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Thinking about switching from American funds to USAA????
Old 01-21-2010, 06:49 AM   #1
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Thinking about switching from American funds to USAA????

I originally posted this in the new user forum but I thought I would get more responses in a place like this.

I currently have a roth IRA with American Funds and I was wondering if it would be a good idea to switch over to my bank USAA. I have searched the site for answers but I can't find anything like this. Right now I have 25 % in Euro growth pacific fund, 25 % in Fundamental investors, 25 % in the growth fund of America and, 25 % in the investment company of America.
I was wondering if it would be a good idea to switch to USAA in the following funds 30 % in USAA capital growth fund 30 % in USAA S&P 500 index fund member shares and 40 % in USAA cornerstone strategy fund?

I also contribute to TSP because I am active duty Navy.

It would be nice to utilize one bank for everything.
Also what does everyone here think about target retirement funds?
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Old 01-21-2010, 06:55 AM   #2
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You should clearly lay out for yourself why the switch would leave you better off. Ease of dealing with one institution is definately a plus (I have everything I can with schwab for that reason). Will you have lower fund expense ratios at USAA? Somehow more attractive portfolio composition? Would you incur any cap gains taxes by switching?
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Old 01-21-2010, 07:25 AM   #3
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You should clearly lay out for yourself why the switch would leave you better off. Ease of dealing with one institution is definately a plus (I have everything I can with schwab for that reason). Will you have lower fund expense ratios at USAA? Somehow more attractive portfolio composition? Would you incur any cap gains taxes by switching?
I spoke with each financial institution and there are no taxes or penalities for switching the only thing I can think of besides everything with one bank is that I'm switching from a loaded fund to no load funds.
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Old 01-21-2010, 10:30 AM   #4
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Switching out of loaded funds s a smart move.

USAA Federal Savings Bank is great to do business with. Unfortunately, the USAA mutual funds (offered through USAA Brokerage Services, not the bank--you'd still be getting two separate statements I think) do not have the low costs or the variety that you could get from Vanguard, or even some of the Fidelity funds. If you take a look at the fund expenses at Vanguard and USAA and multiply the dollar costs per year over your expected investing lifetime, you'll probably find that you'd be tens of thousands of dollars ahead after 30-40 years by going for the lower costs at Vanguard. That's real money.

We bank and have our insurance with USAA and have most of our MFs (Roths, tIRAs, regular accounts) with Vanguard. The electronic transfers (recurring or one-time) between Vanguard and USAA FSB are easy once you set things up. It's well worth it to us for the savings.
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Old 01-21-2010, 05:54 PM   #5
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I agree with Samclem. USAA is a great insurance company, but Vanguard is a better mutual fund company.
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Old 01-21-2010, 06:01 PM   #6
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I agree with Samclem. USAA is a great insurance company, but Vanguard is a better mutual fund company.
It's also a great place to bank, but I agree with the agreement above.
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Old 01-21-2010, 07:38 PM   #7
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Love the bank, like the brokerage. Better funds are available, even at USAA, mostly they are non USAA funds. If you bank there, can understand why you want to consolidate your investments there too.
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Old 01-22-2010, 12:31 AM   #8
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I was wondering if it would be a good idea to switch to USAA in the following funds 30 % in USAA capital growth fund 30 % in USAA S&P 500 member shares and 40 % in USAA cornerstone strategy fund?
I also contribute to TSP because I am active duty Navy.
The first step is to max out your TSP. You won't find better asset classes or lower expense ratios anywhere else.

Speaking as a 25-year USAA customer, you should insure your vehicles with USAA but ensure your retirement with Vanguard or Fidelity. Not only no loads, but lower expense ratios. However going from American to USAA is way better than doing nothing.

Single-bank convenience may seem nice, but you may pay for the privilege. We bounce between NFCU and PenFed for their dueling CD rates. We also used to do mortgages exclusively with NFCU until they dropped the competition ball, so now we're with three other institutions at much lower rates. We have electronic-fund transfer arranged among all of them, so it's no big deal to move money around.
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Old 01-22-2010, 08:46 AM   #9
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I agree with Samclem. USAA is a great insurance company, but Vanguard is a better mutual fund company.
Mostly agreed, but having said that, USAA might have the best gold and precious metals fund on the planet. I wouldn't keep all my investments there just for that, but I might (and do) leave a little there for that 5% (or so) of my portfolio.
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Old 01-22-2010, 09:47 AM   #10
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Originally Posted by rdy4retirement View Post
I originally posted this in the new user forum but I thought I would get more responses in a place like this.

I currently have a roth IRA with American Funds and I was wondering if it would be a good idea to switch over to my bank USAA. I have searched the site for answers but I can't find anything like this. Right now I have 25 % in Euro growth pacific fund, 25 % in Fundamental investors, 25 % in the growth fund of America and, 25 % in the investment company of America.
I was wondering if it would be a good idea to switch to USAA in the following funds 30 % in USAA capital growth fund 30 % in USAA S&P 500 index fund member shares and 40 % in USAA cornerstone strategy fund?

I also contribute to TSP because I am active duty Navy.

It would be nice to utilize one bank for everything.
Also what does everyone here think about target retirement funds?
What share class of American are you in? Do you have an advisor?
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Old 01-22-2010, 04:46 PM   #11
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I assume American Funds are load funds? I don't have experience with them, but I will say that when we first started investing we put our money in a load S&P-type fund with Fidelity. It underperformed the index quite substantially, and those were good years for the S&P. Not that you would know that from our statements - had to calculate my own rate of return to see what I was really getting.

We've done much better after a switch to index funds with Vanguard and T Rowe Price. We also max the TSP - can't beat it for low cost. USAA is our bank for regular checking and savings.
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Old 01-22-2010, 06:00 PM   #12
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If you would like to use one bank for everything, then the answer is WellsFargo. It has the lowest expenses of ALL the options discussed in this thread: no fees whatsoever if you have assets of $25K in your accounts combined. You can have checking, brokerage, mutual funds, ETFs, etc all in one place.

I have been a USAA member since birth I guess and have a checking account with them that I have never sent any money to and a credit card that I have never charged a single item on. I use it for the free 0% cash-back offers. We now have insurance with USAA.

But if you want Vanguard funds, Fidelity funds, USAA funds, ETFs, stocks, totally free checking all for no commissions and no added fees, then WellsFargo is the place to get their PMA relationship going. You can take that 0% credit-card cash advance from USAA and deposit it into your WellsFargo accounts.
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