Switching investments from Edward Jones to Vanguard

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Vanguard investment strategies are all over the personal finance blogs. Passive dollar cost averaging into portfolios has a certain sexiness to it that I didn’t appreciate until after I did it. And once I did, dang it felt sexy. The whole strategy can be summed up into “lower fees from passive index investing creates more wealth for yourself and in 97% of the cases, better performance as well”.

For 8 years I invested with Edward Jones. I read about 10 books and 500 blog posts on personal finance include I Will Teach you to be Rich. I changed my spending and saving habits. But I was reluctant to change my investing habits. But after running my own analysis, I realized that excessive fees were costing me lots of money.

I don’t want that to happen to you.

I was paying 5% load fees and 1.5% expense ratios. I was also paying 2% dividend reinvestment fees, and account maintenance fees. It was enough to make me mad.

But I didn’t switch over because I believed I was paying for solid performance.

I had my reasons. I didn’t want to upset my broker at Edward Jones, I didn’t want to lose money in taxes and fees and I didn’t have any experience with Vanguard. But with the wool pulled from my eyes I realized I had to do something.

In 2015 I opened a Traditional IRA with Vanguard, once I had my oilfield job.

Then I tracked performance and saw better performance in vanguard less fees. Once I had that information I knew I needed to make a change.

I had wasted 3 years and hundreds in fees telling myself that I needed to switch. But once you have momentum it’s hard to stop it. It’s why 2.1 million people still pay for AOL internet from a CD they got in the mail in 1998.

I Finally did an in-kind transfer from EJ to Vanguard.

It’s been 8 months and here are my takeaways.

The end of excessive fees

Roth Ira was $100/year

Vanguard has no loads, and some of the smallest expense ratios in the business. With a minimum 3,000k to invest.

Processing fees to change over

$100 per account to roll them over. Bullshit but worth it to be rid of their loaded funds.

Forms to fill out

You only need a form from Vanguard. This one. I filled it out, signed it, and within 2 weeks my account was fully moved over to vanguard from Edward jones. I got a call from Edward jones asking about canceling the auto draft from my bank. I told them to cancel it, said thank you, and got off the phone.

That was it from Edward Jones. I spent 3 years procrastinating on it. All it took was $200, a 10 minute form, and a 1 minute phone call. Finally high fees were a thing of the past.

Current management ratios

My current ratios range from 0.20% to 0.06% in the Vanguard funds I am invested in. 0.43% in the ETF’s I am in.

Passive investment

Each month I have set amount of money taken from my bank account and processed without loads into buying Vanguard shares. It’s the right kind of momentum.

Linking up banking information

Takes a few minutes, but all they need is a banking account number and routing number. Set up an auto-investment and then lay back in a hammock.

Better Website

Easy to find portfolio breakdown and performance. Really good infographics and tools on the vanguard website for a passive investor. The Edward Jones site was clunky and hard to find real numbers.

That’s what I’ve noticed. I’m glad a made that change at an early age. I now I want to take a calculated risk.

Future investment plans

After the 2009 financial meltdown everyone the irrational exuberance of the market play out. Right now I’ve moved into large (60%) bond positions to conserve capital and to prepare for a 25-50% market drop before buying into admiral index stock funds. When this will happen I am not sure. But I do know that it is way more likely that the bull market will end sometime. I’m just preparing for it in the same way Mr Money Mustache has.

Recent books I read on Personal Finance and investing that were good.

Bachelor Pad Economics: Funny, engaging, actionable.

https://www.youtube.com/watch?v=jAf7I5gl72A

Money: Master the Game: Great All-Weather portfolio allocation strategy.

 

Book Review “I Will Teach you to Be Rich” by Ramit Sethi: Frontload the Work and Relax

This book is great for young professionals that want power over their finances. Ramit is a smart bachelor whose mission is to maximize his utility and manage his limited willpower. I’ve put his systems into action and I’ve saved thousands. We also agree on how to eat chicken wings.

