Gyroscopic Investing

I've been lurking for a few months and have decided to take the PP plunge. I'm quite young (21), but I happen to have some extra cash accumulated and I figured it'd be a good time to start a Roth. My question is: if you were starting a Roth from scratch right now (IAU/TLT/VTI/SHV), which brokerage would you pick? I've poked around the forum a bit and seen some discussion of certain pros/cons (eg. Vanguard doesn't have a good bond trading desk whereas Fidelity does) but haven't really formed a clear picture. I had originally hoped to create an PP using exclusively Vanguard ETFs so as to have 0 trading costs, but obviously they don't really have viable replacements for IAU/TLT/SHV.

Thanks for your help!

I would use fidelity for your bonds.  No commission fee, and it's nice not to pay taxes on the interest generated (which is taxed as income).

Also, keep in mind that there's only a limit to the amount of money you put in your IRA per year.  You can open as many accounts as you want, though.  So you could put $2500 in a fidelity account and $2500 ib a vanguard account if you want.

Adam1226 wrote: I would use fidelity for your bonds.  No commission fee, and it's nice not to pay taxes on the interest generated (which is taxed as income).

Also, keep in mind that there's only a limit to the amount of money you put in your IRA per year.  You can open as many accounts as you want, though.  So you could put $2500 in a fidelity account and $2500 ib a vanguard account if you want.

Do you mean bonds or bond funds? I guess the question was about ETFs and TLT is not commission-free at Fido, although he could use FLBIX as a replacement. In terms of PP-suitability Fidelity is a good option. One could use FSTMX for stocks, FLBIX for bonds, FSBIX for cash and IAU for gold. Only IAU would be subject to transaction fee of $7.95.

Also, Fido offers 30+ commission-free ETFs from iShares. Unfortunately TLT and IAU are not on the list, but since we are talking about Permanent Portfolio the trades shouldn't be frequent.

TDA appears to be another possibility with 100 commission-free ETFs. And TLT is on the list. I never had accounts with TDA so I can't say anything about the quality of their online account tools or customer service. I do have accounts at Fidelity and so far I am really happy with them.

Thanks for the responses! TD Ameritrade looks like a great one-stop shop in terms of their commission free ETF offerings (VTI, TLT, and SHY), but some quick googling suggests that there a number of people dissatisfied with their customer service - further investigation required. I completely overlooked the fact that I could spread my Roth across multiple accounts; that's probably what I'll end up doing.

Also, do you ever keep PP and VP assets in the same account and just artificially segregate them in your mind (or on a spreadsheet)? Or might it somehow be psychologically detrimental to not have PP and VP assets more strictly segregated?

Gabe wrote: I completely overlooked the fact that I could spread my Roth across multiple accounts; that's probably what I'll end up doing.

I highly recommend spreading things out like this.  I know it's not as convenient, but it's part of being well diversified. 

Also, do you ever keep PP and VP assets in the same account and just artificially segregate them in your mind (or on a spreadsheet)? Or might it somehow be psychologically detrimental to not have PP and VP assets more strictly segregated?

That is an interesting question, and one I have often asked myself. 

I keep them absolutely segregated.  That way, I have to think very hard before I move any money into my VP.  The end result...I have $0 in my VP account, b/c whenever I sit down and try to figure out ideas for a VP, I can never think of anything that I think will do as well as the PP. 

Adam1226 wrote:

Gabe wrote: Also, do you ever keep PP and VP assets in the same account and just artificially segregate them in your mind (or on a spreadsheet)? Or might it somehow be psychologically detrimental to not have PP and VP assets more strictly segregated?

That is an interesting question, and one I have often asked myself. 

I keep them absolutely segregated.  That way, I have to think very hard before I move any money into my VP.  The end result...I have $0 in my VP account, b/c whenever I sit down and try to figure out ideas for a VP, I can never think of anything that I think will do as well as the PP. 

Ideally it's best to keep them segregated. I tried to achieve this with a bunch of IRAs and a 401(k) I have and I ended up with PP spread over 4 accounts and VP held in one of those accounts. Not a complete segregation, but works fine. I keep a spreadsheet with separate sheets for VP and PP and mentally it's easy for me to never cross the line between the two. I actually allow funds movement in one direction only - from VP to PP  . 

But in the end of the day it all depends: if you can reliably maintain mental separation then go with it. Otherwise physical segregation of VP in a separate account is the best way.

Gabe wrote: TD Ameritrade looks like a great one-stop shop in terms of their commission free ETF offerings (VTI, TLT, and SHY), but some quick googling suggests that there a number of people dissatisfied with their customer service - further investigation required.

Thanks for sharing, I'll keep that in mind as I was contemplating whether I should diversify by opening a TDA account. Frankly, commission-free ETFs sound great, but that should matter only if one plans to trade often. Both Fidelity and Vanguard charge low transaction fees ($7.95 and $7) so it doesn't matter. I think I will probably end up opening another IRA at Vanguard and that should be good enough.

BTW, I can add that Fidelity customer service is outstanding. Also, I like very much their cash-management features: online billpay, FDIC-insured checking account (called Cash Management account), Yodlee-powered account aggregation tool (Full View) and Cash Manager.

Gabe wrote: Thanks for the responses! TD Ameritrade looks like a great one-stop shop in terms of their commission free ETF offerings (VTI, TLT, and SHY), but some quick googling suggests that there a number of people dissatisfied with their customer service - further investigation required.

Now I would think that there always will be some people who are dissatisfied...

Schwab is another brokerage with good customer service, just to throw it in the mix. I'm also very satisfied with Vanguard and Fidelity...

I have two accounts at TDA and love them.  A Vanguard brokerage account is another option as they have many free ETF's available.  Some level of diversification gives me piece of mind, but can be a pain in the rear as well.

TD Ameritrade is a great brokerage company, and I can recommend them highly.  I keep my PP and VP in separate accounts, as it makes the entire investment/rebalancing process simpler.  No need for mental gyrations to figure out which is PP and which is VP, and no accidentally liquidating part of the PP thinking it's the VP (or vice versa).

jmourik wrote:
Now I would think that there always will be some people who are dissatisfied...

Google indicated that Fidelity and Vanguard had similarly dissatisfied customers, so I think you're right. I called TD Ameritrade and was impressed by the customer service rep. That, combined with their ideal commission-free ETF offerings and smurff's endorsement, led me to pick TD Ameritrade. In the future, I think I'll open up a Vanguard account as well - if for no other reason than to get VGENX on the cheap for a VP (I'm pretty convinced that energy is a good long-term bet). Thanks for chiming in everyone! 

For IRAs I've found that Fidelity has done a consistently nice job over many years.  I prefer companies that have someone I can yell at.  I've had enough account issues over the years that I find it particularly difficult not to be able to talk to a person.  (note: I've never had to yell at Fidelity)

I just opened one at Sharebuilder. $4 trades if you use the automatic investing.