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April7th

Should I Stay Or Should I Go? American To Vanguard...ideas?

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Hi all! Any thoughts on this? I have investments in several American funds and most of them are pretty good. Most have low ER...and rated fairly high on Morningstar. They are all loaded funds, but I have not contributed any new monies in years. I know there are other factors to consider but this is my starting point to research.

 

AND one of the funds is pricey and not that highly rated.

So...let things lie? Exchange the one fund out? I am enrolled in Aspire now...and so I can access Vanguard.

Any help would be appreciated!

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Hi April,

Looks good to me. Leave your American funds in place, but not the pricey one. However, what are the ERs of the "low cost" American funds? I wonder if Vanguard fees are lower. In which case, transfer all of them to Vanguard. Just a thought.

 

Anyway, by what you just said about the one high price fund, of course, I would transfer it to Vanguard.

This provides a chance to review your asset allocation and choose the Vanguard fund that reaches your goal of a fully diversified portfolio with a split between stocks and bonds.

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Thanks Steve.

 

The ERs are between 0.50-75...not tooooooo bad. Also, the high ratings are attractive. Additionally, I am using Aspire to access Vanguard and there is a 0.15% fee added. I will do the math and go from there. I might be better off transferring over more than just that one.

 

Thanks again!

April

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Hi April,

Here are the ER for my funds in Vanguard. I qualify for Admiral funds so that is why some of the funds are have low costs. I think despite what Aspire charges, you can get lower ERs with Vanguard.

 

Name Ticker "%Expense Ratio" "Analyst Rating also from M*"
Vanguard Extended Market Idx Adm VEXAX, 0.09ER, 7
Vanguard Prime Money Market Investor VMMXX 0.16ER
Vanguard Total Bond Market Index Adm VBTLX 0.06ER, 6
Vanguard Total Intl Bd Idx Admiral™ VTABX 0.14ER
Vanguard Total Intl Stock Index Admiral VTIAX 0.12ER, 7
Vanguard Total Stock Market ETF VTI 0.05ER Imagine have an ER of .05% I love it.
Vanguard Wellesley® Income Admiral™ VWIAX 0.15ER, 7

 

Also depends how close you are to retirement. If retirement is years away 5+, I would run the numbers, find out if you qualify for Admiral fund ERs (by talking with Vanguard) and seriously consider transferring all of your money from American funds to Vanguard.

 

Hope this helps,

Happy holidays to you and your family,

Steve

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Wow! Good details...thanks!

 

My AF funds are in a 403(b).

But with the numbers you have listed, I can see that I need to look more closely. Although, I am 4 years from retirement, by the way.

 

Hmmm... Admiral funds are for for larger investments, yes? I have some of my money in Vanguard now. Sooo...will check all this out more closely.

 

Thanks so much!

Merry Christmas!

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If you were in a 403b with Vanguard you would be restricted to Investor class funds. Usually Vanguard allows Admiral class funds if it's an index fund with a balance of at least 10k--but not in their 403b. Aspire allows you to use Vanguard's Admiral class in their 403b and I don't think they have the 10k limit, but others on the forum may know for sure. The difference in the 2 Vanguard classes is 0.11% for TSM and 0.10% for TBM. The difference just about cancels out Aspire's added 0.15%!

 

If your AF funds are at EJ, I would go ahead and have Aspire transfer them to your account. Now that you have a good 403b, are you maxing it out?

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April

 

Since the load is paid and they have no surrender fees you could leave it at American . American funds do well for the most part and are steady. Some have beaten out index funds over time. American funds are mostly large cap oriented. If you decide to leave the money there you should think of adding some small caps to any Aspire accounts you start. Vanguard small cap index would do the trick. Of course it all depends on the funds you own with American Funds. Take a look at the morningstar box for your funds to see were they fall. Hopefully you own some bond funds too.

 

I was in the exact same position at one time-owning American funds but then jumped to Aspire once we got that available and transferred from American and went with Vanguard through Aspire. I didn't regret the move at all because I was able to cut my fees to half of what I was paying at American. Every cut in fees matters. Once my state 457B plan came on board, I stopped Aspire and went with the 457 because the fees were lower still. Fees matter! Now that I am retired I am 100% Vanguard and I am happy. You are heading in the right direction April. Make your last working years count by saving as much as possible!!

 

Tony

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I agree with Tony that AF has a number of above average funds (the problem is the average is fairly lousy!). Of course none of us likes the loads (and I realize that you're not paying those any more). I think paying about 2 to 3 times the ER of a Vanguard index fund for a managed fund is a negative. A lot of AF funds contain a mixture of US and international stocks that makes figuring out your asset allocation a bit more work. They also keep significant amounts of cash which is a gamble that doesn't always pay off. If you agree with John Bogle that index funds outperform managed funds over longer periods of time (and I and most of us here at 403bwise do agree with him), then AF looses to Vanguard.

