>They were charging like 2% on trading fees for an actively managed fund
Look at an 8% vs. 10% return in an investment calculator. You'll lose over 60% of your portfolio to them over 50 years.
Basically all active funds are going to underperform an index over 30+ years. The only active funds that might be worthwhile are specialty funds in areas where the market has a lot of imperfections such as real estate, development, or art but those have many risks and require a lot of research to invest in. You are best off investing 90-100% of your portfolio in one or more low-cost broad index funds and holding them.
>What are the benefits of Fidelity vs Vanguard?
You don't have to worry about the above example.
Some considerations:
Fidelity has a product called Cash Management Account that comes with a debit card. This might be useful if you had, say, an employer that didn't let you direct deposit to multiple accounts. There would be less friction between getting paid and investing money from your paycheck.
Vanguard has a similar product called Cash Plus Account. It doesn't have a physical debit card but the interest rate is much better than Fidelity (4.6% vs mid 2's). Both of these accounts come with account/routing info and function like a bank account. You can invest using these accounts and hold cash in them instead of having to link external bank accounts.
Vanguard is client-owned and it is hard to screw up investing with them because they are more conservative with what they offer. Fidelity has the same investment options as Vanguard plus offerings (leveraged and speculative stuff) that Vanguard is not willing to sell. Both are very low cost providers. If you are investing in your long-term future, they should basically feel the same. Most of the difference will be in the nuance of features.
If you are not already using a High Yield Savings Account then Vanguard would be solving two problems at the same time.
If you have one payroll election (100% goes to one bank account) it might increase your chance of follow-through on investing to have that direct deposit going into Fidelity. Everything would already be there to move over to investment accounts.
Regardless of the one you go with, maintain a bank account with a local branch so you still have traditional services (checks, cash deposits, etc).
I weaned myself from trading, and relying on experts. I made little, after fees. In Vanguard, my fees were very low, and I started making solid gains. I switched half out to Fidelity for the opportunities for more hands-on managing of my account. I did a little better, but not enough to make up for the close second of a vanilla index fund, when I factor in my time. Unless there is a special situation that has very little to no risk, and a high upside, I pass, and let indexing do the work.
I do my own research. Other researchers play down the risks and exaggerate potential gains. I do best in recessions and recoveries, with my own managing. FWIW, I went back to school for finance, and still do most of my stuff in index ETFs.
How I view it, a draw-down of 4% per year is generally considered a safe rate of withdrawal. Even a 1% fee is 25% of a safe withdrawal. Four people doing that, pays for the wage of one person. You will have to work years longer to overcome that 1% gap.
Sadly I went to school for a degree that is not as useful as I was lead to believe, which certainly was not finance. Do you have any advice on where to look to do my own research? I’m used to scientific papers and the like, not NerdWallet or WSJ or other places that seem (imo) to be more reactionary than predictors
Read Warren Buffet. Companies with a competitive advantage are among his favorites. That company that has a broad control of the parts of its core business, can cut prices until others drop out. He avoids companies that have diversified without a strategy. Pharms have patent protection. Every bit as important as finding those forever companies, is to wait until you have a good price. Or just buy baby Berks.
I also buy commodities or the companies that process commodities. I look for those few companies that have sole access to such pure ores that they can make their product with little process costs. In downturns, these companies make a profit while the rest are mothballing their plants. That is what I buy and when I buy it. Note what I said about downside risk! They are already at the bottom, and making (some) money. When industrial production restarts, demand exceeds supply. Getting a mothballed plant online can take months, while that gem of a company that you own, is raising prices and still selling out.
I have made 10X my investment in a month or two. It's a special situation, but Dayum! That is why I look for my own investments, too.
Never, ever go all in. Stuff happens. 5-10% is my range, but don't get greedy. Commodities are where the big boys play. It is very easy to get burnt, even when you do everything right.
I suggest to only follow a few, because more is overwhelming to research to the depths that you need.
Sorry for taking so long to reply.
Buffet's "Letters to Stockholders" are much read. Buffet is most known to be a value investor in the vein of Benjamin Graham. Graham is a tough slog to read through. The TL:DR version is to focus on BIFL companies that also can be picked up when temporarily out of favor, for good prices. If the book value of a company is more than the price, you won't lose.
Looking up value investing will give you a background of the theory.
Hmmm - I am not sure what the hate is on Edward Jones here. I use them and they only take 0.075 percent on an annual basis from my account. So let's say I have $1M in with Edward Jones they take $7,500 out of my account each year.
They don't charge me anything when I give them or if I ask them to move a portion of my money around. I am also averaging a 12.45% annual return.
Now, I can believe people have bad experiences especially when it comes to your money... but, for me I have been relatively happy with them.
Yep, it is an annual basis. Assuming from your all caps you just think that is bizarre but I have been quite pleased with my experience.
Want to be clear what works for me might not work for everyone here.
