I recently simplified my retirement savings strategy by moving most of my retirement funds into Vanguard. My savings were sort of confusing up until this point and after reading many posts and having some great conversations with friends, I decided that now would be a good time to set up an IRA. Here are a few key points to help those searching for solutions and also my findings.
Vanguard Account Settings
Unlike most of the other retirement firms, Vanguard has established funds already set up and users are simply contributing into funds without buying portions of funds from Vanguard. What this means is when you set up an account, you need to determine where you are contributing your retirement funds prior to moving your money into the account.
With Fidelity, I was able to buy and sell funds as I pleased and incurred costs while doing so. Vanguard does not operate in the same manner. Vanguard essentially lets you buy into funds prior to opening the account and offers you the mutual funds at cost. Vangaurd also advertises that their costs are five times less expensive than any of their competition. What they mean by this, is that the expense ratios for simply opening a mutual fund are nearly 5 times cheaper than any of their competitors.
For Instance, with Fidelity, to own a S&P 500 mutual fund that invested in mostly large cap companies, was running me nearly .67 expense ratio to own. This means that Fidelity would charge me a very high percentage to simply own the mutual fund they were managing for me. Vanguard charges me .09 to keep the same mutual fund. This is what they mean by they charge their customers at cost to invest in their mutual funds.
Vanguard Customer Service
I had a rather complicated setup with Vanguard because I was moving over a few different accounts from different banks. I had 3 401(k) at 3 different investments firms, stock options and stocks I owned from an ESPP (employee stock purchase plan), multiple ROTH IRA, and a stock trading portfolio for personal use. As you can see, my aggregate savings were all doing well but were not organized into a simple plan.
Vanguard CS spent close to 2 hours working through all the paperwork and investment opportunities with the company to find the right long and short term fits for my needs. I gained a lot from working with Bruce and he even left me his direct number.
Overall I am very pleased with their service and I am very excited to continue using their services! I highly recommend all new investors to switch over to Vanguard ASAP.