Getting My Feet Wet With Vanguard

[Fishindude77]

I keep hearing Vanguard accounts brought up over and over on this and other forums, as well as from personal friends; solid company, easy to work with and low fees. Getting an account set up and giving it a shot.

Have some excess cash lying around that isn't doing much and need to put it to work. For starters I'm going to set up a gift account for each of my grandkids starting with about $10K each in a 60/40 stock bond fund. Will let their parents be the custodians, but we will still have the ability to add $$ to these accounts as we see fit.

Secondly will be setting up and account for the wife and I to just try and produce average or better returns so that $$ keeps growing and we can draw from if necessary in retirement. If that performs well, will add $$ as we see fit going forward.

[AJ444]

I keep hearing Vanguard accounts brought up over and over on this and other forums, as well as from personal friends; solid company, easy to work with and low fees. Getting an account set up and giving it a shot.

Have some excess cash lying around that isn't doing much and need to put it to work. For starters I'm going to set up a gift account for each of my grandkids starting with about $10K each in a 60/40 stock bond fund. Will let their parents be the custodians, but we will still have the ability to add $$ to these accounts as we see fit.

Secondly will be setting up and account for the wife and I to just try and produce average or better returns so that $$ keeps growing and we can draw from if necessary in retirement. If that performs well, will add $$ as we see fit going forward.

I have made Vanguard the destination for all assets where I have a choice (my 401k, wife's TSP and HSA are with different providers, all but the TSP are in Vanguard funds however). I even use their Vanguard Advantage account with bill pay as our primary bank

There are decent competitors but they are all driven by profit, Vanguard is essentially owned by its funds which are owned by the investors so their goal is to reduce expenses.

There are concerns with Vanguards rate of growth in that people have complained about their customer service experience. I had a trade messed up based on bad direction from a CSR and even their supervisor didn't understand why the information they gave was wrong. I escalated the issue and got a call back from someone higher up who apologized, admitted the error and explained they are doing the best they can with training given the unprecedented growth. That went a long way with me. Sometimes I wish they would spend some of their proceeds improving the customer experience instead of continuing to lower expense ratios. The positives absolutely outweigh the negatives though IMO.

[disneysteve]

We've got about half a million invested with Vanguard so we've certainly put our trust in them. I've never had a problem. I can't say I've had a lot of dealings with their customer service but the times I have everything was handled efficiently.

[Fishindude77]

We've got about half a million invested with Vanguard so we've certainly put our trust in them. I've never had a problem. I can't say I've had a lot of dealings with their customer service but the times I have everything was handled efficiently.

Good to hear. Think I'm going to shoot for having a similar amount stashed away there within next couple years. Recently retired and trying to put money to work to insure plenty of income for life without eating too much into principal.

Money will come from:
410K
Farm income
Commercial real estate income
Dividends from a specific stock owned
Board of directors income
Proceeds from new Vanguard account

Have quite a bit wrapped up in hard assets; real estate, homes, and stock that I'd rather not have to tap into to live off of.

[corn18]

I have accounts at Vanguard, Fidelity (FIDO) and USAA. Only have money at Fidelity right now as my 401k is with FIDO and I can buy Fidelity mutual funds at no cost at USAA. I was going to switch all my non 401k money to Vanguard a couple of years ago to get their lower ER's but then FIDO lowered their ER's to match or beat Vanguard, so I just stayed with FIDO. FIDO customer service is fantastic and their website is 100x better than Vanguard's. Other than that, I can't say much about Vanguard other than their $4T AUM and glowing reviews by all the Bogleheads. If I was starting where you are, I would go with Vanguard, as I like John Bogle and his approach to serving the investor.

If you get a chance, visit bogleheads.org (or maybe you already have). Simple approach to investing that resonates with me.

[~bs]

There are concerns with Vanguards rate of growth in that people have complained about their customer service experience.

There are quite a few similar stories going around. I'm guessing if you're primarily self serve, there shouldn't be issues. but if you're doing anything that requires forms or phone trades, possibly might be issues.

But I've had problems with my primary broker, tdameritrade, when opening new accounts before. So I'm guessing the issue isn't only with vanguard. I think the move towards low cost, low fee, online self service is causing customer service to suffer at various financial institutions.

[Gailete]

Fishingdude 77 - I am curious why the bond income for a child's gift account? Depending on what the money is ultimately to be used for, I was under the impression that bond funds don't pay out much and are a hedge against stocks when they go down. I'm just thinking that unless those accounts are to be used for college expenses in the near future, the bond funds my actually have the potential of holding back the growth that the account may have the potential of achieving. If the gift account is to be used eventually for when the kids need or want the money, it seems more reasonable to have it all in stocks, but then bonds seem a bit weird to me, not matter how much I read up on them. Since I'm playing catch up, I'm trying to invest all in stocks that are reasonably safe.

[kork13]

There are quite a few similar stories going around. I'm guessing if you're primarily self serve, there shouldn't be issues

I've heard those stories as well, but I agree -- if you're pretty self-service about things, their customer service growing pains should be mostly transparent.

