My next account is a traditional IRA with Vanguard. This money originally came from a 403b I rolled over when leaving a non-profit employer back in 2002. At the time, I rolled the pre-tax money into an IRA with the Edward Jones office that my parents used. I had heard about “front loaded” funds and knew they might not be the best pick for me, but over the years of establishing relationships with several agents at that office (turnover was about every 3 years), I just kept it open. A few reasons I think this happened:
- Laziness on my part. It’s so much work to open an account with another company and move it over. It’s just not enough money to bother, right? Wrong.
- The fees were cleverly hidden from me. I even looked around at my online account and just couldn’t find evidence of them taking big fees! I did find the load information in the fund prospectus, but I still didn’t have a good grasp on what it was actually costing me.
- Being the nice person that I am, I was afraid to end the relationship with the agent. It took several months of talking myself up to pull the transfer trigger and work up the nerve to call Edward Jones. When I finally did, it was very easy and professional! Lesson learned on that. This desire-to-be-nice-to-everyone-even-at-my-own-expense is a trait of mine that I’m seeing more clearly as I get older and trying to overcome.
That being said, I made the jump to a Vanguard IRA early last year and am happy I did so. I don’t contribute to this account; I just watch it grow. Per my investment strategy, I have it in stock index funds:
- Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX). Since I had an initial balance of just over $10,000, I was able to buy into this fund for the lower expense ration of 0.05% (rather than VTSMX for my Roth).
Current balance is $12,017. This account is 100% stock investments right now, which I think is OK since it’s a relatively small portion of my overall portfolio. As I age and the balance grows, I may need to diversify it.
Next up: Vanguard Roth IRA!