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One Mutual Fund Company? Or Two?
02-23-2008, 06:04 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
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One Mutual Fund Company? Or Two?
On another thread someone was asking about consolidating their funds at one MF company (VG). I have also considered consolidating our assets and using 1 MF company for convenience. But I am wondering if I reduce my risk by using two MF companies and putting 1/2 of our money at two large MF providers (e.g., VG and T Rowe Price).
One question I have for the forum had about using s single provider.
Does the use of one MF company present a risk? What kind of situations might occur where I would wish that I would have split my assets between two MF companies? For example:
- if VG ever went Bankrupt... would my money be tied up?
- is there a chance that some $h!th3ad at a MF company may do something like that European trader (lose several $B) and it affect my account?
Anyone have any thoughts?
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02-23-2008, 06:12 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2005
Posts: 5,704
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i only use one..... fidelity
supposedly they only manage your money and the funds are secured by the underlying holdings if they went bankrupt.
but im not sure though of the legalities because these fund holdings are held in street name meaning theirs. so although theoretically a bankruptsy shouldnt effect us im not totaly sure
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02-23-2008, 07:47 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 19,126
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All of my money is at VG. I wonder about this issue from time to time, but I feel pretty safe at VG or Fido (where all my money used to be).
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 40% bonds / 10% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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02-23-2008, 07:48 AM
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#4
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Full time employment: Posting here.
Join Date: Feb 2008
Posts: 920
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I use brokerage accounts at USAA, managing both USAA and other fund families (including Vanguard) from one place. The tradeoff for convenience being some trading fees during the annual rebalance for non-USAA funds purchases.
Kinda nice having all the investments, insurance, and banking in once place.
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02-23-2008, 08:08 AM
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#5
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Full time employment: Posting here.
Join Date: Aug 2006
Location: athens
Posts: 802
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Typically I've held most of my assets in Fidelity. But last week I sold some real estate and decided to increase assets in my Vanguard accounts instead of putting more at Fidelity. I figured that it never hurts to diversify, even between these two big boys. As soon as I can grow the accounts over $500K at Vanguard, I've read they apparently provide you a financial plan review for FREE. So that's where I'm headed with that new account, just not sure when I'll get there.
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Can't you see yourself in the nursing home saying, " Darn! Wish I'd spent more time at the office instead of wasting time with family and friends."
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02-23-2008, 08:53 AM
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#6
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 46,599
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Quote:
Originally Posted by chinaco
Does the use of one MF company present a risk? What kind of situations might occur where I would wish that I would have split my assets between two MF companies? For example: - if VG ever went Bankrupt... would my money be tied up?
- is there a chance that some $h!th3ad at a MF company may do something like that European trader (lose several $B) and it affect my account?
Anyone have any thoughts?
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Life has a way of imploding on us periodically, as many/most of us have noticed with much chagrin. Everyone in the world will say something (like real estate) is a sure thing and totally foolproof. (After all, land will always go up since they aren't making any more of it, right?  ) Then something (like the recent real estate slump) will occur and they will all pretend like they knew it was coming.  So, despite the fact that I have read a lot on this board and others about how safe my money is in Vanguard, I am wary too.
Right now I actually DO have all of my investment money in Vanguard, other than what I have in the TSP, and in my house if you consider that to be an investment. I don't like depending on Vanguard this much, though. I will also have SS and a small pension. I do think that having one's money coming from a multitude of income streams coming from a multitude of sources is an excellent idea, no matter what anybody says about the safety of investing in Vanguard.
I will probably put any new investments someplace else, for peace of mind. But I will also probably always have half or more of my money at Vanguard, since I am quite satisfied with them.
If I had the temperament for it, I really think one of the wisest moves would be to buy a couple of rental properties so that some of my income was from rent paid to me. I just can't do that, though. Too tender-hearted, and too challenged by keeping my own home in reasonable shape, let alone rentals. For some reason I am also intrigued by the idea of owning a laundromat, which someone else here does and discussed on a thread last year. All those quarters potentially pouring into the machines is a cheery thought. But again, I don't know if I would be able/willing to keep the place in good repair.
