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Old 01-13-2009, 11:17 AM   #1
yahtzee
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Lifecylce funds - Vanguard vs. TRowe vs. Fidelity
I am looking at investing into a lifecycle fund - a 2035 fund to be exact.

TRowe - http://finance.google.com/finance?q=MUTF:TRRJX
Vanguard - http://finance.google.com/finance?q=MUTF:VTTHX
Fidelity - http://finance.google.com/finance?q=MUTF:FFTHX

I have heard that Vanguard and TRowe have the best expense ratio's and Fidelity would be a distant third between the three. The Vanguard has a $75 fee to get into the fund. Is that something that should be absorbed based on the overall expenses associated with the fund? Meaning, should I just pay the $75 to get in so that longer term I will be paying less overall? Any other thoughts on these three funds would be great. FYI - I am starting with $5k for this particular investment.
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Old 01-13-2009, 01:07 PM   #2
pochax
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I would agree that Vanguard and T Rowe Price are among your best choices here due to low fees (i think Vanguard is the lowest). the other difference used to be that the glidepath for equities allocation was higher (and therefore more aggressive risk/reward profile) for T Rowe Price compared to Vanguard around retirement age (assumed 65) with ~55% equity allocation but i just reviewed Vanguard and it appears to be more comparable now.

see these glidepath charts at the following:
T Rowe Price: http://individual.troweprice.com/pu...irement%20Funds
Vanguard:https://personal.vanguard.com/us/fu...st#targetAnchor

Thus, i am not sure there is too much difference if that is the case. I am not sure where you are getting the $75 fee for Vanguard. I don't see that mentioned on the Vanguard website (you seem to have the $3k minimum required).

Is this in a tax-sheltered account (eg. IRA, 401k/403b, etc.)?
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Old 01-13-2009, 08:34 PM   #3
yahtzee
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Quote:
Originally Posted by pochax
I would agree that Vanguard and T Rowe Price are among your best choices here due to low fees (i think Vanguard is the lowest). the other difference used to be that the glidepath for equities allocation was higher (and therefore more aggressive risk/reward profile) for T Rowe Price compared to Vanguard around retirement age (assumed 65) with ~55% equity allocation but i just reviewed Vanguard and it appears to be more comparable now.

see these glidepath charts at the following:
T Rowe Price: http://individual.troweprice.com/pu...irement%20Funds
Vanguard:https://personal.vanguard.com/us/fu...st#targetAnchor

Thus, i am not sure there is too much difference if that is the case. I am not sure where you are getting the $75 fee for Vanguard. I don't see that mentioned on the Vanguard website (you seem to have the $3k minimum required).

Is this in a tax-sheltered account (eg. IRA, 401k/403b, etc.)?

Thanks for the reply. Ironically, the Fidelity advisor told me of the $75 fee. It would be in a Roth IRA. I just went to place the order on my Fidelity website and the $75 charge appears to be a Fidelity commission charge. Ugh. I had just gotten all my money settled here....should I just eat it and move on? The Fidelity rep said, "It is up to the fund company to determine how they want to participate in our FundsNetwork program, with a fee or without. Vanguard has chosen to have us charge the fee to buy the fund through us."
Last edited by yahtzee : 01-13-2009 at 08:46 PM.
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Old 01-13-2009, 09:18 PM   #4
pochax
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Quote:
Originally Posted by yahtzee
Thanks for the reply. Ironically, the Fidelity advisor told me of the $75 fee. It would be in a Roth IRA. I just went to place the order on my Fidelity website and the $75 charge appears to be a Fidelity commission charge. Ugh. I had just gotten all my money settled here....should I just eat it and move on? The Fidelity rep said, "It is up to the fund company to determine how they want to participate in our FundsNetwork program, with a fee or without. Vanguard has chosen to have us charge the fee to buy the fund through us."

Indeed, if you plan to buy a competitor's fund, i can't imagine they wouldn't tag you with a fee (it would be like trying to buy a chevy malibu at a Ford dealer!). you can buy Vanguard funds directly through Vanguard website (i don't know where their local branches are, if any). personally, if you aren't using any Fidelity funds i think it's odd that you would own a Vanguard fund through a Fidelity account. In the future, if you are going to continue to invest you may want to open a Vanguard or T Rowe account so that future investments in that fund won't charge any commission.
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Old 01-13-2009, 09:20 PM   #5
yahtzee
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Quote:
Originally Posted by pochax
Indeed, if you plan to buy a competitor's fund, i can't imagine they wouldn't tag you with a fee (it would be like trying to buy a chevy malibu at a Ford dealer!). you can buy Vanguard funds directly through Vanguard website (i don't know where their local branches are, if any). personally, if you aren't using any Fidelity funds i think it's odd that you would own a Vanguard fund through a Fidelity account. In the future, if you are going to continue to invest you may want to open a Vanguard or T Rowe account so that future investments in that fund won't charge any commission.

Understood. I already had an account established as i have my wifes traditional IRA and my money market (emgcy savings) there as well. Would you open up an account with them to save the $75? I dont guess i can just move my Roth from one company to another, can I ?
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Old 01-13-2009, 11:45 PM   #6
pochax
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Quote:
Originally Posted by yahtzee
Understood. I already had an account established as i have my wifes traditional IRA and my money market (emgcy savings) there as well. Would you open up an account with them to save the $75? I dont guess i can just move my Roth from one company to another, can I ?

actually, you can. in fact, i did the exact same thing you did last year (except for starting a vanguard fund at fidelity...i opened a fidelity lifecycle fund) with my wife's IRA and when i decided i wanted to go with T Rowe, one month later, i transferred it all to a T Rowe Price lifecycle (retirement 2045) fund. however, you will not recoup the $75 commission fee.

the alternative, if you are happy with Fidelity funds, is after the 90-day waiting period is over, you can transfer what you have invested from the Vanguard fund to a comparable Fidelity fund (and i assume Fidelity would not charge you anything for that but be sure to ask first).
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