… for the first time in maybe a decade. You may find it amazing that I’ve been blogging about money for nearly four years now and having not bought a mutual fund in many, many years. Once Exchange Traded Funds (ETFs) started getting commonplace, I switched to those vehicles instead. Typically the expenses were just a hair or two lower than their mutual fund counterpart.
This morning I broke the streak and bought a mutual fund. Why now? Fidelity’s marketing had done a great job convincing me how easy it was to set up a SEP-IRA with them. Being the lemming I am, I bought into it :-). That’s not entirely true… I knew from years of experience that Fidelity is a solid company. Their reputation is great. I also knew that they come very close to competing with Vanguard on mutual funds with very low expenses.
When it came time to invest the money from my SEP-IRA, I noticed that Fidelity was going charge me around $8 for a stock trade (if I were to do an ETF) and nothing if I bought their mutual funds (as long as I purchased the $10,000 minimum). It’s sad that I let $8 dictate my investing strategy. However, the expense ratio was almost the same between the two investment options. I didn’t even investigate the ratios until I was writing this post. Fidelity’s international mutual fund had an expense ratio of 0.10% and Vanguard’s VEU ETF expense ratio is 0.25%. Seems like I got lucky in saving the $8 and picking the lower cost option. Update: As for the international mutual fund choice I did some research on Globe Advisor’s mutual funds section and it looks like international mutual funds do better than some benchmark ETFs: (source)
Now I’m looking to do something that I’ve been meaning to do for some time… rollover multiple 401Ks to an IRA. I know that many say you should rollover your 401Ks as soon as you leave your job. Every time I left a job, there was some economic crisis and the market had sunk significantly. I was nervous about having my money in transition and missing a recovery. However, with the Dow relatively high, it seems like a good time to make a move and consolidate.
I have brokerage accounts with Ameritrade, Etrade, and Zecco (and of course Fidelity now). I have bank accounts with Bank of America and USAA. Since I haven’t been very active with brokerage accounts since the blissful days of Datek (memories!), I could use your help. What online brokerage do you use and why?