Dropping Edward Jones and moving my money to Vanguard

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Vanguard investment strategies are all over the personal finance blogs. Automated dollar cost averaging into passive index mutual funds has a certain sexiness to it that I didn’t appreciate until after I did it. And once I did, dang it felt sexy.

Basically,  “lower fees, from computerized passive index investing versus active management, leaves more wealth for yourself, and in 97% of the cases, gives you better portfolio performance as well”.

For 8 years I invested with Edward Jones active mutual funds. And they did okay.

Beginning in college I read books and blog posts about personal finance, including I Will Teach you to be Rich.

I mainly changed my spending habits.

I was reluctant to change investment strategies.

After running my own analysis, I realized that excessive fees were costing me lots of money.

And I don’t want that to happen to you.

I was paying 5% load fees, 1.5% expense ratios, 2% dividend reinvestment fees, and account maintenance fees.

What I didn’t know was really hurting my investment portfolio.

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

-I didn’t have any experience with Vanguard.

But when I read Money: Master the Game by Tony Robbins, and his chapter on fees, I realized I had to do something.

In 2015, I opened a Traditional IRA with Vanguard.

Then I tracked performance for 2 years and saw better performance in vanguard along with 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. .

For a disclaimer: I am not an investment professional, and this is not investment advice. Past performance does not predict future performance. This is purely entertainment writing.

With that out of the way. Here are my takeaways.

The end of excessive fees

EJ Roth ira was $100/year. Bullshit.

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.

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 to EJ, 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% ratio for gold ETF’s.

Passive investment

Each month I have set amount of money taken from my bank account and processed without loads into buying Vanguard shares.

I did this before. But it’s still important to build that money machine as a young man. Time is on my and your side.

Warren Buffet wrote an Op-ed piece in 2008 during the tumultuous Financial Crisis. “Buy American. I am.”

The S&P 500 was a roller coaster that month. The largest percentage swings in history.

The day his article was published the S&P was at 909.53. His critics slammed him. But a 9 year Bull market vindicated him. Today the S&P stands at 2,500.03.

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

I turned 18 on the day of the largest point swing in S&P 500 history, -106.95.  This current 9 year long bull market will end. Everything that goes up will come back down. I’m 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.

 

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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.