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Anyone with experience using Vanguard
Old 05-15-2006, 01:04 PM   #1
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Anyone with experience using Vanguard

Anyone with experience using Vanguard

Hi, This is my first post here and hopefully I can get some unbiased opinions on some of my concerns. Please dont flame me if you think these are stupid questions as I really dont know a lot about this kind of stuff and would feel better if I got some of my concerns answered by people who dont stand to 'profit' by selling me something that takes advantage of the unknowing. I have been burned by investments in the past and just recently somebody at a bank wanted to sell me an annuity which after doing research on, found that it was not in my best interest, but theirs because of the high expenses they get up front.

First off, I am currently 55 and going to retire end of June. I have accumulated 300K in my companys 401 K plan. I can leave it with JPMorgan (but not in that same fund) but I despise JPMorgan and will be pulling it out of there (for reasons I dont need to burden you with here).

Right now, all of it is in what they call a custom, for our company, 'Stable Value' fund (they classify it as cash, however I really dont know exactly what it consists of) which has been pulling in a 5 year average of 6.21 percent. That rate has been decreasing lately and is at a one year rate of 5.70 amd 1.35 for the last 3 months right now. I have, in the past invested in some of the other stock/bond funds that were offered in the 401K plan, however I have lost value in just about ALL of them. I think JPM saddled the plan with some real dogs for us to invest in. In waiting for the funds to come back, they discontinue them and change to new funds, hence locking in our losses. Hence, it has left somewhat of a uneasy feeling in my gut about how they operate. I really dont know a whole lot about this kind of stuff so I am quite intimidated with having to move it now to somewhere different.

That being said, I am thinking of either moving it to a rollover IRA at a local bank (yielding about 5.00 percent) or taking the plunge as in moving it to Vanguard as I have been reading lots of stuff (not understanding it all, but most of it seems positive) about them as having funds with no fees (loads I think they call it) or very small percents as far as maintenance costs.

I really do not plan to tap these funds for a timeframe of 10-12 years.


OK, now for the questions/concerns...

1) If I call Vanguard, is there a charge to have them prepare a 'plan' or for them to talk to me? I realize that time spent by someone discussing my concerns cost someone paying the advisor but do I need to pay up front first not knowing if I will like what I find out from them

2) I guess I want to get into the no load or low maintenace funds as I dont want to have the costs eat away at the return too much. Is pulling in the vicinity of a 5 percent annual return (after fees) on this type of investment do-able? (I'm not looking for the double digit return here, as my goal is safety, if there is such a thing.)

3) I am concerned with buying into something all in one lump (and perhaps at the high end of things) so will Vanguard have MY best interest if I express this to them as far as where to put the funds or can they be trusted to know the proper mix/exposure of whatever fits my risk tolerance (which would be conserative)? I am quite afraid of going into Bonds a lot as I got burned back in the early-mid 90's buying into bonds on the advice of a 'planner' at a bank and lost lost lost on them before pulling out. At the time, I didnt know that bonds go down in value at times when interest rates escalate and I feel that interest rates have not hit their peak at this time and dumping lots of the invested $$$ into bonds at this time concerns me greatly (bonds being conservative), as it seems that Vanguards target funds seem to invest more into bonds as the time to their target gets closer (target fund 2015).

4) Do I really need to know exactly where and what funds I want them to invest in as I really know nothing about this kind of stuff (except bonds go down when interest rates rise).

5) Does Vanguard offer CD investments (not an annuity) for all or part of the money, as I find the safety of CD's as a more conserative choice?


I dont think I will seek the advice of a paid planner as I really dont know who to trust, being conned a few times in the past. Again, I am looking for unbiased opinions.

Thanks for any/all answers/opinions
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Re: Anyone with experience using Vanguard
Old 05-15-2006, 01:33 PM   #2
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Re: Anyone with experience using Vanguard

DT, welcome to the forum.

I'm a Vanguard client and I'll take a shot at responding to your first question:

Quote:
Originally Posted by Dovetonsils

1) If I call Vanguard, is there a charge to have them prepare a 'plan' or for them to talk to me? I realize that time spent by someone discussing my concerns cost someone paying the advisor but do I need to pay up front first not knowing if I will like what I find out from them
According to the Vanguard website there is no charge for a basic financial plan if you have $250,000 or more invested with them. Although I have never used their financial planning services, it is my understanding the advice you will recieve is sound and reasonable, but not exceptional. I suppose that isn't bad considering it doesn't cost you anything extra.

I would suggest you spend some time reading the Vanguard site as they have a lot of information that will likely benefit you and help answer many of your questions.


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Re: Anyone with experience using Vanguard
Old 05-15-2006, 01:50 PM   #3
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Re: Anyone with experience using Vanguard

Go with Vanguard. They have all the products you need including CD's, and they can give you the freebie advice. They will be a little biased toward low fee Vanguard funds including index funds, but it is out of genuine belief that their approach is superior and not an attempt to rip you off. They can actually make just as much if not more money directing you to some of the other fund families in their extensive network because they get a "trailer" or a portion of the annual expenses and loads for themselves, and yet they generally do not steer you in that direction.

