaction costs due to personal situation, my investments are in fact at a few different brokers that are not Vanguard. There are certainly other people on this forum for whom the same is true.

retiredjg
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Re: Getting Started: USAA vs Vanguard?

Post by retiredjg » Fri Jun 03, 2016 3:43 pm

I'll modify my answer a little.

If you want to use Vanguard mutual funds, Vanguard is the place to hold them. I can't think of any exception to that (except in your 401k/403b) although there might be one. If you want to use Vanguard ETFs, there is a possibility of free trades at at least one place, maybe more. That would be perfectly adequate as well.

SGM
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Re: Getting Started: USAA vs Vanguard?

Post by SGM » Fri Jun 03, 2016 3:51 pm

I have Vanguard MF with Vanguard only to get the admiral shares and to have no transaction costs. When I have used brokerages I used Vanguard ETFs.

USAA has some good insurance and banking products.

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