Vanguard Admiral Funds

[ShokWaveRider]

In your experience is it worth buying a minimum now of $50k to get Admiral Shares (Specifically) the VIPSX fund. Or would it be best to DCA in?

SWR

 

[LOL!]

My experience? I would buy I-bonds right now instead.

I have owned the vanguard fund in the past, but would not buy now. Instead I would stick with short-term bond fund of your choice. I have been known to be wrong before.

 

[walkinwood]

Your question seems to be - should I DCA or buy in one lump-sum. Search for those discussion and you'll find many here & on bogle-heads.

The bottom line is that if the fund goes up from here, you would have been better off jumping in at once. On the other hand, if the fund goes down, you would have been better off DCAing. But you don't know what's going to happen, so DCA if you want to hedge a bit against the downside, but know that you'll give up something on the upside.

I usually DCA into a position because I am more sensitive to the downside.

I don't think there is a huge disadvantage in buying the Investment grade fund & then switching to the Admiral grade when you have enough in the fund. I wouldn't include that in my decision making.

 

[FIREd]

My experience? I would buy I-bonds right now instead.

I have owned the vanguard fund in the past, but would not buy now. Instead I would stick with short-term bond fund of your choice. I have been known to be wrong before.

I agree. Sticking with I-bonds and short term bonds seems sensible at this time (minimal downside potential).

I owned VIPSX in the past. I would not drop a lot of money in it right now. And quite frankly, I think that owning TIPS directly is so simple that I will never use a TIPS fund again.

 

[Bluemoon]

When I buy I do it in a lump sum. I also agree that I would stick to I-bonds (which I own) and a short term bond fund rather than VIPSX which I owned some years back.

 

[foxfirev5]

While I have owned this fund in the past I would have tough time wrapping my simple mind around investing in a fund with a negative yield. Like the others above I max out the I bonds and keep my new money in short durations,

 

[RAE]

I've owned VIPSX for a while now, and it continues to do very well. I own it in my IRA, and I continue to monitor it closely, so I can exit quickly if necessary (with no tax consequences). This low interest rate environment we are in could persist for a long time yet, in my view......I see nothing on the immediate horizon that tells me rates are going to escalate any time soon.

 

[ShokWaveRider]

When I looked at it the returns were pretty reasonable over the last few years.

 

[easysurfer]

In your experience is it worth buying a minimum now of $50k to get Admiral Shares (Specifically) the VIPSX fund. Or would it be best to DCA in?

SWR

I think another way to look at it is asking yourself the question "When do you expect your portfolio to be rebalanced?".

In your example, say you expect it to take about 5 months and you don't wish to invest all at once, then you can easily put in 10K a month. But if you want to get it over and done with sooner, than put in more at once.

I do a combination of both. For automatic investments and my HSA contributions, I DCA monthly. Yet when I rebalance my portfolio due to target allocation drift, I do so all at once in huge chunks just to get the balancing done and out of the way.

 

[target2019]

Check this page for the quarterly dividends:
VIPSX Historical Prices | VANGUARD INFLATION PROTECTED SE Stock - Yahoo! Finance
Answer depends on your expectations. If this is part of deploying a significant percentage to VIPSX for the future, you may be able to get better price by DCA.

If you are trying to generate immediate income, then $50K invested today will get you 3380 shares. If the next quarterly div is .05, that is about $169.00. The year end might be four times that.

So, it depends on many factors. Tax-advantaged account? Age? Retired? Really need the income?

 

[LOL!]

When I looked at it the returns were pretty reasonable over the last few years.

EVERYTHING had great returns over the past 3 years. EVERYTHING.

Tell me what you saw when you looked at the returns for the NEXT few years please.

So be careful with your comparisons.

 

[ShokWaveRider]

EVERYTHING had great returns over the past 3 years. EVERYTHING.

Tell me what you saw when you looked at the returns for the NEXT few years please.

So be careful with your comparisons.

