Vanguard change coming I received this email from Vanguard yesterday concerning the conversion of my S&P index investor class taxable account with Vanguard (I submitted my request for the conversion):
Our index funds changed investing forever. Now we’re making them even better.
Fund newsNovember 19, 2018
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If you’re like many successful investors, you like to keep it simple. That means saving consistently in low-cost, straightforward investments like index funds. We get it. We pioneered index investing for individuals. Simplicity, transparency, and low fees are core to who we are. And we’re constantly looking for ways to build on those values.
That’s why we’re making a change.
We’re lowering costs for more than 1 million current index fund investors and giving new investors one more reason to choose Vanguard. To do that, we’re dropping the minimum investment for Admiral™ Shares on 38 index funds.
Our Admiral Shares were previously available to investors with over $10,000 per fund. Now you’ll only need $3,000 to take advantage of the low expense ratios Admiral Shares offer. In turn, we’re eliminating higher-cost Investor Shares of those same index funds for individual investors.*
What this means for you
Whether you’re just starting out, adding to your portfolio, or catching up, this change can help you:
Reach your goals faster. Lower expense ratios mean more of your returns stay in your account, so it can grow faster. For example, $50,000 invested in Investor Shares might cost an average of $90 per year versus $55 per year in Admiral Shares. A $35 difference might not sound like much. But when it’s compounded over 10 years, it can add over $600 to your bottom line.**
Diversify your portfolio. When choosing how to allocate your money, you’ll have more flexibility to diversify. For example, if you have $10,000 to invest, you can still put it in a single index fund. Or you can split it up into 3 different index funds and get the same low-cost benefits.
If you currently own Investor Shares of any affected funds, you don’t have to do anything. We’ll convert them to Admiral Shares over the next year. Or you can immediately and easily convert your shares using our online process.
Already own Admiral Shares? The change doesn’t affect your current investments. But if you choose to purchase a new fund in the future, you don’t need $10,000 to get the same low expense ratio you’re used to. And you can be sure we’ll continue to look for the best ways to lower costs and help you meet your investment goals.
On a mission to give investors the best chance for success
Vanguard’s story begins with low costs but it doesn’t end there. Vanguard is built for investors. As a client-owned† firm, everything we do is because we care about our clients, want them to succeed, and have no competing loyalties.
This change is one more way we’re looking out for investors. It will allow us to deliver an estimated $71.2 million in savings to clients.††
“No other firm in the industry has demonstrated Vanguard’s track record of delivering cost savings and value to its clients,” said Vanguard CEO Tim Buckley. “Our unique, client-owned structure enables us to consistently pass along economies of scale and lower the cost of investing for our clients, so they keep more of their returns.”
See which index funds now offer $3,000 minimum investments for Admiral Shares
*Investor Shares will still be used in certain situations, such as in retirement plans and fund-of-funds investments.
**Vanguard Investor Shares average expense ratio: 0.18%. Vanguard Admiral Shares average expense ratio: 0.11%. All averages are asset-weighted. Source: Vanguard, as of December 31, 2017. This hypothetical example assumes a $50,000 investment held for 10 years, with an average return of 6%. It doesn’t represent any particular investment. Your actual savings could be higher or lower. The rate is not guaranteed.
†Vanguard is client-owned. As a client-owner, you own the funds that own Vanguard.
††Estimated savings for the identified funds is the difference between the Investor and Admiral expense ratios multiplied by eligible average assets under management (AUM). Eligible average AUM is based on the daily average assets over the past 12 months (November 2017 to October 2018).
Lewis Braham: If Commodities’ Day Has Come, This Fund Should Score: (JCRAX) @BobC: Always enjoy seeing you comments ! How is
retirement treating you ?
Regards,
Ted
PG&E bond PG&E bonds have faced steep declines this year, with some declining more than 30%. PG&E has approximately $18 billion in outstanding senior unsecured bonds. At present, PG&E’s most actively traded bond is trading at a higher yield than junk bonds.
