Sorting out retirement savings: Vanguard love and funds
May 30, 2013
I love Vanguard. I love their service, the easy user interface, the fact I’ve never had to talk to anyone just to get simple things done. Most of all: I love their low expense ratios and the option to buy Admiral Shares to lower the expense ratios even more.
My accounts have mostly been lying fallow for the past few years as my employer sponsored plans were with another, much more expensive, company. It was, for a saving junkie, a pretty depressing sight: fund changes fully dependent on the whim of the market and not on my active saving. And my savings rate was dismal: I only put away enough to maximize the match because my cash flow needs were awkwardly high.
Three years down the road, my contributions, match and any gains totaled about $19k in the new account.
Time to clean house
1. We finally processed the rollover IRA paperwork, months after I should have done it. Stupidly, I couldn’t just take care of it myself, my former employer had to be involved. But: done.
2. Three years ago, my very first sub-$3000 401(k) had no place to go with Vanguard’s $3000 minimum to open any normal account. My only choice was a STAR fund. It had a whopping 0.34% expense ratio but that was still better than those other firms that charge nearly 1%. Into the STAR fund it went.
3. The new Rollover IRA money went into the STAR funds account and the whole shebang was used to buy up new Admiral Shares.
Voila!
I now have $74k split into three accounts across a variety of funds:
- 70%: split between a large blend (large cap and a blend of growth & value) and foreign large blend index funds.
- 20%: split between an emerging markets index fund, a mid-cap growth fund, a small cap investor fund, and a total stock market index investor fund.
- 10%: in treasury bonds. (Roth)
It’s no $100K saved by age 30, despite putting something away every year since I was 21, so I’ve got some catching up to do. Also, my current employer doesn’t yet offer a retirement savings plan so it’s time to research ways to put away money on my own.
On the plus side, we arranged for PiC to max out his plan this year to make up for my lack of a plan so that’s great.
How’s your saving for retirement or just plain savings going?
Cash savings, as always, is going excellent. Have enough with current work to eat for the summer break from grad school. IF job interview from this week works out, looking forward to FINALLY contributing a little to retirement savings for the first time in four years. I’ve left it untouched since I’ve been back in school (meaning I have withdrawn nothing, just let it ride), but also have not contributed to it because savings had to cover living expenses for school breaks. Looking forward to breaking that cycle!
That makes sense, looking forward to new savings cycles!
$100k by 30?! Is that really the current recommendation? I didn’t start saving for retirement until I was about 31. I’ve been maxing out my contributions every year, but I’m turning 46 this year, and my 401(k) still hasn’t broken $200k. Some of that is due to market performance ups and downs, despite spreading my investments across various types of funds like you. I’m lucky to also have an employer funded pension that has a projected retirement value of around $60k to date (and my employer matches my 401(k) contributions up to a small extent, too). About two years ago I started a variable annuity at the recommendation of a financial planner. All my voluntary retirement investment is done through Vanguard, too. The only one that has been a bit of a pain to deal with is the variable annuity because I can only get customer service during M-F business hours and there doesn’t seem to be any easy way to do regular direct deposits of less than $250 at a time. I have to dig into the issues a bit more and see what’s possible, though. Most of my retirement saving is all post-tax these days in Roth 401(k) or the variable annuity; the financial planner recommended this approach to cover my options since I had contributed so much to pre-tax 401(k) for so long.
Oh I don’t think it was any kind of real recommendation, I just decided that’s what I wanted because I started the second I could start putting away money in an employer fund. That’s interesting that you’ve switched to post-tax, I may need to for now.
It’s going. I’m 50% invested in individual stocks, and the other 50% is in cash or index funds ($37K in cash, rest in index funds).
Seems to be a risky-enough portfolio for someone my age (I can recover), and it covers my short-term bills until my next contract.
Retirement funds maxed of course, for tax savings, and individual stocks are for the medium-to-long term for dividends to create an income stream.
Is that a mix that includes all your cash? I didn’t cover my cash holdings which are relatively substantial too.
Yeah, Vanguard is great. When I was investing part of my savings on my own, I had several VG funds and really liked the service and the low costs. Right now my manager has everything in Fidelity, which also has very low costs. The Great Desert University had my 403(b) in Fidelity and, shall we say, I was not pleased with the level of service on the retirement-fund side. Right now the financial dude runs interference for me, so I don’t have to deal with long series of phone-answering folk, no two of which say the same thing. But if anything should happen that FD were to disappear from the scene, I’d go right back to Vanguard.
🙂 I’d say 74 grand by age 30 was not too shabby at all, especially considering the magnitude of the recession we’ve been through. And that you were out of work for a while.
Fidelity’s not bad WRT costs, but I haven’t had to deal with them directly. I’m still tempted to roll PiC’s stuff away from them.
Recession: oh yeah. I have selective memory.
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I have about 71k in the last 8 years. I wasted 3 years but the other years, defined retirement plans were not available to me.
I did bully er, encourage the young coworker to start contributing to his 401k last week. He was looking at an expensive gift for his gf so I asked if he was contributing to his retirement. And then opened up plan site so he could enroll. 🙂
Not too shabby! I know I’m losing time off-savings now so am getting antsy about getting a new retirement vehicle. And good on you for “encouraging” your coworker. He’d better thank you some day 🙂
He thanked me immediately. 🙂 I let him copy my choices as a starting point. I think just getting started can be a deterrent or an easy way to procrastinate.
I got my first IRA in 1984 and put it in STAR. Still have it, in fact. My kids got STAR also. My father always said it was too conservative, but it’s done pretty well.
STAR is conservative but not badly so. I only wanted out because of the expense fees.
We started in 2006 as a couple with $2k in retirement. DH foreigner with no chance to save and me making pittance and losing my Roth IRA money at the time it was $2k limit. I think I had saved $8k but it was down to $2k by 2006. Anyway fast forward to 2013, we have maxed out the 401k every year and saved $5k in each Roth IRA for 7 years and we have $390k saved for retirement between 401k and Roth IRAs. Should break $400k this year.
It is very possible. The plan is continue maxing out retirement, save for college, cars, bigger home DP ($225kish right now)