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ETF's at Vanguard
Old 02-12-2014, 10:52 AM   #1
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ETF's at Vanguard

Need to roll my 401k to an IRA.. DW has a tIRA at Vanguard with their 4 recommended index funds 50/50. My Vanguard customer service guy set my account up with a small 2k money market account to await my retirement and the rollover to come.

He set it up for me to do ETF's if I wanted to... can you enlighten me with an easy explanation of ETF's and their pros/cons? I've done the wiki review and don't have a good handle on it....

One of the recommended strategies is the 3 fund portfolio using VTI, VXUS and BND funds available from Vanguard.. I would do 50/50 most likely.

Thx in advance for your thoughts....!

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Old 02-12-2014, 10:54 AM   #2
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Old 02-12-2014, 07:54 PM   #3
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I am a big fan of ETFs and use them for about half our portfolio, but there is nothing magic about them, so do not be fooled by folks touting them.

Here is a list of pros and cons: ETFs vs mutual funds - Bogleheads

Folks who are used to placing stock orders do just fine with ETFs because they know about market orders and limit orders and what price they want to place the limit price at and not getting ripped off by placing stupid orders.

Folks who get anxiety attacks and who have a fear of getting ripped off hate ETFs and prefer to use mutual funds where one is always guaranteed a fair price.

Vanguard ETFs are great for folks who do not use vanguard as a broker, but if you use vanguard as a broker, you might as well use their admiral share class of funds instead of ETFs.

If you insist on using ETFs, try out just one for now and see how you like the mechanics of placing a trade, getting a distribution, reinvesting the distribution, selling shares, etc. You may find it suits you or you may have an anxiety attack.
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Old 02-18-2014, 07:13 AM   #4
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I like the two ETF port of 50% VT + 50% BND. It's the simplest, totally diversified, and very cheap.
AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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