This decline has been sparked by news regarding PG&E’s likely liability related to recent California wildfires. The Public Employees Retirement Association of New Mexico filed a securities suit against PG&E earlier this year based on misrepresentations that PG&E allegedly made regarding its vegetation management (the practice of making sure vegetation is clear from power lines to avoid fire risk), fire prevention, and other policies related to the company’s wildfire prevention efforts and potential liabilities. That suit centers around wildfires that occurred in 2017 and a series of disclosures that began in October 2017 and sent PG&E shares tumbling.
In the midst of the most recent California wildfires, PG&E has filed additional disclosures regarding the limitations of its liability insurance to cover any liabilities related to the fires. PG&E also disclosed that it had filed an electric incident report with the CPUC relating to an incident at the same place and time that the most recent wildfire began, leading to the possibility of even more dramatically increased wildfire liabilities for PG&E.
I see no bondholder suit as of yet, though it is pretty clear that bondholders are impacted here, and should have standing to pursue their own action.
Vanguard Rolls Out HSAs For 401(k) Participants This says that Vanguard will be integrating its 401(k) processing with Health Equity's HSA. It doesn't sound like any new HSA product is being offered. Interestingly, it seems to characterize HSAs as
retirement savings:
For Vanguard participants who elect to save in a HealthEquity HSA, Vanguard’s Retirement Readiness Tool technology will integrate their HSA information with their 401(k) balance and other assets to give them a comprehensive view of their current and future retirement savings.
Vanguard already offers some of its funds through Health Equity and through a couple of other HSAs. Here's Vanguard's retail page for those HSAs:
https://personal.vanguard.com/us/whatweoffer/overview/healthsavingsHealth Equity overhauled its HSA about three years ago. It used to offer inexpensive access to a pretty good set of funds if I recall correctly, but switched to all Vanguard. Its HSA account costs 40 basis points/year. If you've got $10K in your HSA that costs more than several other HSAs, though if you want a fairly wide selection of Vanguard funds, this HSA can still work well for you.
It offers index funds through cheaper institutional clones rather than through Admiral shares of retail funds, but how much of a cost difference does that amount to?
HealthEquity retail HSA:
https://www.healthequity.com/doclib/hsa/hsa-invest.pdf
Vanguard Rolls Out HSAs For 401(k) Participants
buying mutual funds in October Hi all, I have a question to the board. I am curious how people deal with this issue. So October is historically a volatile month and usually presents buying opportunities. However, October is pretty close to when distributions are made. So on the one hand, October could be a good time to buy mutual funds (MF) but on the other hand it is not advised as you could get a tax bill. One option is to check if MF that you are interested in buying will make distributions. Obviously other options are to buy index funds which don't make big distributions, buy in retirement accounts,... Case in point IVA funds have recently opened and with the downturn, this might be a good entry point. However, the IVA funds will be making large distributions soon (primary reason that they are open now). And yes, I own actively managed funds and some of them in taxable accounts. Just wondering how others approach this issue. Granted everyone is moving toward index and so not an issue for them.
Thrift Savings Plan Investment Limit To Increase To $19,000 In 2019
Thrift Savings Plan Investment Limit To Increase To $19,000 In 2019
Thrift Savings Plan Investment Limit To Increase To $19,000 In 2019 FYI: The standard limit on investments will rise from $18,500 to $19,000 in 2019 in the Thrift Savings Plan for federal employees along with similar
retirement savings plans such as 401(k)s, the Internal Revenue Service announced Thursday.
A separate limit on “catch-up contributions” allowed for those ages 50 and older, meanwhile, will remain $6,000.
Almost all federal employees have a TSP account, because one is established automatically for everyone hired into the Federal Employees
Retirement System, which applies to those hired since 1983.
Of the nearly 2.6 million — including U.S. Postal Service workers — under that
retirement program, nearly 180,000, about 7 percent, hit the investment maximum in 2017 of $18,000, TSP figures show. Of those, 122,000 were 50 or older, and of that group, nearly 79,000 invested the additional maximum $6,000.
