I've been reading the blog for as long as I can remember and I sporadically read the board.

We've been clawing our way out of debt and I'm at a point that I want to start increasing my retirement savings slightly. I've got a small amount in a 403b situation (my name) that I'm not happy about now that I'm getting more educated on these matters and will be trying to determine whether I'm better leaving the accumulated funds there or moving them. But that's not my question for now.

I'm going to start having some retirement funds set aside (still deciding 403b or IRA) in DH's name and slightly increase what I set aside each month. We both work for the same school district and have the same options available. I know I want to start sending money somewhere different. Vanguard and Fidelity are both available to us. (One list I have says that T. Rowe Price is, but another doesn't...so I don't think the are). I've read good things about both (here and elsewhere) and particularly enjoyed this thread: http://www.getrichslowly.org/forum/view ... t=vanguard and

FIL is my advisor/mentor in this area. He's away this weekend and I'm trying to get all my own ducks in a row so that when we sit down over the next few weeks that I'm educated enough to have good ideas and good questions for him. He deals with both F and V and agrees that both are good choices.

I called both to confirm what is available to me for a 403b. Vanguard was very helpful and all they have is available. I have spent more time on their website. I quite like it (important to me) and I got warm fuzzies from them on the phone. I haven't reached an individual from Fidelity (the number I called switched me to someone else who gave me another number to call and I haven't) so I don't know if everything Fidelity offers is available to me or not, but I'll assume so based on Vanguard's answer. I didn't like having to talk to multiple people and the people that I talked to didn't thrill me. Initially, their website was confusing to me but I've spent more time on it now and it's not bad.

I was ready to just ditch the Fidelity idea and stick with Vanguard, but then I looked at their annual fees. My understanding is that Vanguard (knowing I will have below Voyager level assets for quite a while) charges $15 a year PER FUND, where Fidelity charges $24 a year per ACCOUNT (which I presume can contain multiple funds). Obviously, this isn't the only fee, but it's the first one I can readily grasp.

I initially thought I'd do Target/Freedom funds since I'm clueless, but FIL has scoffed at that idea, and I'm interested in learning more. So I'm sure I'll want to have a few different funds. So that makes Fidelity more attractive if I'm understanding the fees correctly. However, if I'm going to have some $ in DH's name and some in mine (I should do that, right?), and knowing that he has no interest in any of this, I thought maybe to get myself 'introduced' to both F and V I should put DH's money into a Vanguard Target fund and let it be. Then start my new account at Fidelity and let FIL advise me as to how much/what/how etc. This would keep DH's at $15 a year and mine at $24. I could do this for a while and then see if I wanted to go all to one or the other. I know eventually it might be in our best interest to have a larger accumulation in one spot to qualify for something like Voyager level at Vanguard.

Thoughts? Suggestions?

TIA.

(FIL lent me Bogle on Mutual Funds and I'm working on it this weekend as well.)

I think you are focusing a lot on the fees.
You quite obviously want to go with Vanguard. You stated that you felt more comfortable with their website and their customer service was excellent. You seem to be a person who likes to compile all the information before making a decision. But so far you haven't even been able to get all the information from Fidelity. Do you really think it will be any easier once you are a customer? Isn't the slight difference in fees worth that?

I say this because from your post it seems like you are only planning on opening two accounts at the most. So Fidelity would only be $6 cheaper per year. Even if you opened 4 accounts with Vanguard you are still paying only $36 more a year. To me that is a small sum when compared to the piece of mind you would get from going with a company that you like.

Thanks for your response. I just feel like I've been taken advantage by my old situation and don't want to pay a penny more in fees than I have to. But you're right, I'm very much swayed by customer service and pleasing/easy websites. And I suppose while I don't have a lot saved, I wouldn't have to get a bunch of different things if the fees bothered me that much.

Any other comments on having things one place vs. a few?

I don't have experience with Fidelity, but I highly recommend Vanguard and their Target Retirement Funds. I have all my Roth IRA in one of their Target funds and it's been very easy to manage. Just one place for my money and I don't have to worry about it. Why did your FIL scoff at the idea? Most financial advice I have read says that these type of one-in-all funds are a great choice for most people, especially those who don't want to actively manage and rebalance their porfolio frequently.

Their website is user-friendly and has answered most any question that I've had about their funds or policies. I haven't had to call them for anything yet, but my dad has called them with various question and has had good experiences with them over the phone.

I think the Vanguard $15 fee goes away once you have more than $5k in in the fund, which is another reason to go with a Target fund. If you only have one fund you will reach this minimum very quickly and will no longer have an account fee.

If you're worried about fees then you should stick with index funds, which have very low expense ratios and do just as well as managed funds that have higher expenses. And if you're going to use only index funds then you might as well go with a Target fund since it's a diversified mix of 3-4 index funds. Is there a particular reason that you want to choose 3-4 different funds yourself instead of using one of their fund-of-funds like the Target funds?

Thanks.