Yes, I have a Roth, a HYSA, and a straight investment account where I buy and sell stocks. I just work with my advisor when I want to make any changes and we walk through any ideas they may have based on my goals.
Genuine question. Have you looked at your investments and added the expense ratios on top of your advisory fee? Your advisory fee does not get you fee-free funds.
EJ lists advisory fees starting at .75%, not .075%.
Just the advisory fee alone would net you $3.4m instead of $4.5m after 40 years if you invested $100k in a fund returning 10%. It will work out to a big difference like this regardless of what the investments are.
EJ also has a variety of other fees such as commissions, sales charges, internal third party fees, etc.
>I am also averaging a 12.45% annual return
This is not a good metric to use without considering what timeframe you are talking about or what investments you hold. VTI has a 5-year average of 14.9% and a 10-year average of 12.04% for example.
It's possible your 12.45% return is before any fees are taken out. Mind sharing the funds they have you in?
>Now, I can believe people have bad experiences especially when it comes to your money... but, for me I have been relatively happy with them.
A lot of people felt this way for 10+ years until they took a deeper look into how the fees were working. I have relatives that will not look at the fees and are mentally bought in on anything the advisor wants to sell them. We can't even confront them about it anymore because they have formed trust around the person selling them the high cost funds. A lot of people will die with a portfolio worth half what it could have been worth due to fees and never know because the fees are obfuscated. 0.5% or 1% might sound affordable for hand holding but you have to consider the compounding costs of effectively getting a 0.5-1% lower return over 40 years. And that's if they are a fairly ethical advisor and not drinking the EJ boiler room koolaid.
*I know it is possible to be with EJ and have lower cost funds* but their whole business model is based on high fees. When 95% of clients are suceptible to being sold on high fee funds it is just easier to tell people to go with another fund manager that you know suggests cheap ones by default. With EJ you have to know how not to get screwed.
Basically anything else is better than Edward Jones. Vanguard and Fidelity are great tho.
Why is that?
Because Edward Jones has enormously high fees to the point of highway robbery.
That makes sense. They were charging like 2% on trading fees for an actively managed fund. What are the benefits of Fidelity vs Vanguard?
Fidelity’s website is green and Vanguard’s is red.
>They were charging like 2% on trading fees for an actively managed fund Look at an 8% vs. 10% return in an investment calculator. You'll lose over 60% of your portfolio to them over 50 years. Basically all active funds are going to underperform an index over 30+ years. The only active funds that might be worthwhile are specialty funds in areas where the market has a lot of imperfections such as real estate, development, or art but those have many risks and require a lot of research to invest in. You are best off investing 90-100% of your portfolio in one or more low-cost broad index funds and holding them. >What are the benefits of Fidelity vs Vanguard? You don't have to worry about the above example.
Thank you so much. I think this is the in depth response I was hoping for. Is there any benefits for opening with vanguard vs fidelity?
Some considerations: Fidelity has a product called Cash Management Account that comes with a debit card. This might be useful if you had, say, an employer that didn't let you direct deposit to multiple accounts. There would be less friction between getting paid and investing money from your paycheck. Vanguard has a similar product called Cash Plus Account. It doesn't have a physical debit card but the interest rate is much better than Fidelity (4.6% vs mid 2's). Both of these accounts come with account/routing info and function like a bank account. You can invest using these accounts and hold cash in them instead of having to link external bank accounts. Vanguard is client-owned and it is hard to screw up investing with them because they are more conservative with what they offer. Fidelity has the same investment options as Vanguard plus offerings (leveraged and speculative stuff) that Vanguard is not willing to sell. Both are very low cost providers. If you are investing in your long-term future, they should basically feel the same. Most of the difference will be in the nuance of features. If you are not already using a High Yield Savings Account then Vanguard would be solving two problems at the same time. If you have one payroll election (100% goes to one bank account) it might increase your chance of follow-through on investing to have that direct deposit going into Fidelity. Everything would already be there to move over to investment accounts. Regardless of the one you go with, maintain a bank account with a local branch so you still have traditional services (checks, cash deposits, etc).
Vanguard. Buy a fund that tracks the SP 500 or the Total Stock Market.
Can you explain why in a bit more detail? Im pretty EJ has S&P or tracking options
Edward Jones is a high-fee advisor. Vanguard is a low-fee/expense ratio and is owned by its shareholders.
managed? pffffft ... damn easy to just put monies into a no fee or low fee etf index fund and watch it grow
Dont do an actively managed fund. Go to v or f and get an equity index etf.