Go to the discussion board on "My first meeting with a Certified Financial Planner" which talks about their advice.

http://early-retirement.org/forums/i...p?topic=7571.0
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Re: Anyone with experience using Vanguard
Old 05-15-2006, 01:56 PM   #4
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Re: Anyone with experience using Vanguard

*I just rolled over 401k to vanguard in march.Before making any decisions- at the home page, click individual investor. At top of new page click research stocks and funds. Sort by asset class. *Scroll through and click fund name, ie Index 500. You can then select information such as who should invest, holdings, risks, etc. You can call *and will be assigned an advisor who will send you a questionaire and allow you to schedule an advisory session. *No obligation. *You can follow or disregard. Only advice I give is don't take my advice. *Do what makes you comfortable. *Good luck. *
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Re: Anyone with experience using Vanguard
Old 05-15-2006, 01:58 PM   #5
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Re: Anyone with experience using Vanguard

Hi...you sound like me 10 years ago...


Vanguard will not charge you to set up an account .
Their fees are the lowest in the business
They have simple *money market funds for the super conservatives
They offer a nice array of mixed *mutual funds based on how long till you retire...I think they are named for the years you have left before retirement
Here is the link

http://flagship2.vanguard.com/VGApp/...verviewJSP.jsp

Sounds like trust comes hard...what I can tell you is that I find no one here or anywhere who manages their retirement funds that has been critical of Vanguard.

Get educated about basics of investing in mutual funds. (The only way to go unless you have a very high risk tolerance and time to research stocks on your own. Frankly, you sound like me, someone who is not the least bit interested in finding individual stocks) ...

This board has lots of very knowlegable people...Investing for basic returns with no "loads" and minimal management or expense ratios does not take rocket science at all...In fact, I treat investing a lot like a computer...I do not need to know how it works to use it very successfully...I just listen to the folks in the know and stay with the basics...In investing that means all mutual funds, no individual stocks, all "Index" mutual funds that have a very diversified number of stocks or bonds...

Most of my "stock" funds are in the total stock market with only a small percentage *(15%) in more specific index funds like "global", small cap, mid cap, growth, or large cap.

Again, keep it simple and you will beat 95% of any "money manager" out there.


Good Luck...Ted



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Re: Anyone with experience using Vanguard
Old 05-15-2006, 02:24 PM   #6
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Re: Anyone with experience using Vanguard

I'll 'second' all of the above. I've been with Vanguard for almost 10 years and am pleased with their offerings and services. We have about 80% of our funds in Vanguard with a variety of VG no-load funds that are both indexed and actively managed with an average expense ratio of under 0.6%.

Like you, we have other accounts that still are in other 'houses' but will be consolidated when DW retires at the end of next year.

I've felt burned at other places but never at Vanguard.

Go for it! By the way, welcome to the forum.

JohnP
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Re: Anyone with experience using Vanguard
Old 05-15-2006, 04:28 PM   #7
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Re: Anyone with experience using Vanguard

A Fidelity and Vanguard customer here and ditto to the advice above.* As a suggestion you might want to look at a coffeehouse portfolio style.*
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Re: Anyone with experience using Vanguard
Old 05-15-2006, 05:04 PM   #8
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Re: Anyone with experience using Vanguard

Back when I had a full head of hair began investing with Vanguard they sent a booklet titled "Facts On Funds". I found it to be very helpful. You may like to call and have them send you one. They also have it on a pdf file (big) from their site. http://flagship4.vanguard.com/VGApp/...iewContent.jsp
Hope this helps

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Re: Anyone with experience using Vanguard
Old 05-15-2006, 09:05 PM   #9
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Re: Anyone with experience using Vanguard

Welcome, Dovetonsils,

I dunno about 'unbiased' advice, but the price is right.

I have been a happy Vanguard customer for many years. I have never used their advice function, but I would not be afraid of them. I second the recommendation for "Facts on Funds", though.

There is a nice little site called The Coffeehouse Investor, by Bill Schultheis, that promotes no-load index funds (of which, Vanguard is the king). Find them at:
http://www.coffeehouseinvestor.com/ Read the whole site. It won't take long. I like his little book (the first one--haven't seen the second one yet). Cheap, too.

This site draws much on Bill Schultheis's book:
http://www.suite101.com/discussion.c.../1-10message_1

Then, there is the web site of our patron saint, John P. Greaney:
http://www.retireearlyhomepage.com/

John publishes a little paper, report #001 (2nd edition), for $5 (a flaming bargain!):
http://www.retireearlyhomepage.com/reports1.htm
I bought it. I buy it again once in a while and send it to friends. I liked it a lot.

Vanguard's LifeCycle Funds include a weighting in bond funds. I don't like bond funds, personally. You can lose principle when interest rates rise. I like the idea of index stock funds and CDs or TIPS. You can hold TIPS in Vanguard, but they will charge you to buy them. Call Vanguard and talk to them.

Good luck!

Ed
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Re: Anyone with experience using Vanguard
Old 05-16-2006, 01:13 PM   #10
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Re: Anyone with experience using Vanguard

Wow, you guys are great! Thanks for all the links and the confidence in Vanguard.

Funny comment about the computer knowledge from ' tednvon' as I know a lot about that kind of thing but am totally in the dark about investing.

Thanks again
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Re: Anyone with experience using Vanguard
Old 05-16-2006, 01:36 PM   #11
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Re: Anyone with experience using Vanguard

Vanguard does seem to be the best deal, and may give some of the best advice. But don't blindly follow what they tell you... the financial advisors at Vanguard just like anywhere else are in business to make money by charging you fees, so you should always do your own due diligence to make sure what they are recommending is in your best interest. Especially if the advice involves frequent selling/buying.

The only negative I've heard about Vanguard is some reports that because the fees are low, some financial advisors have to be more ruthless in generating sales to earn their paychecks than at places where fees are higher. Seems to rarely be an issue in actual practice, but it's something to watch out for.
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