So, I will probably put some money over in Fido at some point though I feel that sort of diversification of income streams is less than rentals or a laundromat might provide.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
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02-23-2008, 10:42 AM
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#7
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Recycles dryer sheets
Join Date: Jan 2007
Location: Los Angeles area
Posts: 329
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I use several different companies (4-5, depending on whether you count the 401k), mostly because I haven't gotten around to consolidating some taxable accounts. But at minimum I would keep 2, because of the reasons you mention.
If for instance Vanguard does go bankrupt, I wouldn't be shocked to find my assets inaccessible for some period of time - maybe just a day, maybe a month. Sucks if you suddenly have a large need for withdrawals. Hopefully at least your emergency fund is with a different company.
Now, I don't think the above scenario is very likely, but it's also not much trouble for me to maintain multiple accounts to guard against it. Worth it in my book.
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02-23-2008, 10:54 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Al
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02-23-2008, 01:10 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,551
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Having most of my stash @ Vanguard does not cause me to lose sleep. DW still has her IRAs @ USAA since their S&P fund is still as cheap as VG (ER wise). She is not inclined to move it to VG, even though I have recommended it. If the ER goes back up, I will become more insistent and use simple math to try to convince her.
Since a MF is worth whatever the securities included in it are worth, I can't see where the financial strength/weakness of the MF family has much bearing on the safety of the value of the investment.
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Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
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02-23-2008, 01:19 PM
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#10
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,829
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I couldn't decide which is better-- the cheap company that keeps losing IRA beneficiary designations or the "full-service" one that uses my shareholder expenses to hire midget bowlers & prostitutes...
At least we're not investing in actual mutual funds-- just ETFs and individual stocks.
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02-23-2008, 01:34 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,037
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Quote:
Originally Posted by chinaco
On another thread someone was asking about consolidating their funds at one MF company (VG). I have also considered consolidating our assets and using 1 MF company for convenience. But I am wondering if I reduce my risk by using two MF companies and putting 1/2 of our money at two large MF providers (e.g., VG and T Rowe Price).
One question I have for the forum had about using s single provider.
Does the use of one MF company present a risk? What kind of situations might occur where I would wish that I would have split my assets between two MF companies? For example: - if VG ever went Bankrupt... would my money be tied up?
- is there a chance that some $h!th3ad at a MF company may do something like that European trader (lose several $B) and it affect my account?
Anyone have any thoughts?
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American
Dodge & Cox
Janus (only 1 international)
Putnam (an old roth IRA i can't cash in yet)
Vanguard (70% of my portfolio)
US EE and I bonds
i like to keep it spread around a bit for some excitement. the non VG ones are low expense ratio and have some pretty nice dividends and 15 year returns.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
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02-23-2008, 02:56 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,692
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Quote:
Originally Posted by Nords
I couldn't decide which is better-- the cheap company that keeps losing IRA beneficiary designations or the "full-service" one that uses my shareholder expenses to hire midget bowlers & prostitutes...
At least we're not investing in actual mutual funds-- just ETFs and individual stocks.
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I know one is Fidelity, but which one hires the prostitute and midgets, I want to go to their Xmas parties
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02-23-2008, 03:26 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Location: North-Central Illinois
Posts: 3,228
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Quote:
Originally Posted by Nords
I couldn't decide which is better--.......the "full-service" one that uses my shareholder expenses to hire midget bowlers & prostitutes...
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I'd settle for a video!
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Vanguard and T. Rowe Beneficiary Traps
03-27-2008, 06:45 AM
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#14
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Confused about dryer sheets
Join Date: Mar 2008
Location: Nashville
Posts: 1
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Vanguard and T. Rowe Beneficiary Traps
Take a look at Forbes 9-3-07 issue re limitations for beneficiaries custodied by Vanguard and T. Rowe. ("Disinherited by Vanguard" is, I believe, the title.)
While post-death planning is allowed, the rules at these two fund families do not afford pre-death planning by the IRA owner's heirs.
See Publication 590 for details on why this could be detrimental.
pete
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