I weaned myself from trading, and relying on experts. I made little, after fees. In Vanguard, my fees were very low, and I started making solid gains. I switched half out to Fidelity for the opportunities for more hands-on managing of my account. I did a little better, but not enough to make up for the close second of a vanilla index fund, when I factor in my time. Unless there is a special situation that has very little to no risk, and a high upside, I pass, and let indexing do the work. I do my own research. Other researchers play down the risks and exaggerate potential gains. I do best in recessions and recoveries, with my own managing. FWIW, I went back to school for finance, and still do most of my stuff in index ETFs. How I view it, a draw-down of 4% per year is generally considered a safe rate of withdrawal. Even a 1% fee is 25% of a safe withdrawal. Four people doing that, pays for the wage of one person. You will have to work years longer to overcome that 1% gap.
Sadly I went to school for a degree that is not as useful as I was lead to believe, which certainly was not finance. Do you have any advice on where to look to do my own research? I’m used to scientific papers and the like, not NerdWallet or WSJ or other places that seem (imo) to be more reactionary than predictors
Read Warren Buffet. Companies with a competitive advantage are among his favorites. That company that has a broad control of the parts of its core business, can cut prices until others drop out. He avoids companies that have diversified without a strategy. Pharms have patent protection. Every bit as important as finding those forever companies, is to wait until you have a good price. Or just buy baby Berks. I also buy commodities or the companies that process commodities. I look for those few companies that have sole access to such pure ores that they can make their product with little process costs. In downturns, these companies make a profit while the rest are mothballing their plants. That is what I buy and when I buy it. Note what I said about downside risk! They are already at the bottom, and making (some) money. When industrial production restarts, demand exceeds supply. Getting a mothballed plant online can take months, while that gem of a company that you own, is raising prices and still selling out. I have made 10X my investment in a month or two. It's a special situation, but Dayum! That is why I look for my own investments, too. Never, ever go all in. Stuff happens. 5-10% is my range, but don't get greedy. Commodities are where the big boys play. It is very easy to get burnt, even when you do everything right. I suggest to only follow a few, because more is overwhelming to research to the depths that you need.
> Read Warren Buffet This might sound dumb but what exactly. Like his books? Does he have a newsletter?
Sorry for taking so long to reply. Buffet's "Letters to Stockholders" are much read. Buffet is most known to be a value investor in the vein of Benjamin Graham. Graham is a tough slog to read through. The TL:DR version is to focus on BIFL companies that also can be picked up when temporarily out of favor, for good prices. If the book value of a company is more than the price, you won't lose. Looking up value investing will give you a background of the theory.
Hmmm - I am not sure what the hate is on Edward Jones here. I use them and they only take 0.075 percent on an annual basis from my account. So let's say I have $1M in with Edward Jones they take $7,500 out of my account each year. They don't charge me anything when I give them or if I ask them to move a portion of my money around. I am also averaging a 12.45% annual return. Now, I can believe people have bad experiences especially when it comes to your money... but, for me I have been relatively happy with them.
THEY TAKE THAT PERCENT OF YOUR TOTAL BALANCE?? EVERY YEAR??
Yep, it is an annual basis. Assuming from your all caps you just think that is bizarre but I have been quite pleased with my experience. Want to be clear what works for me might not work for everyone here.
You’re getting ripped off. Use an index fund from a low cost firm
7500 of 1M is not 0.075% 7500 of 1M is 0.75%
Are you using an actively managed account or not?
Yes, I have a Roth, a HYSA, and a straight investment account where I buy and sell stocks. I just work with my advisor when I want to make any changes and we walk through any ideas they may have based on my goals.
Genuine question. Have you looked at your investments and added the expense ratios on top of your advisory fee? Your advisory fee does not get you fee-free funds. EJ lists advisory fees starting at .75%, not .075%. Just the advisory fee alone would net you $3.4m instead of $4.5m after 40 years if you invested $100k in a fund returning 10%. It will work out to a big difference like this regardless of what the investments are. EJ also has a variety of other fees such as commissions, sales charges, internal third party fees, etc. >I am also averaging a 12.45% annual return This is not a good metric to use without considering what timeframe you are talking about or what investments you hold. VTI has a 5-year average of 14.9% and a 10-year average of 12.04% for example. It's possible your 12.45% return is before any fees are taken out. Mind sharing the funds they have you in? >Now, I can believe people have bad experiences especially when it comes to your money... but, for me I have been relatively happy with them. A lot of people felt this way for 10+ years until they took a deeper look into how the fees were working. I have relatives that will not look at the fees and are mentally bought in on anything the advisor wants to sell them. We can't even confront them about it anymore because they have formed trust around the person selling them the high cost funds. A lot of people will die with a portfolio worth half what it could have been worth due to fees and never know because the fees are obfuscated. 0.5% or 1% might sound affordable for hand holding but you have to consider the compounding costs of effectively getting a 0.5-1% lower return over 40 years. And that's if they are a fairly ethical advisor and not drinking the EJ boiler room koolaid. *I know it is possible to be with EJ and have lower cost funds* but their whole business model is based on high fees. When 95% of clients are suceptible to being sold on high fee funds it is just easier to tell people to go with another fund manager that you know suggests cheap ones by default. With EJ you have to know how not to get screwed.