How many brokerage firms are you using?

[dualstow]

if I could nitpick the above previous page a little bit, mathjak:

Fees: both houses are really good, and far cheaper than they used to be.
*Treasurys trade for free at both.
*Both offer free trades of their in-house funds and ETFs. At fidelity, that also includes iShares.
Stock trading depends on how much money you keep at Vanguard (free at the highest level) and is a flat $4.95 per transaction at Fidelity. Very recently it was 6.95 and 8.95.

The expense ratios of index funds are always decreasing, but they’re both really close. For the broad market, practically zero. I mean, F’s was 0.04% when V’s was still 0.03%. So you’d save $100 on every million.

Change in philosophy: I don’t know if Jack Bogle contradicted himself, but he hadn’t been at the helm of Vanguard for a long time by the time he passed away. And V had definitely moved in a different direction. Example: international bonds in the target retirement funds. Another example: the infatuation with ETFs. (By the way, didn’t pug or kbg write something about the structure of ETFs and why he held them instead of funds at fidelity?)

The main change with Bogle is that he was holding stocks and bonds with a 50/50 ratio and not ‘age in bonds.’ When you have that much money, does it really matter? But, other than that I don’t think he really strayed. Of course, Vanguard has pressure to change with the times. People want ETFs.

That beneficiary thing, though- terrible. No excuse for it. I’m grateful that you had alerted us to it.

[mathjak107]

i use mostly managed fidelity funds which have outperformed indexing for the 30 years i have been an investor , but i do own some index etf's .. i gave the new fidelity zero expense index fund a shot too .. it is a slightly different index than the standardized ones . they would have to pay for the use of the standardized index's so to keep it free they have their own modified version of a total market index and s&p 500 index. they do not have to pay for the use of the index so they can keep it zero expense

[dualstow]

What's the ticker?

[mathjak107]

Fzrox

[pmward]

Fzrox

I have a bunch in this as well in my IRA's. So far it's tracked the "official" indexes very well. The only thing to watch out for was some short term cap gains last year, which is why I don't hold it in taxable.

[mathjak107]

i try not to hold much in equities in a taxable account ... as michael kitces points out , that special lower capital gains rate we think we are getting tends to evaporate over long periods of time with as little as a 2% dividend being distributed compared to having it in a tax advantaged account ..

with interest rates so low it is silly to keep bonds in a deferred account taking up valuable tax deferred compounding space . the bonds are taxed at regular rates anyway .

[sophie]

It's not all about the expense ratio. I think there's some behind the scenes activity that affects fund performance that isn't necessarily reflected in the ER. For example, FSKAX has consistently lagged VTSAX and also its benchmark index by more than the difference in ER.

Also news flash: Fidelity finally has a low-ER small cap value index fund!!!! FISVX. ER is 0.05, which beats Vanguard's 0.07 (and completely blows away IJS). It's too early to judge performance, for which see above.

In which case Vanguard's main advantage comes down to the Treasury-only money market. Fidelity can't match that one. The ER of its equivalent fund is 0.42%!!!

[dualstow]

For example, FSKAX has consistently lagged VTSAX and also its benchmark index by more than the difference in ER.

I did not know that! Interesting, because I hold both. I have my wife in ITOT (1500 stocks only), an iShares product. Maybe I should compare its performance to FSKAX (over 3000), but if I switch, it could be ill-timed. Not that she would notice.

[sophie]

For example, FSKAX has consistently lagged VTSAX and also its benchmark index by more than the difference in ER.

I did not know that! Interesting, because I hold both. I have my wife in ITOT (1500 stocks only), an iShares product. Maybe I should compare its performance to FSKAX (over 3000), but if I switch, it could be ill-timed. Not that she would notice.

Yup I noticed that a while back. It's when I started thinking about building up a basket of stocks to complement the index funds. Now that they've hit the big time, I expect there will be more behind the scenes shenanigans that we'll be reading about one day in the Wall Street Journal.

[Kbg]

Small note...if one is going to invest in a small cap index fund, recommend something based on the S&P 600 or other "crap filter" type small cap index. The R2K is not a good index for small caps.

[mathjak107]

not all index funds do the same things like some loan out securities ... spy is one of the few pure ones ..ivv is not

[Smith1776]

Indeed I remember Swedroe remarking that filtering out the junk or "lottery ticket" stocks from a portfolio, particularly of small caps, greatly improved results. Removing these crappy securities even from total market indexes seemed to improve the portfolio across the board.