FIL is retired and spends much of his time researching and studying this stuff. I'm sure he did that even before he retired as well. Since I'm asking him the questions, I'm thinking that he's thinking that I want to be more actively involved. And since I'm not sure yet if I do or don't...I'm wishy-washy over whethter I think the 'set and forget'-ness of them is a good or bad thing yet.

I thought that the Target funds had higher fees than some others, that's why I thought some people said to stay away from them. But I don't really 'get' all the fees yet.


Good to know! I hope that's the case. Someone else told me that they'll waive fees if you accept an online prospectus. But I can't find any of this info online. (Then again, I've looked at so much I definitely could have missed it.)

For individual accounts (taxable, IRA, Roth IRA), Vanguard waives fees if you pick the online statements or reach $5000 per fund. You can still get a single annual statement in the mail though.

For employer-sponsored retirement accounts (403b, SIMPLE-IRA), Vanguard charges per fund (unless you're in a giant plan where a trust groups everybody together). Online statements cannot waive this fee -- only reaching the 100K milestone will. However, Vanguard groups all members of a household together so if your FIL has significant assets at Vanguard, using his mailing address would waive your $15/fund fee.

On whether to choose Fidelity or Vanguard, Fidelity has cheaper core index funds (roughly 7 Spartan funds) but Vanguard has a wider number of low expense funds. That means decide on your asset allocation first. If you decide you need X, Y or Z that's available at Vanguard for 0.25% ER or Fidelity at 0.85% ER, the annual expenses on $2500 invested in that fund would wash out the $15 fund fee.

Thank you! Thank you!

I'm really starting to understand this ( in a 'moving from clueless to having somewhat of a clue' sort of way).

That makes sense about when they do and don't waive things and fits with everything I've read. And I had thought about using FIL's mailing address. We do have various things mailed to that address, so it wouldn't be totally weird. I think DH's state retirement stuff goes there, etc. I was concerned that they'd lump us into the same online account if we did that. I think I had confirmed with them that we CAN choose to have both his and hers assets on one 'account' as far as managing it from the same online screen, etc. So I was concerned that if we had the same mailing address, that could lump us in with the inlaws. It sounds like the perfect solution if that is not the case.

I'm in the process of figuring out my AA. And I'm coming up with what I think I'd want from Vanguard. I'll get together with FIL the end of the week or so and tell him what I've come up with.

Thanks for pointing out the ER vs. Annual Fee. I totally get that now.

I think I'll end up with Vanguard. But I'm trying not to get locked into any one plan in my head yet until I've got it put together in my head. But doing the research for my AA, I'm really leaning towards Vanguard.

For my IRA and my wife's, we had to fill out the limited power of attorney forms to manage each other's accounts. So just having the same mailing address will not automatically let everybody see or manage each other's accounts.

You are comparing two very good companies with low fees. I think you could optimize your choice based on what you plan to do now. If you do something different a year from now then the other choice might have been optimum.

In my opinion choosing between these two companies should com down to which one YOU are more comfortable dealing with. If one has a website or educational material that is more user-friendly to you then I would put a lot of weight on that.

Does Vanguard automatically link household accounts (for the purposes of fee waiving) based on the address, or do you have to tell them to do it?

It looks like you're leaning toward Vanguard. Even your limited exposure to the two companies makes clear the differences I see in them magnified over 10+ years.

I have had accounts with both companies and in my opinion Vanguard outclasses Fidelity at every turn. Fidelity customer service has gotten better in recent years, but I would transfer my funds to Vanguard in a heartbeat if I could. Since I now live outside the US I am unable to change funds (my Vanguard company-sponsored funds have all been acquired by Fidelity) without incurring shocking fees, so I'm stuck with Fidelity. Go with Vanguard.

Actually, to bring closure to this post, I DID go with Vanguard. I'm moving about 2/3 of my existing 403(b) and starting my new contributions going there. DH has also started a 403(b) there. I set the accounts up yesterday and called them twice. I am scratching my head wondering whether I'm overly influenced by all I've read. The manner of the agents was SO professional yet comfortable. Does that make sense? It just seemed decidedly different from other phone interactions. I'm very happy with our choice so far.

Thanks all.

First off - hats off to you for taking an active role in your retirement!

Vanguard and Fidelity are both good and reputable companies. I work with both of them professionally and from my perspective, it's a toss up that goes to who you are most comfortable with in the end.

Personally, I love some of Vanguard's products. I also like the fact of going into my local Fidelity office and speaking with a few of the reps there; but, that's just me. I am able to "talk shop" about certain funds, new ETFs, etc. Fidelity also offers some good trading platforms, bill pay, etc. that I am just used to.

So, I have accts at FIDO, a couple Vanguard funds and get the best of both worlds. It seems like you are leaning towards Vanguard. You won't be unhappy there. Don't spend too much time and enerrgy fretting over your decision. It's really like choosing between 2 great restaurants, IMO. You'll be fine either place.

Good luck and good investing!!!

Mike