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Should I Open a Vanguard Account?
Old 09-13-2013, 12:55 PM   #1
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Should I Open a Vanguard Account?

We have a whole bunch of index funds in our brokerage account with a company other than Vanguard. Over the next 10 years I really need to beef up the taxable portion of that account and would like to add some Vanguard Funds(especially Wellesley) I think the sales charge is $50 for funds of a different company. I would really like to keep everything together at the same company and I have been with the current company for 15 years.

If I am adding Vanguard funds in 5K or 10K amounts do you think its worth it to pay $50 or should I stay with the other companies funds that have no cost, or should I open a Vanguard account?
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Old 09-13-2013, 01:13 PM   #2
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I am slowly moving my ETFs that are at a discount brokerage to my Vanguard account. I don't see any reason to not open a Vanguard account to buy the Vanguard mutual funds. If you want to buy funds other than Vanguard you could keep your brokerage account or buy them in a Vanguard brokerage account. You can compare fees.

I wouldn't pay to buy Vanguard mutual funds in a brokerage account. You can move Vanguard ETFs to Vanguard. Your brokerage account will probably have a fee to move your assets.
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Old 09-13-2013, 01:39 PM   #3
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Originally Posted by Wishin 2B Fishin View Post

If I am adding Vanguard funds in 5K or 10K amounts do you think its worth it to pay $50 or should I stay with the other companies funds that have no cost, or should I open a Vanguard account?
I would not pay the fee. Opening the Vanguard account is easy and it can be linked to your other accounts ( checking etc ) for electronic transfer so moving funds is easy. I have one mostly for their muni funds but out of those now.
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Old 09-13-2013, 02:22 PM   #4
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I just opened my own Vanguard account this morning. Taxable brokerage and IRA transfers are in progress. Took me about an hour and two phone calls to get through it. DW's IRA is already at Vanguard. Setup the bank account connection, and will liquidate and transfer most of my mutual funds (those that won't have much tax impact at all) over to Vanguard next week. Then I'll set up my automatic drafts from bank to Vanguard once the accounts are transferred.

I am not transferring one of my Index funds as saving 0.2% on expense ratio is not worth the tax impact of the capital gains right now. I'll just have to remember to sell that one FIRST when I start withdrawing!

Quite eye opening to me to see that not all index funds are created equal...

As for your situation, if you want the other funds, I wouldn't pay to buy them. It may be less than ideal to have multiple accounts, but to me it's worth the extra 2 minutes it takes to log into another website to save yourself hundreds (or thousands) of dollars in fees. JMO.
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Old 09-13-2013, 10:06 PM   #5
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If the fees are one time at buy only and you're making big buys it's probably not a big deal. But if it screws up your rebalancing and smaller-amount withdrawals with the same fee then I'd open a Vanguard account.
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Old 09-14-2013, 08:19 AM   #6
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Quote:
Originally Posted by Wishin 2B Fishin View Post
We have a whole bunch of index funds in our brokerage account with a company other than Vanguard. Over the next 10 years I really need to beef up the taxable portion of that account and would like to add some Vanguard Funds(especially Wellesley) I think the sales charge is $50 for funds of a different company. I would really like to keep everything together at the same company and I have been with the current company for 15 years.

If I am adding Vanguard funds in 5K or 10K amounts do you think its worth it to pay $50 or should I stay with the other companies funds that have no cost, or should I open a Vanguard account?
$50 is 1% net return on a $5k investment. That's a lot.

Seems to me that you are being EXTREMELY nice with this brokerage company, while they are happily ripping you off... $50 per transaction, really? It costs them cents... And given such numbers, I am ready to bet there are other more subtle ways in which you're paying more money than you should (e.g. fees).

I would suggest that you do open a Vanguard account for all new funds you select and new savings you invest, and then develop a strategy to slowly move your existing assets to Vanguard. The latter part is easy for IRAs and such plans as you can roll them over at no cost. But it's trickier for regular securities, because of capital gain taxes. Hard to comment on such move without particulars, but think about it... In the long run, this should save you significant money.

PS. Another value of opening a Vanguard account is access to their admiral funds, with even lower fees. That, you can't get from another brokerage company. Otherwise, I would have suggested to select any low-fee brokerage you like (E-Trade, etc), but for this reason alone, moving to Vanguard is well worth it.
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