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  1. Terrific post. I have emailed links to both my kids. We are in the process of moving one of my kid’s assets from Wells Fargo Advisors and into something else. Do you also like Vanguard for non-IRA investments?

    • Hi Elaine, glad you liked it! I like Vanguard for their low fee funds – you don’t actually need to be in Vanguard to own these, but if you are you get to access them for no fee which is nice.

      The best place to stash money really is dependent on the investment style of the person, some people like to trade in stocks more and if this is the case two factors become more important: Cost of Transaction and Ease Of Use. Vanguard is a little more old fashioned in its trading platform, so if someone has a slow and steady buy and hold type approach it is fine, but if someone is looking for technical trading it falls flat (people who are trading very quickly to lock in profits, theoretically..)

      So the answer is yes, if they can follow a solid passive investment approach then I would certainly put non retirement investments in Vanguard. But if they want bells and whistles I would go elsewhere. I actually have brokerage accounts (retirement and non retirement) with TD, Fidelity, OptionsHouse, eTrade and Vanguard. My favorite to trade with was eTrade, but also the most expensive, TD and Fidelity are jointly useless, and OptionHouse is good because it is cheap, but it is aimed at a more Pro market so you need a little more knowledge sometimes to feel comfortable.

      Vanguard does also have full brokerage so for $7 per trade they can buy and sell individual stocks, so all in all it should be good.

      • “I actually have brokerage accounts (retirement and non retirement) with TD, Fidelity, OptionsHouse, eTrade and Vanguard.” – Oh, my, don’t tell George! He just wrote and tweeted about how helpful it is to not have a bunch of accounts. 😉

        Truth be told, we also have accounts in a variety of places. We strive to consolidate and succeed to a point, but then there is always a reason to open or maintain an account, and the result is lots of statements and assets in different accounts.

        As for our 20something, the costs of the funds he was in at Wells were higher than they need to be for similar investments. So we pulled the trigger and sold a bunch of stuff, but he and his dad have been remiss in getting it re-invested. His latest job came through around then, and his focus is now on that, so the cash is just sitting…. ;(

        On the upside, the job (4 months on the road for a major, luxury foreign car company) is a good one. It’s his first time as a tour manager in the events marketing business. He’s worked many promotional events and was on the road for 6 months with another car company, but now he is in charge of staff, responsible for 9 cars, and handles just about all the logistics for his team as they go from dealer to dealer, running special events for them. So while the cashed in funds may be just sitting, he is earning nicely and getting super experience.

        Still, I do think he needs to focus on investing. Maybe Vanguard is a good solution for them.

        • I’m a little all over the place, but can keep track generally – the ones that caught me out in terms of overlapping investments came when we set up Allisons company 401(k) and 403(b) plans – have to watch overall allocations to make sure we don’t go too heavy. I do use Personal Capital too to link my Investment Accounts and track all the allocations (the link in the footer is an affiliate link for them).

          If they really want to do nothing regarding investing they might want to use Betterment – they do charge a fee, but for that the interface is very easy to use. I have met with their CEO and VP of Product and am very impressed with them – it basically uses Vanguard (and another fund) to make a basket of funds – or the Icecream idea above, and manages the rebalancing. If they are OK with rebalancing themselves (once a year or so) then I wouldn’t pay the fee for Betterment. Betterment can make you lazy too and not want to learn, which is not good in the long run, but can be good if you are too busy in the short term.

          His job sounds great! I love anything that involves travel as when you get away from home base and things go wrong you really need to think outside the box to fix them – plus the perks of being in a far away place make things like dinner fabulous each time.

          • Thanks for the suggestions. Just signed up for Personal Capital and will suggest it to my husband. Yes, my son’s job is giving him some great experience as he handles whatever gets thrown at him that day, from hotel reservations that go awry to car damage and break-ins; from staff and management issues to broken display pieces and drop-shipments that don’t arrive. Yesterday they had the biggest attendance yet and it went great. Today he’ll get some logistical work done and then head to NYC for some R&R before heading off to the next dealership.

            I think father and son just need to sit down and pick some Vanguard funds to complement the TIAA-CREF Roth IRA accounts he has. But neither seems to make it a priority. It is not an area I like and I am happy to leave it to them, but then it is hard to nudge them too much if I have abstained!

            • Yep I hear you! The Personal Capital portfolio analyzer will allow all the accounts to be looked at as a whole and that will help suggest where to fill in the gaps, it makes it a lot easier, but still many people are daunted by the task.

              Sounds like he has a great job, hope he packs some shorts for NYC, weather here is crazy hot right now!

  2. Matt, I’d love to get your opinion on “target date retirement funds.” I’ve been looking at these types of funds at Vanguard. I’m attracted to the idea of a “set it and forget it” solution that automatically re-balance and reallocates the asset mix.

      • Thanks, just finished reading your intro to target-date retirement funds. I was a bit confused by this part of your reply:

        “I would consider them better ideas if you go for one and push the
        retirement date on the fund back a ways… but don’t pick the one that
        actually will see you into retirement.”

        Did you mean plan on setting the retirement date later than I’d expect, because people are working longer? Like for example, if I plan to retire at 55, push the date for the target retirement fund to 65 instead?

        Then have another, different mutual fund to cover the first 10 years of retirement? One that’s more actively managed?

        Sorry, if I’m being obtuse. Glad that you’ve covered this topic. Until now, the only information I had on target-date retirement funds was from Vanguard itself. Good to get an outside perspective.

        • Hey Marcus, I just wrote a post about it for you – check it out and let me know if it makes sense. My point is to not be attached to the date on the box – if you change it you can make a ton more money, because the years before your retirement are when you have the biggest amount of capital saved up. If you become too risk averse here, as I feel a Target Date fund can be, then you can lose out on the biggest gains (needless to say, with risk, comes the chance of loss too).

  3. Hello, and thanks for your post. How come you recommend VTAPX for the bond side of the allocation and not the vanguard total bond market index fund? I also read somewhere that corporate bonds in a Roth IRA yield higher returns. I’m not too sure on which bond fund to choose because I’m hearing opposing information. Are you confident on choosing VTAPX? Do you currently hold this bond fund in your Roth IRA portfolio? Thank you for your time.

    • Hi Thomas, I just picked a shorter duration fund in order to help avoid the impact of raising interest rates.

      Total bond fund is good also, it pays more, but is more susceptible to price movement.

      In my case I have very low bond positions due to my time and risk horizon so I decided to lose out on return in order to have more dry powder.

      If you have a 60/40 portfolio there is more room for a total fund, but I might still have short terms in there right now.

  4. Hey Matt, just looking back a bit, and noticed that this entry says “VTIAX is a diverse blend of REIT companies”. Probably worth fixing.

    Cheers,

    Dan

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