 

If this is an EJ account using AF, do you know if EJ adds on an annual fee? They probably do but it may be about the same as Aspire's annual fee of $40. If you give us the list of the AF funds with tickers, we'll be able to compare them with some Vanguard funds.

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I will get that list posted this week...when I have a minute...crazy hectic this time of year. Thanks! I really appreciate that you might have the time to help me out. Yay!

 

I will say, I have gotten rid of EJ; their fees were VERY high, in my opinion. Way higher than the Aspire fees. The AF funds are just sitting out there, all by their lonesome, no advisor. I am trying to figure assest allocation. It is a bit tricky because of the funds I currently have through Vanguard and AF.

 

I will be back!

 

BTW, I have managed to convince a great number of people to switch to Aspire, through offering Superintendent conference day sessions and new-teacher mentor meetings. I have included this website in every meeting...I am getting a lot of good feedback. Only one nuisance issue with Aspire, however. I have helped a bunch of people fill out all the Aspire paperwork, only to find Aspire was using a new form and had not updated it online. Ay yi yi! I have listened to a podcast here with a representative from Aspire...I wonder if he knows about this glitch? Anyway, everyone had to re-submit forms. But...worth it!

 

Thanks again.

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April

 

Be patient with Aspire. When I first started with them customer service and their website options were somewhat sub par. I have seen improvements over the years. They are on the fast track to getting better. The form issue could happen to any company . Remember-Aspire works because it allows you a low cost Vanguard option you would otherwise not have. If your workmates use it to tap into higher cost funds the advantage is greatly diminished. Best to use this Aspire option to tap into very low cost funds like index funds from Vanguard or Fidelity. Its all about keeping costs very very low.

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BTW, I have managed to convince a great number of people to switch to Aspire, through offering Superintendent conference day sessions and new-teacher mentor meetings. I have included this website in every meeting...I am getting a lot of good feedback.

That's wonderful!! If only every school had a "403bwiser" like you to help their colleagues become aware of their better choices!

 

I agree with Tony--use only Vanguard's low-cost index funds, and go "self-directed" to avoid the advisor's fee.

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BTW, I have managed to convince a great number of people to switch to Aspire, through offering Superintendent conference day sessions and new-teacher mentor meetings. I have included this website in every meeting...I am getting a lot of good feedback.

That's wonderful!! If only every school had a "403bwiser" like you to help their colleagues become aware of their better choices!

 

I agree with Tony--use only Vanguard's low-cost index funds, and go "self-directed" to avoid the advisor's fee.

 

 

Congrats on getting your colleagues and the Superintendent on board.

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April

 

Be patient with Aspire. When I first started with them customer service and their website options were somewhat sub par. I have seen improvements over the years. They are on the fast track to getting better. The form issue could happen to any company . Remember-Aspire works because it allows you a low cost Vanguard option you would otherwise not have. If your workmates use it to tap into higher cost funds the advantage is greatly diminished. Best to use this Aspire option to tap into very low cost funds like index funds from Vanguard or Fidelity. Its all about keeping costs very very low.

Not QUITE sure how to use the quote function here...but here goes! Using Aspire, I have advised everyone to skip the advisor and go to either a target fund or look at suggestions (found here on this site and at Bogleheads site) for choosing 3 or 4 funds that allocate nicely. With the target funds , I tell them, set it forget it. With the choosing of three or four, I just remind them they will need to shift percentages over time, no one will do that for them.

 

I have learned soooo much from this website. Quite interesting! And really helpful.

 

I am not knocking Aspire, really. I understand these things happen. And well worth the effort. It truly is our ONLY decent choice here at my school district. People have been shocked when they sit down and really start to understand how much money they are losing. It is so easy to feel inadequate when an "expert" such as a sales person from Axa shows up in one of our faculty rooms.

 

I have met with over 200 people so far, more to come. However, I do not ever profess that I am in any way an expert! I simply show them some numbers.

 

So! Back soon....have a great holiday season.

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April

 

Be patient with Aspire. When I first started with them customer service and their website options were somewhat sub par. I have seen improvements over the years. They are on the fast track to getting better. The form issue could happen to any company . Remember-Aspire works because it allows you a low cost Vanguard option you would otherwise not have. If your workmates use it to tap into higher cost funds the advantage is greatly diminished. Best to use this Aspire option to tap into very low cost funds like index funds from Vanguard or Fidelity. Its all about keeping costs very very low.

I have met with over 200 people so far, more to come. However, I do not ever profess that I am in any way an expert! I simply show them some numbers.

 

So! Back soon....have a great holiday season.

 

 

Hi April,

Meeting over 200 people is so cool! I have been doing this for 20 years and have never met so many, and only a few seem to understand the numbers. Whatever you are doing, keep it up! You are the new reform leader. You might want to talk to a local reporter and tell them what you are doing and why, and mention the NY Times articles. Keep the discussion going, and keep meeting your colleagues.

Happy holidays,

Steve

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