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Investment account???
Old 03-28-2004, 05:10 PM   #1
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Investment account???

What should I be looking for in an investment account? I started an account with Scottrade with the intent to buy a Vanguard fund as a Roth plan. Now I am wondering if I should have opened an account with Vanguard?

What should I be looking for in an investment account?
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Re:  Convenient, reliable, & maybe cheap too.
Old 03-28-2004, 07:31 PM   #2
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Re:  Convenient, reliable, & maybe cheap too.

The main advantage of one account is that all of the records come from that one account. You can open accounts with multiple companies and possibly save some money on transaction fees, but your record-keeping expands with each new account. A FundAlarm poster (Fundaholic) at one point owned over sixty mutual funds, but he probably has them consolidated with one or two brokerages. Otherwise I'd hate to be his mail carrier.

Another convenience is portability. If you use Scottrade to hold your Roth, and you tire of your Vanguard fund in that Roth, then you just sell the fund and buy another fund (or stock or bond or whatever) from Scottrade. No rollovers, no transfers, no delays, maybe a small brokerage fee, and probably very few hassles. Doing the same from Vanguard to another fund company would take, at a minimum, several weeks. The Vanguard Diehards board lists horror stories that have dragged on for months and still haven't been corrected.

To some extent you're putting a lot of eggs into one basket. You never know when you're going to see exclusive CNBC coverage of your brokerage's executive staff partying in Costa Rica with what used to be your IRA. OTOH the larger firms have a track record and have learned that they can make more money robbing charging maintenance fees for decades than by taking it all at once (thus killing the golden goose).

Of all the firms I've surveyed, Scottrade seems to have the best combination of fees & service. Vanguard has the cheapest index funds but their explosive growth has killed their service. If you don't need service, maybe Vanguard is still for you. Schwab used to be the Scottrade of the '70s & '80s but in the last few years seems to have wandered off the righteous path. They've been ruthlessly nickel & diming even their six-figure customers.

Somehow we never ended up with Scottrade or Vanguard. We began with Fidelity in the early '80s and expanded to Evergreen, Heartland, & Tweedy, Browne but have been consolidating with Fidelity. Their website is now very robust & fast and their trade execution has been outstanding. Putting a lot of your eggs with one firm tends to not only reduce the paperwork but also to reduce or eliminate the nuisance fees like IRA maintenance charges. Fidelity's brokerage fees are higher ($14.95-$20) than Scottrade but we don't pay IRA maintenance fees and we get free electronic billpaying. The billpaying itself is worth a half-dozen trades a year, and every year or so they kick in a few free trades in conjunction with some other offer. I can't remember the last time Fidelity made a mistake with my account, and they've graciously corrected a few of mine.

If you deposit $1M with Fidelity or trade like a hyperactive jackrabbit (I believe 120 trades/year?) you'll be eligible for $8 trades and specialized trading software. That may be aimed straight at Scottrade's customers...
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Re: Investment account???
Old 03-28-2004, 08:56 PM   #3
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Re: Investment account???

I also have most of my assets with Fidelity and am very happy with the customer service, and the web support. There is a breakpoint for 'premium' and 'high net worth' customers for better service. I think the breakpoint is .5 and 1 million, but am not sure. I'm in the premium bucket and like it. Never had to wait more than seconds (<1min) for an agent, although most of my access is via the web.

However, their bond (no tips for example) market seems weak, and their research is average. I keep a Roth IRA at T.R.Price for access to their web tools. They have access to morningstar's x-ray service that provides meaningful asset allocation information. HarrisDirect had a good bond service, but bonds are not my main portfolio component at this time. When they raised their trading rates a while ago, I bailed out of them.

Wayne
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Re: Investment account???
Old 03-29-2004, 01:07 AM   #4
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Re: Investment account???

Quote:
However, their bond (no tips for example) market seems weak, and their research is average. *
Wayne,
Check again re:TIPs. I have TIPs in my Fidelity Premium Account. I have also bought and sold them before.

I also have finally consolidated most everthing at Fedelity. What did it for me, other than literally 30 years of good service, is the convenience of importing everything into Turbo-Tax. That and the feature where I can look and see at any time where I stand re:capital gains in any given year. Since I mostly hold individual stocks, I find this a very helpful tax planning tool.

Mikey

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Re: Investment account???
Old 03-29-2004, 07:53 AM   #5
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Re: Investment account???

Mikey -

Sorry, I wasn't clear there. To clarify, the web access to the bond markets seems weak. Yes, you can buy any bond and sell any bond via their bond trading desk. However the web information is only on their inventory, and includes treasuries but not TIPS (that I can find).

On PCFN, later known as HarrisDirect, I could look up any bond price and get quotes for any not available via lookup. I can probably do that with a phone call to Fidelity.

Wayne
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Re: Investment account???
Old 03-29-2004, 10:10 AM   #6
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Re: Investment account???

Quote:
However the web information is only on their inventory, and includes treasuries but not TIPS (that I can find).

On PCFN, later known as HarrisDirect, I could look up any bond *price and get quotes for any not available via lookup. *I can probably do that with a phone call to Fidelity.
Wayne, I understand now what you mean. I agree, Fidelity doesn't have good web tools for fixed income. My brother uses Schwab and finds their fixed income much more accessible.

My satisfaction with Fidelity comes from 30 years of trading, 100s of transactions, and almost no mistakes. (On their part I mean-plenty of mistakes made by me!)

Mikey
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Vanguard vs. Fidelity?
Old 04-04-2004, 07:12 PM   #7
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Vanguard vs. Fidelity?