Interestingly, one way to filter out the junk from small caps is to simply tilt towards value.

As you all know, if I tilt towards value I'm getting low P/E, P/B, P/CF ratios etc. Having a low P/E necessitates having some earnings. Crappy securities tend to get filtered out when there's no cash flow or earnings (no p/e and p/cf at all). So there's actually a quality/profitability tilt that's built in.

[Kbg]

IJS is better than IWN as well (IWN is the value R2K ETF)

[boglerdude]

thats the idea, companies where market sentiment is bad but fundamentals are good

But now everyone's looking for that. I wonder how much Arnott and Swedroe make every year from our fees?

[KevinW]

I have two brokerages, my personal accounts are at Vanguard and my 401k is at Schwab. I plan on keeping most funds at Vanguard and a minority at either Schwab or Fidelity.

[yankees60]

Thanks for all the great responses to my initial question below.

I am still gathering information to map out my grand plan to go FULL Permanent Portfolio. As I stated below, I have already opened an account with Fidelity. But I will fund it at some time after I establish the FULL Permanent Portfolio.

One of the items on my plan is consolidating some of the many (seven!) retirement accounts I have with Vanguard. Six of them can be consolidated into two (one Traditional IRA and the other ROTH IRA). However, the remaining one of them served as an education for both the people I spoke to at Vanguard and my friend who is a many decades experienced CPA in Rhode Island. Massachusetts does not recognize SIMPLE IRAs. Therefore, I cannot consolidate that into anything because though its drawdowns WILL be taxable on the federal level there will be NO Massachusetts tax due on them since I never received any Massachusetts tax advantages when I made my contributions.

Vinny

I am about to become a level 4 Permanent Portfolio investor.

The book advises you to have all your investments in at least two brokerages.

Presently I have all my investments with Vanguard. Last Friday I opened an account with Fidelity in anticipation of it taking half of my present Vanguard investments.

How many brokerages are you using:

1
2
More than 2

And, could you please identify which ones you are using and why?

Thanks

Vinny

[dualstow]

It's not all about the expense ratio. I think there's some behind the scenes activity that affects fund performance that isn't necessarily reflected in the ER. For example, FSKAX has consistently lagged VTSAX and also its benchmark index by more than the difference in ER.
...

Saw this today:

Can anyone tell me why is FSKAX 17% portfolio turnover as of 8/31/2019

https://www.bogleheads.org/forum/viewto ... st=4986257

( FSKAK is total stock market, Fidelity's answer to Vanguard's VTSAX )

[jalanlong]

I am only using one brokerage right now, M1 Finance. I think their "pie" system is perfect for the PP. I just pick my funds and allocation %s and I am done. Then I buy that investment pie and my funds are doled out accordingly. And I dont have to worry about rebalancing as each deposit will be split as to make the ETFS reach their target %.

[yankees60]

It's not all about the expense ratio. I think there's some behind the scenes activity that affects fund performance that isn't necessarily reflected in the ER. For example, FSKAX has consistently lagged VTSAX and also its benchmark index by more than the difference in ER.

Also news flash: Fidelity finally has a low-ER small cap value index fund!!!! FISVX. ER is 0.05, which beats Vanguard's 0.07 (and completely blows away IJS). It's too early to judge performance, for which see above.

In which case Vanguard's main advantage comes down to the Treasury-only money market. Fidelity can't match that one. The ER of its equivalent fund is 0.42%!!!

1. Five months later have you been able to discern what could be the above "behind the scenes activity"?

2. Is it still too early to judge the performance of FISVX?

Vinny

[yankees60]

Just vanguard. Too big to fail

For those here who are creative and imaginative can you paint any picture in which Vanguard could fail without just above everyone else behind them also failing?

Vinny

[yankees60]

So mostly I invest through Vanguard, with smaller amounts at a couple of other brokerages where my employer 401(k)s are. Ideally it would all be at Vanguard for simplicity.

A few ways to interpret that...

1) You just happened to end up with Vanguard but you are quite happy with Vanguard and understandably would like to eliminate the smaller accounts with other brokerages.