Fishingdude 77 - I am curious why the bond income for a child's gift account? ... I'm just thinking that unless those accounts are to be used for college expenses in the near future, the bond funds my actually have the potential of holding back the growth that the account may have the potential of achieving.

Sounds to me that OP's intent is for a college fund -- at least by intent if not in name... at least, that's how I understood it.

[Gailete]

I have done all my investing through the former ING/Sharebuilders website, now called Capital One Investing. In the years, I have invested there I have never spoken to a CSR. You can use them for a checking account, savings accounts as well as investments. You can invest in mutual funds through them, including Vanguard. For each mutual Fund, there are different costs and initial investment costs and how much is the minimum you can invest at a time. Generally, the amount of subsequent investments is lower using their plan than going through the mutual Funds regular site. But that is something to double check. For the Vanguard 500 Index, I think the initial investment had a fee of $19.50 and a minimum investment of $3000 with subsequent investments about $100 if I remember correctly. Obviously, something you will want to double check. I don’t invest with Vanguard but with American Century Funds simply because their initial investment amount was in the range of something I could go with, otherwise it would have taken me years to be able to make a mutual fund investment of any kind.

For anyone that wants to avoid the middleman and the extra fees for using them and are comfortable making investing decisions yourself. This is a site to at least check out.

[Fishindude77]

Well, I changed my approach on this. Jacked around with Vanguard on line quite a bit, then decided it wasn't going to work for me. I need to deal with and talk to a human. Hooked up with a local dude that handles American Funds and charges pretty low fees.

Setting up both grand kids with accounts, starting with $10K apiece invested in a good "semi aggressive" fund of stocks & bond mix. Will make the parents the custodian. My advice is going to be to use it for college if you must, but if there is any way they can hang on to it for retirement, it could make the difference in between early retirement or not, or a well funded retirement or not.

Also have set up a bit more conservative account for ourselves. Will initially fund it with $200K which we won't need to touch for a while, add funds as we see fit, maybe up to $500K or so. Eventually the returns from this money will be utilized to support some of our retirement needs.

[disneysteve]

Hooked up with a local dude that handles American Funds and charges pretty low fees.

Very sorry to hear that. If you haven't put the money in yet, PLEASE take the time to research how much it is going to cost you. There are probably 2 basic choices.

One is that you will pay the salesperson (your local dude) a percentage of assets under management. So if you invest $200,000 and he charges 1%, you will be paying him $2,000/year to do absolutely nothing. And you still pay the expenses associated with the actual investments.

The other option is that you pay an upfront load of up to 5.75% plus the fund expenses. That figure does go down as the amount goes up but for those $10,000 accounts, you'd get raped with that maximum charge. Even at 200K, you'd still pay 3.5% plus expenses.

Doing this is going to cost you tens of thousands of dollars in unnecessary fees over your lifetime.

[Fishindude77]

Very sorry to hear that. If you haven't put the money in yet, PLEASE take the time to research how much it is going to cost you. There are probably 2 basic choices.

One is that you will pay the salesperson (your local dude) a percentage of assets under management. So if you invest $200,000 and he charges 1%, you will be paying him $2,000/year to do absolutely nothing. And you still pay the expenses associated with the actual investments.

The other option is that you pay an upfront load of up to 5.75% plus the fund expenses. That figure does go down as the amount goes up but for those $10,000 accounts, you'd get raped with that maximum charge. Even at 200K, you'd still pay 3.5% plus expenses.

Doing this is going to cost you tens of thousands of dollars in unnecessary fees over your lifetime.

No separate fee to the local dude, he get's his kicked back from American Funds over time.
There is a small upfront load fee, but not near the percentage you suggest.
Costs are actually a bit higher but quite competitive with Vanguard charges.

Recently re-positioned our company's 401K plan with another vendor so have gotten a pretty good understanding of how fees are charged. This dude is very cost conscious and clearly went over where and how they make their money, and how much they charge.

I don't mind paying a little more to have some personal help with this. Doing everything myself on that Vanguard website felt like I was sending the money to outer space and hoping for the best. If the end result is a return I'm happy with, why should I care if my guy makes a buck?

[Gailete]

Sounds like you already know what you want and need. Not sure why you feel the need to talk with a human especially since you can bypass by having a much cheaper set-up by doing the investment work yourself and it isn't really work.

Whatever you do,it is wonderful what you are choosing to do for your grandkids!

[disneysteve]

No separate fee to the local dude, he get's his kicked back from American Funds over time.
There is a small upfront load fee, but not near the percentage you suggest.
Costs are actually a bit higher but quite competitive with Vanguard charges.

I'm curious which funds you've chosen and which fund classes. I'd honestly be very surprised if the fees are competitive with Vanguard.

As for personal help, I haven't had to call Vanguard a lot but anytime I have, I've always gotten good service from them.

[corn18]

Because him making even as little as 1% will kill your returns over the long haul. I don't like dudes looking after my money. They never have your best interest at the top of their list. Ever.

You have run into the problem that everyone has with VG. Web site sucks. Customer service is spotty. Just opening an account was like getting a Top Secret security clearance.

Try Fidelity. They have outstanding customer service and you always talk to a person. Their website is the best in the business and you can handle 99% of everything on the site. And their fund selections and costs rival VG.



Corn