I read this in college after hearing Ramit on the Art of Charm (back when it was pickup podcast, RIP). After 2 years in the oilfield, I know this book laid a solid foundation. Last month I put his negotiation tactics to work while shopping for car insurance and got a 30% reduction by switching to Allstate. His tactics paid for the book 20 times over. Besides that he makes financial literacy interesting and has a biting dry wit.

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Ramit sets 6 weeks to put in his systems. By the end all of your finances will be automated. Your credit card, online savings and investment accounts will be connected. They will all be low-fee, high-interest, and minimal maintenance. The last section is about saving for weddings, negotiating for cars, and creating a rich life for yourself.

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These are the habits I gained and recommend doing:

  • Mint: Probably the best thing I have learned from reading this back in college was getting a Mint account. I have had it for 4 years now and have an awesome data set. I spent the other day running through what I’ve spent over the past 4 years on alcohol, bars, groceries, amazon shopping, and even income.
  • Get rid of all subscriptions: Magazines, cable, Netflix, and linkedin. They are soul sucking. If you want them, buy a la carte.
  • Craigslist: I find its great to buy/sell used items.  I have sold bikes, shoes, furniture and TV’s.
  • Investing: Automation, putting money away for an index fund. It’s like tinder dating for your money. Keep working hard and learning at your job so you deserve the raises that will come your way, and you can invest those. Nothing feels quite like making money while you sleep.

Ramit has a large collection of articles and courses. I almost pulled the trigger on Dream Job but I decided to implement his free stuff first before I moved on to the premium services. This is an entertaining book and I plan on giving it to my nephews and cousins when they are in college.

For 2 great interviews of Ramit:

http://theartofcharm.com/podcast-episodes/ramit-sethi-will-teach-you-to-be-rich/

http://theartofcharm.com/podcast-episodes/episode-172-ramit-sethi-iwillteachyoutoberich-com-dream-job/

For another good book review of IWTTBR. Look to Mr Money Mustache’s Book Review.  He calls the title into question, “At best, it should be called I Will Teach You to Stay Out Of Trouble”. MMM is more of a stoic frugalist. Ramit is more of a measured hedonist.

Ramit’s main message is to set up the financial system so you CAN live a rich life. Whatever that means to you.

Buy the book here

 

My 10 Goals for 2016

Bruce Lee

2015 was a great year. I learned to play guitar and backflip on a trampoline. I played tennis on red clay in Argentina and got my weight under 200 pounds.

This year I have set 10 ambitious goals.

“The boring, behind the scenes work, day in and day out, are what make you rich” – Ramit Sethi

My Goals for 2016

Travel

  • Sit lower level at Arthur Ashe Stadium at the US Open
  • Drink XX beer while relaxing on a hammock on a Beach in South America
  • Eat a Bratwurst at a Professional Baseball Game with my Dad

Projects

  • Film, edit and upload 3 tennis videos to YouTube
  • Record and post a Podcast on ITunes
  • Write, edit and publish 15 new articles on this blog by writing 1,000 words a day

Fitness

  • 20 Pullups
  • 100 pushups
  • Squat 250 5x
  • Weigh 180 pounds

A part of me is scared that I won’t follow through. That small voice that tells me I can’t do it. Beyond that small voice is a deeper and stronger voice. It tells me that I’ve already accomplished them, I don’t have to do anything extra.

How I paid for my vacation to San Miguel de Tucuman, Argentina

Studying abroad in Tucuman, Argentina was a turning point in my life. Now at 23 I want to return to see friends I made when I was 16. When I got my job in the Oil Field I made sure that my first vacation would be back to Red Clay Courts of Tucuman.

I come from a middle class family who believed in hard work and the promise of education. Through college I worked odd jobs and saved money.

In sophomore year I listened to a podcast from Ramit Sethi, and promptly bought his book, I Will Teach You to Be Rich. A crazy title I know, but that ostentatiously titled book laid out the basics of money management.