2) You are quite aware of all the other brokerage possibilities, e.g., Fidelity and there is nothing regarding them that would entire you to switch. If I could offer you the possibility to just magically, immediately switch all or part of your Vanguard holdings to somewhere else you'd not do so.

Vinny

[yankees60]

Two.

I only meant to have Vanguard, but they weren’t doing solo 401k’s when I set mine up, so I used Fidelity for that. I had a rough beginning with Fidelity, but then it smoothed out. Friendly service at their physical branches. There was one guy one year who took my annual contribution out of my hand, processed it and tossed the receipt to me without a word, but that was one guy.

Vanguard certainly has growing pains. I had good service over the phone and online for the most part.
+ I had some directly held shares of this and that from when I was a kid, and Vanguard made it easy to transfer those over.
+ I got out of a smaller brokerage that I should have never been in. That was also from when I was young and didn’t have control over my investments. Vanguard got that done with no problems.

- I was disappointed in the beneficiary thing detailed by mathjak above. My dad and I had a joint account from my childhood, and for me it had never mattered that his name was attached. One day, I noticed that my wife’s name was no longer mentioned as my beneficiary. Or, I may have learned it when mathjak mentioned it in the past.

Vanguard had never told me about it. I had to ask them. And, almost my entire savings was in this joint account. We had to jump through some hoops to get the account in my name only so i could restore my wife as the named beneficiary. Not the end of the world, but...they should have told me.
- A few other headaches. No one’s perfect.

I do like that Vanguard is like a co-op where every shareholder is kind of a co-owner. I think about that when I buy shares of a corporate bond fund with a purchase fee. Fidelity, as good as they are, are not like that. I remember asking them how much money I had to have in my account to get free trades like I do at Vanguard (US$2 if I run out of free trades each year). The answer: they don’t have different levels. Everyone has to pay for trading.

I like both firms and would not want to diversify any further. Even one firm would be enough for me, plus a checking account elsewhere.

Dualstow,

If I said to you, "Dualstow! I just passed a new law! Everyone one can now only use one brokerage firm", it seems from reading what you wrote above that you'd say, "Vanguard!" True?

Vinny

[yankees60]

i try not to hold much in equities in a taxable account ... as michael kitces points out , that special lower capital gains rate we think we are getting tends to evaporate over long periods of time with as little as a 2% dividend being distributed compared to having it in a tax advantaged account ..

with interest rates so low it is silly to keep bonds in a deferred account taking up valuable tax deferred compounding space . the bonds are taxed at regular rates anyway .

You have stated the above numerous times in numerous Topics in this Forum.

1) How do you define "long periods of time"?

2) I'm seeing the following for Vanguard's Total Stock Market Index (VTSAX):

30 day SEC yield
as of 03/31/2020
2.19%

It this were to be one's sole equity holding in the Permanent Portfolio and If this yield were to persist over the entire "long period of time" (however you define it) would you then say this fully qualifies for the above admonition? I.e., this investment should not be in taxable but should, instead, be in a "tax advantaged account". And, if so, which would you prefer? Traditional or Roth?

Vinny

[Tortoise]

So mostly I invest through Vanguard, with smaller amounts at a couple of other brokerages where my employer 401(k)s are. Ideally it would all be at Vanguard for simplicity.

A few ways to interpret that...

1) You just happened to end up with Vanguard but you are quite happy with Vanguard and understandably would like to eliminate the smaller accounts with other brokerages.

2) You are quite aware of all the other brokerage possibilities, e.g., Fidelity and there is nothing regarding them that would entire you to switch. If I could offer you the possibility to just magically, immediately switch all or part of your Vanguard holdings to somewhere else you'd not do so.

Vinny

Probably #2.

Vanguard was the first company I ever invested with. My dad helped me open an IRA there when I was a teenager and taught me the power of compound interest and of starting to invest at a young age.

In my mid-20s, I read Bogle’s books on mutual funds and became a big fan of Bogle’s philosophy and of Vanguard’s investor-owned model. And I’ve remained a Vanguard fan since then. They’ve strayed a bit since Bogle left, but they still seem more focused on core values and simplicity than most of their competitors.

[jalanlong]

Only 1. I am using M1 Finance because of their "pie" system and fractional shares. I don't want to go back to a regular brokerage where I have to place individual orders for each ETF. The downside is they don't offer individual bonds so I have to be satisfied with ETFs for the bond portions.