So what you are saying it is a c@#p shoot with everything.

 

[REWahoo]

So what you are saying it is a c@#p shoot with everything.

I wouldn't be quite that harsh. I think the message is "Past performance is not an indicator of future returns", especially short term (the past three years virtually everything performed well).

The fact the fund had reasonable returns over the past few years might tempt an investor into performance chasing. Returns over the long run (psst - Wellesley) is a better indicator - at least to my way of thinking.

 

[ShokWaveRider]

I wouldn't be quite that harsh. I think the message is "Past performance is not an indicator of future returns", especially short term (the past three years virtually everything performed well).

The fact the fund had reasonable returns over the past few years might tempt an investor into performance chasing. Returns over the long run (psst - Wellesley) is a better indicator - at least to my way of thinking.

Understand that. Wellesley is my other option. Just looking for a Bond allocation too. Probably going to use the 50:50 Couch potato approach. They seem to recommend that TIPS fund.

 

[TeeRuh]

SWR, I read your original question to be more about whether to chase Admiral shares or not (minimum 50K investment). I don't think the advantage is big enough to worry about Admiral. (Full disclosure: I have the Vanguard TIPS fund (like it) and it is Admiral.)

t.r.

 

[ShokWaveRider]

swr, i read your original question to be more about whether to chase admiral shares or not (minimum 50k investment). I don't think the advantage is big enough to worry about admiral. (full disclosure: I have the vanguard tips fund (like it) and it is admiral.)

t.r.

Thank You!

 

[RunningBum]

Without getting into whether TIPS is a good investment now, there has been a lot of discussion on DCA vs. lump sum that you can find from searching. I'm one who believes in lump sum, and that DCA is only for regular investing out of your salary or other income source. Search for the threads and you can see the reasons for both sides and decide for yourself.

As far as admiral shares, it drops the cost from 0.20 to 0.11%. On 50K that's $45 a year. If you are really close to the $50K minimum I'd bump it to hit it, but if your AA called for $30K in the fund I wouldn't make it $50K just to get admiral shares. If your plan was to get up to $50K now with a lump sum or eventually thru DCA, I would say this is one more very small advantage of investing with a lump sum.

 

[RAE]

I wouldn't be quite that harsh. I think the message is "Past performance is not an indicator of future returns", especially short term (the past three years virtually everything performed well).

The fact the fund had reasonable returns over the past few years might tempt an investor into performance chasing. Returns over the long run (psst - Wellesley) is a better indicator - at least to my way of thinking.

Agreed, but VIPSX has performed pretty well over the long term, also. It's 10-year load-adjusted return is 6.98%. 10-year load-adjusted return is 8.10%. It has only lost $$ one year in the last 10 (2008), and that was -2.85%. It's best years were actually not among the last 3.......it returned 16.61% in 2002, and 11.59% in 2007. I'd say that's pretty good performance over the past decade, for a bond fund.

 

[prototype]

$50K seems high for a Vanguard Admiral fund. I am not familiar with all their funds, but several of the ones I have (VWAIX and VFAIX) I opened as admiral funds with much lower amounts than 50K. I have only been using Vanguard for 3 months so I have alot to learn on how best to utilize them and fine tune things. The funds I am in now were recommended by an independent CFA, I know this does answer the OP's question, I was just surprised to see such a high minimum for an admiral fund. I thought they were in the 10-25K range.

 

[FIREd]

$50K seems high for a Vanguard Admiral fund. I am not familiar with all their funds, but several of the ones I have (VWAIX and VFAIX) I opened as admiral funds with much lower amounts than 50K. I have only been using Vanguard for 3 months so I have alot to learn on how best to utilize them and fine tune things. The funds I am in now were recommended by an independent CFA, I know this does answer the OP's question, I was just surprised to see such a high minimum for an admiral fund. I thought they were in the 10-25K range.

Managed funds (like VIPSX) have a higher minimum than index funds.