All together the 18 day trip cost me $2400. When I got back my bank account wasn’t empty and there was no money hangover in the form of payments to credit card companies. This journey taught me how to save and be frugal; habits that will stick with me for the rest of my life.

Argentine Asado.
Argentine Asado.

1) The biggest strategy was Automatic bank withdrawal into a high yield online savings account with Capital One 360. $50 to $150 withdrawn without me having to move a muscle. Slowly building up money for 24 months, this was how I bought my ticket straight up.

Open an account now
2) Bring stuff to sell there. This was something I researched before going down. In Argentina Iphones are highly prized due to import restrictions and high tariffs. Labtops, ipads, and anything Mac related will sell for high prices. I took down skateboards to sell to my friends for a steep discount and in exchange for staying at his place.

The Country where an Iphone cost $3,500
3) Learn how to cook. I began with Mexican food. Its a lot of cleanup so I wouldn’t recommend it for beginners. I would recommend grilling a whole chicken.

 

4) Got on Mint and started tracking all my spending. I used to spend irrationally at the grocery store. I used to have a full refrigerator. Now I buy for 1 week, and use up everything. I have cans of soup for when food gets low, but I enjoy being creative with meals.
5) Buy a bike. I use it all the time being close to the grocery store, and gym. I save money on gas and repairs for my car.
6) Follow Personal Finance Bloggers. Ramit Sethi helped me negotiate my rent down 15% using his scripts in my emails. I ended up saving $800 from 1 email.
7) Take care of the stuff I own, I like to keep the stuff I have equal. If I buy something like a new shirt I have to either give a dress shirt away or throw it out. I clean the shoes I own and now they last 50% longer than before. Learn how to wash certain things. Jeans don’t need to be washed that much, and when you do, make sure to flip them out. When my phone screen cracked, I learned how to repair it online and bought a kit to do it. Now I have repaired it twice.

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8) Bring cash. The official rate is 9 pesos. Dollar Blue is 13 pesos. Bring $100 bills only. Go to where the banks are and people outside will trade with you. Listen to the word, “Cambio”. It means change in Spanish.

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9) Get a Skymiles credit card. Got into the lounge area for $30. I had food, drinks, Wifi, and a shower. Yeah it was worth $30 to pass 5 hours in the Atlanta airport. If I could do it over again I would have opened up the card 2 years ago. You can ask for a limit increase every 6 months. Right now my limit is only $1000. And tickets to Argentina are between 1,300-2,000 roundtrip. This is to save up miles for my next trip to Tucuman.

 

Working on a Drillship in the Gulf of Mexico

Operations On Pemex Centennial And La Muralla IV Deep Sea Crude Oil Platforms

The H2S alarm blares me awake. Poisonous Hydrogen Sulfide Gas is just one of the threats keeping me from a good nights rest. Two seconds later a voice comes on “Disregard the false alarm, please disregard the false alarm”.

My dreams of large paychecks, sexy girls and the vacations are now over. My phone isn’t plugged in so I get up and check the time. I’ve missed one alarm this week, so my thoughts turn to dread, thinking I’m late again. To my relief it’s another 2 hours until wakeup.

My shoulders and lats ache, I smile knowing that means progress. Despite my fitness efforts over the past two years I have remained the same weight and muscle mass. Seeing the muscled guys in magazines reminds me of girls that I wanted so bad in high school, something I think of, but will never actually get to have.

I track it all. Sleep, Food, exercise, steps. I want that fitbit or jawbone even though I know it’s a waste. I cant wait for my Pavlok really. I see so many people wearing the fitbit. I notice it every time kind of like signal for health conscious people. I also started Winston’s War, which is a novel about World War 2 and how Churchill and the parliament worked before the war.