Well, THIS is an interesting discussion. I've been getting ready to consolidate all my old 401(k) accounts and IRAs (held in various and sundry financial service companies). My accountant, who also does fee-only financial planning, uses Fidelity exclusively, but I've long had a fondness for Vanguard. I was planning to move into a Couch Potato portfolio, using Vanguard funds, and I did a cost-comparison. Vanguard is definitely cheaper than Fidelity.

However, since I'm not the only one to have this idea (Darn!), and Vanguard's popularity has soared, it's quite true, all reports are that service is in disarray. They have acknowledged the service problems (keeping the phone staff lean has been part of the strategy for keeping costs down, so they say) and presumably are trying to work them out. But can I be a true Couch Potato if I have to sit on hold on the phone and search my monthly statements for mistakes? (If we rely on ME to find mistakes, this portfolio is in big trouble.)

I'm really interested in others' take on this question.

Anne
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Re: Investment account???
Old 04-04-2004, 07:48 PM   #8
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Re: Investment account???

Anne,

I have been with Vanguard for years and have
mostly been very satisfied with the help.
Sometimes you get a "greeney" on the phone
who may need to get a supervisor to help with
a tough question. The Vanguard website has
had some knocks but I don't have any trouble.
I do all my IRA re-balancing, etc. via Internet.
It helps if you have enough invested to be a
"Voyager" client. I think the more experienced
people get that duty.

Good Luck,

Charlie (aka Chuck-Lyn)
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Vanguard vs. Fidelity vs DFA?
Old 04-04-2004, 08:05 PM   #9
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Vanguard vs. Fidelity vs DFA?

Thanks for your input, Charlie. I would probably be able to gather up enough money to get out of steerage, even if I can't quite go First Class. Not sure what the $$ amounts are, but it's reassuring to know that having more money greases the wheels at Vanguard, just like it does everywhere else!

Now in the meantime, I've just been reading about Dimensional Fund Advisors (an article by Paul Merriman) www.fundadvice.com (article called The Ultimate Buy-and-Hold Strategy). I had seen DFA referenced here but this is the first time I knew what it stood for. So it seems there's yet another option in this question. I won't try to summarize this multi-page article here, but Merriman does make a case for DFA being the best way to do great asset allocation.

Anybody want to weigh in on this?

Anne, a quick study but OH! There's a lot to learn.
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Re: Investment account???
Old 04-05-2004, 05:11 PM   #10
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Re: Investment account???

I believe the voyager cutoff is a half million and flagship is a million.

The service does get better in those latter two, however I hear they are put up to target you to buy more services. So far this has never happened to me and the email service with the higher end teams have been fine. They answer in a day, usually correct, and I've usually solved it myself by then and learned two more things in the process.

But then I'm one of those guys who wont ask anyone at the store where something is, because in the process of looking for it I'll find 5 other things i wanted and see 3 things I didnt even know they had!
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Re: Investment account???
Old 04-05-2004, 05:43 PM   #11
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Re: Investment account???

TH, $250,000 gets you Voyager status. It takes a million for Flagship. Voyager status is worthwhile, primarily because they waive all the small fees (custodial, etc.). That's the main perk as far as I'm concerned. I also get:

- "Household Statement" which consolidates everything (wife and I) into one statement (and web view)
- free access to Financial Engines
- brokerage discounts
- 50% discount on the cash management (checking) account.

There is "personalized" service, too, but I haven't noticed any improvement. However, I have found Wendy Duetsch to be extremely helpful whenever I have had complex tax questions pertaining to retirement plans. Wendy is one of the reasons I stay with Vanguard and I always email her directly if I have such questions. She has saved me some money and the hassle of using an accountant - plus she knows more than any accountant I'm aware of.
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Re: Investment account???
Old 04-05-2004, 06:00 PM   #12
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Re: Investment account???

My bad on the lower limit for voyager, I wasnt sure what it was.

Dont forget free turbotax!!

Although there are still a few things they wanna charge you $5 or $10 or some other silly little fee for, even in voyager and flagship. That was my one big piece of input to them when I opened the account...drop the penny ante fees that will cause more problems and misunderstandings than they're worth, or lump them all into the fund management fees by raising them .00001%.
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Re: Investment account???
Old 04-05-2004, 06:19 PM   #13
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Re: Investment account???

I told them the same thing, TH. Nix those obnoxious fees.
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Re: Investment account???
Old 04-05-2004, 09:29 PM   #14
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Re: Investment account???

In case you have not seen it yet, there is a great
graphic showing the relative performance of 8
asset classes from 1984 through 2003. Check
this out!!!
http://www.callan.com/resource/perio...PertblDark.pdf

Cheers,

Charlie




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Re: Investment account???
Old 04-05-2004, 11:02 PM   #15
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Re: Investment account???

Ahh...Innnnnputtt.

Have this halfway into a spreadsheet for looking over.

First glance...almost everything has its day at the top or bottom. Large cap value seems to spend most of its time in the middle of things.
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Re: Investment account???
Old 04-06-2004, 09:33 AM   #16
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Re: Investment account???

I don't understand the periodic chart. Is this on a quarter by quarter basis or all for the same period? Why would similar asset classes have such different results across the board?

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Re: Investment account???
Old 04-06-2004, 10:09 AM   #17
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Re: Investment account???

Hi Sky, (could not resist the alliteration)

Each column shows the returns for each asset
class for the whole year. For example under
the 1984 column, bonds had the best yearly
return at 15.15% and the Russell 2000 growth
index had the worst at -15.84%.

It is a very busy chart, but very interesting
nevertheless.

Cheers,

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