USAA for investment help?

[Joss]

We are ready to pull the plug at the end of this year and feel fairly well set.

Now, I don't know enough about investing to do more than find something that won't lose my money and just leave it there. I've just never committed the time to learn or had the interest to do so, so I'd keep this "policy" if I could. But maybe in a year or so, I could find the time to audit some classes on this.

I've been with a Walnut guy for about 6-7 years and he takes a percent of the whole value and really doesn't do much but try to convince me to buy annuities. Other than that, no big hairy... plus or minus. I do sort of wonder about why I keep paying him though.

I've been with USAA for auto insurance since about 1972 and have always found them to be very, very good. In the last couple of years I've been getting some junk mail from them about their investment branch. The only weird thing about USAA is doing business with them is usually over the phone... awkward.

Has anyone had experience with the USAA investment people? Results?

 

[REWahoo]

Has anyone had experience with the USAA investment people? Results?

Based on my experience with them, I think you'd do much better with Fidelity or Vanguard. USAA fund performance is so-so as is their fee structure.

However, if you know nothing about investing and don't have the ability and/or will to learn, I'd say they were far better than most "financial advisers" out there.

See this thread: http://early-retirement.org/forums/index.php?topic=12165.0

 

[Joss]

Thanks Wahoo. That's exactly what I needed.

(Note to self: Use search first )

 

[LOL!]

I think Scott Burns commented on USAA recently. He basically says: Use Vanguard because they are cheaper.

 

[Joss]

Is Vanguard a person with a desk that you go see and says "Hmmmm, you should do this, this and this"....

or just a voice on the telephone that says, "Whadaya want?"



Jeeze I hate asking these revealing questions.

 

[Eagle43]

What Re Wahoo said. I was with USAA for years and moved it all to Vanguard. Nothing really against them, but Vanguard beats them with lower costs.

 

[Joss]

Great about Vanguard, but how educated do you need to be to use them?


Are they a do-it-yourself access to the market... or do they offer decent advise based on your specific situation?

 

[Nords]

Now, I don't know enough about investing to do more than find something that won't lose my money and just leave it there. I've just never committed the time to learn or had the interest to do so, so I'd keep this "policy" if I could. But maybe in a year or so, I could find the time to audit some classes on this.

Josh, it sounds as if you've been paying a FA to do the things that you've chosen (at least until now) not to do for yourself.

I've been a USAA car insurance customer for over 25 years and Fidelity for over 20. I've never invested with Vanguard. They will all probably treat you OK. They probably won't try to sell you equity-indexed annuities, or at least not right away. They all have various retirement-planning & asset-allocation software systems that will tell you exactly which and how much of their funds (not the other guy's) you should buy. Their staff are all highly skilled at reading their scripts to you over the phone and at asking their supervisor calling you back after researching your questions in the tax code. Vanguard is generally regarded as good basic service for rock-bottom fees, Fidelity is generally regarded as a bit more service for a good bit more fees, and IMO USAA is the little financial-services weiner dog bouncing around with their tongue hanging out, yapping and trying to get the attention of the big dogs.

But unless you're willing to pony up 0.25%-1% in annual fees, none of them will offer a high degree of personal service & hand-holding. All of them will expect you to largely take care of yourself and to agree to arbitration in the event of lawsuits. In other words, you're on your own. You're not bleeding in shark-infested waters, but IMO you are more or less handing your credit card over to the new-car sales guy and asking "How much of a payment can I afford?"

The point of all of this is that you're setting yourself up for the classic investor-psychology trap of buying high and selling low. If you do what they recommend and then the market drops 15%, unlike your FA they're not going to hold your hand and reassure you that the market will recover. They're going to do what you tell them you want to do, and in the case of Vanguard they may charge you a 2% "short-term" trading fee for doing so.

The cost of saving yourself the FA's fees is education. It's as simple as reading the books mentioned on this forum-- from the "Boglehead's Guide" & the financial chapters of "Work Less, Live More" through "Random Walk" & "All About Asset Allocation" all the way up to "Four Pillars". There's even "Triumph of the Optomists" and "Intelligent Asset Allocator" if you really want to dig into the terminal boredom technical details of asset allocation. But by reading one or two of those books-- and by using this board as your place to ask dumb questions support group, you'll be more confident that you're getting the right recommendations from whichever firm you choose. You'll be less likely to retreat at the first whiff of danger.

 

[Joss]

Thanks, Nords. Right to the point.

Right now, I'd about as soon go "do-it-yourself" on a hot 220 breaker box as to dive into this financial stuff. Electricity and money management have about the same appeal to me. With electricity, though, at least you can (usually) get what you pay for in a professional.

Self-education appears the only way out.

Is "Boglehead's Guide" the obvious starting point?

 

[Nords]

Is "Boglehead's Guide" the obvious starting point?

You have to start somewhere, and if you haven't started yet after all these years then that's a good place to start now. If you try to start your investment education with "Intelligent Asset Allocator" then you'll feel like you're running head-first into a brick wall...

The book was written by three posters on Vanguard Diehards and should be available at the local library. (I bought a copy for another read, and our kid is about done with her Motley Fool Guide to Teen Investing.) One of them is a previously-published author, the second is the board's grand old man with a humongous number of posts, and the third is a tough guy skilled bond investor. It's no surprise what they think you should do, and with whom, but you can at least feel comfortable that they're not getting a commission.

The important thing is that a book like Bogleheads is a gateway to more books, more websites, more reading, more learning... and more confidence in your asset allocation for the day that the Dow is down 250 points.

 

[Joss]

"You have to start somewhere, and if you haven't started yet after all these years then that's a good place to start now."

Roger that.