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I broke regs and pushed my helmet up to bask in the brightness. Working at night has been okay, but I miss the sun, tennis, hiking, trees, animals. The cookies, chocolate, and rolls call to me, I think in my head, “Saturday, I can be a fat fuck”. I’m happy. This routine. I’m maturing. Sometimes I ask myself why I am here. Is it adventure to be on a metal boat that doesn’t move with 3 squares and a hot shower each night? Or it is restriction? No alcoholic drinks, no way to spend money, no girls, no porn, no drugs. I reduced the amount of choices I can make. I don’t feel distracted like I do at home, because at home anything is possible. The choices overwhelm me and I feel lonely if im not texting someone. Here I can’t. I am a man out here. I don’t have to appease anyone, I just have to learn, and eat and shit.

Then we finally get a day worth remembering.

3:30 am-My first 3 hours as a mudlogger is going well, it’s the calm before the storm. Suddenly a Gas alarm goes off in the shaker house, For the last 3 hours I have to announce gas values coming from our sensor in the shaker house. I get on the PA, “Total Gas is 2845 units, Total Gas is 2845 units.” A unit is 50 ppm. That means 142,250 ppm of Methane gas is coming up in the mud into the shaker house from the wellbore. PA comes on, “This is the captain speaking, there is high gas at the shaker units, do not go outside, all crew stand down”. The company man calls and tells us he thinks its sandstone, not shale with 10% siltstone, what ive been calling the last 250 feet of drilled formation. Hen, my sample catcher who goes to the shaker house every 30 ft to collect, sieve and clean samples, looks at me, “what was that?” he asks.” They want me to go into the shaker house? Damn. I tell him we to be calm, and I continue looking at the now fizzing rock sample..This means I was wrong, we aren’t in shale anymore. I have no idea but I want to remain patient.

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4:00 am- The company man and Chase want to know if it is still mud-shale. Ive back tested 5 samples, 150 feet of formation and they all fizz CO2 like a mutherfucker. Damn this isn’t shale and hasn’t been for some time. I tell Chase, this might be limestone, but I don’t have 50% HCL to know”, Chase stares at me mouth open, I continue, “They never sent it to me”. And I don’t know if its oil rich because the samples are covered in base oil from the drilling fluid, and the centrifuge is broken. Chase, who has 12 year’s experience, and makes more money than he could spend in a lifetime living in Mumbai, swivels back around. “So we can’t test for oil or carbon content, is what you’re telling me, I can’t work with this bullshit”. I get the point. I call over to Dennis to get his opinion. He is on the phone pointing at the computer, he hasn’t helped me in 2 hours. Tisharat and Mahmout, two international guys with 20 years combined experience are anxiously eyeing the door. Being 5 feet from a gas filled shaker house, I understand their anxiety; being danger close to a drilling operation going haywire.

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5:00am- Calls are coming in, shit is not going well. Under intense pressure small pockets of gas enter the wellbore, due to a change in pressure these pockets begin to expand. Which is what is currently happening. A small pocket of gas has expanded over the course of the 34,000ft wellbore into a 40 barrel gas pocket. Unknown to us, The Company shut the well in. But this is not the end of problems for the brand new drilling crew, not used to drilling over 5,000 ft of water, with a giant 50 ft Blow Out Preventer, now, cement is pouring onto the deck from a clogged nozzle. A roughneck is trying with no success to un-fuck the nozzle with a broomstick. Cement, mud, and drilling fluid is coming in globs down, Me and Hen look at each other, both thinking we are fucked. Dennis is yelling into the phone now.

Unknown to me, the problem of shale or limestone doesn’t matter. In the oilfield they have an invented term that is a 50% mix of limestone and shale called Marl or Calcareous Shale. Once all the chips fell and responsibility was doled out, we were not in the crossfire. The Mud engineer took the responsibility for the kick, and the drill floor gave us a pass due to our diligence and phone calls we made at the time. The Romanian tells me that this happens quite a bit, but this boat is too inexperienced to be drilling at 120 ft/hr. I am sent off the boat two days later, 2 weeks before my 4 weeks is up. They tell me that The Company wants someone with more experience as a mudlogger. In hindsight, this actually encouraged me, I liked the pressure.

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