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.

 

How to stop biting your Nails: The Rubber band Approach

 

We are what we do. For 18 years I bit my fingernails. I was anxious about stuff and to temporarily alleviate the thoughts I bit my nails. It was an anxious habit and it sucked.

I was tennis player and sometimes I couldn’t play. I would bite them during lectures in classes I knew I needed to study for. I would bite them during scary movies.

I was self conscious of it, and each year made a resolution to stop that habit. I wanted it badly enough that I stopped being comfortably numb and took action, well many actions.

I tried using nail polish, habanero hot peppers, nail strengthener; all passive methods that didn’t work for me. Then finally I tried the simple rubber band. Having a rubber band on my wrist cured me.

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This method is simple: Snap your wrist when you bite your nails.Trust me, you will become hyper aware of biting your nails very quickly.

  • Have a thicker rubber band that fits comfortably around your wrist. Carry extras.
  • When you put your fingernail to your teeth…stop yourself, take a deep breath, and don’t judge yourself or be mad
  • Lift up the rubber band and snap yourself hard enough to sting the fleshy part of your wrist. Repeat it 3 times.

The important thing is too always have it on, and snap yourself each time you begin to bite your nails. This is negative reinforcement and believe me, it works.

You might think this is masochistic. But no one ever said changing your habits was easy. But once you win this battle, you gain confidence in yourself.

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From Charles Duhigg’s book, The Power of Habit

While breaking this habit, you will recognize the common thought loops that occur before biting your nails. Biting your nails is a symptom not the cause of anxiety. To eradicate the nail biting even further, you must address the cause. Those thoughts are reminders that you haven’t taken action. So take action.

After awhile you develop a new problem. You have to learn how to clip your nails, which is pretty annoying.