Regards,
Ted
https://www.washingtonpost.com/politics/2018/11/02/tsp-investment-limit-increase/?utm_term=.2ad242d7c75b
Buy ... Sell ... and Ponder (Fall Investing Season ... September, October & November) Now that I am beginning to collect October mutual fund income disbursements, within my portfolio, Old_Skeet put his buying britches on yesterday and did a little equity buying in EADIX which is a global equity fund that makes monthly income disbursements. Today, I plan to buy a little in my convertible securities fund (FISCX). And, tomorrow probally a little more buying in something (possibly FRINX) while the markets are in their throw back stage. All of these funds in some form or fashion generate income. Now being in retirement I am starting to rebalance my portfolio from a growth and income allocation towards an income and growth allocation. Some might ask ... What's the difference? Well, the income and growth allocation has a greater focus on income generation and usually carries a higher weighting in income generating securities over equity securities. For me this will be an allocation of somewhere around 20% cash, 40% fixed income & 40% equity. This means, for me, I'll have to reduce my equity allocation by 10% and raise my cash and my fixed income allocations by 5% each.
Steak Dinner And Annuities: Retirement Product Surges After Fiduciary Rule’s Demise
Steak Dinner And Annuities: Retirement Product Surges After Fiduciary Rule’s Demise
Muni bonds sport attractive yields for retirees By https://www.financial-planning.com/news/muni-bonds-sport-attractive-yields-for-retirees?feed=00000153-9f90-d098-a37b-dfb9d93c0000Lee Conrad
Published
October 19 2018, 4:42pm EDT
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Muni bonds sport attractive yields for retirees
The municipal bond market remains steadfast despite investors' expectation that the demand for muni bonds would dwindle because of new lower tax rates, and bond prices would drop as a result of interest rate increases, according to this article from Kiplinger. Indeed, the economy and the muni market proved resilient and tax revenues have been strong, said one expert. For older investors, muni bonds can also offer diversification as they tend to have low correlation with other fixed-income investments. To be sure, tax reform has been a mixed bag for muni bonds, but a few other factors working in their favor now include the fact that there was a huge spike in issuance in late 2017, which constrained the supply of muni bonds this year, helping to support prices. Moreover, muni defaults, which have been historically rare, have lately dropped to their lowest level since 2008.
Separated at Birth: Fund Share Classes and CIT Funds Looking over a friends 401K plan recently I tried to decipher what his employer was offering for investment choices. In his case, he was mandatorily enrolled in what appeared to be a T. Rowe Price 2020
Retirement Fund, yet it did not have the investor share class ticker symbol TRRBX. Instead it was a CIT (Collective Investment Trusts) fund option that carried an ER (expense ratio) of 1.18% compared to TRRBX's ER of (0.61 %).
I attempt to monitor my weighted expense ratio of my entire portfolio. Funds in my portfolio that have an ER above this weight average will be scrutinized more closer for lower ER comparative options. In some rare cases, paying a high ER is legitimized by manager out performance.
Article explores these expenses:
https://humbledollar.com/2018/08/separated-at-birth/
Where to now? Still 80 20 in 401k.tsp...long time till retirement... Can ride our few more recessions... Would buy more if major crash Dca
Bought gm bond yield mid6% in private brokerage acct price 91cents cusip 37045V-AT-7
US Deficit: $1.5 Billion In Daily Interest
Are we trying to create a record for oldest elected president or something? I for one have this one issue. Government should also have
retirement age. You maybe continue in your job as long as you don't lose it, but getting elected for new job you should be under 67. This is not discriminating against old people. This is just leveling the playing field for everyone.
IOFAX SEMPX I use these two funds to fill in my bond portion of the portfolio along with a short-term bond fund. 30-35% total
@ Bobpa, are you saying you have 65-70% is in stocks? If so, and you're roughly
retirement age like a lot of us around here, you've got quite a bit in equity/credit risk already, so I'd put relatively more in SEMPX (more balanced risk; see the holdings on the Semper site). If it were me, in
retirement as I am, I'd strongly consider adding to IOFIX and reducing equity a bit.
Of course, I may not be interpreting your brief posts correctly; if not, what I'm saying shouldn't play any part in your decisions.
Good luck, AJ
