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Comment by easde | Hacker News Reader

Betterment is easy but if you have more than a few thousand bucks to invest I would just open a Vanguard account and put your money there. If you have no idea what you're doing just use a target date fund, otherwise just buy stock/bond ETFs in the mix that you want. Not worth ~0.4%/year in fees (doesn't sound like a lot until you realize it's $400/year on $100K) to have someone else do that for you.

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In the years I've been using it the fees have totaled 5.2% of the earnings over that time (current balance - invested, not total account balance). It's not nothing, but personally I place a high value on simplicity and peace of mind in my life, so it's worth it to have a simple and excellent user-experience in the app, as well as the ability to do things like withdraw and deposit with literally the tap of a button.

You're nuts if you think 5.2% is reasonable. Let's say for simplicity that's 1% per year for 5 years, if you chose VTSAX instead with an expense ratio of 0.04% (yes that's right) you're looking at total fees over 5 years of 0.2% versus 5%

Compound that 30 years out, you would loose hundreds of thousands of dollars for a pretty UI. Forget that, take a day and go setup a Bogleheads [1] portfolio.

[1] https://www.bogleheads.org/wiki/Three-fund_portfolio

Did you get alpha

5.2% is crazy.

The target date fund I use, SWYJX (Schwab Target 2055 Index Fund) has a net ER of 0.08%. Over 25 years, the difference between 0.4% and 0.08% can be hundreds of thousands of dollars.

Like Betterment, SWYJX an automated portfolio, but one adjusted for age, not some individual profile.

Bruh 5.2 percent what are you doing giving investment advice lmao

I'm willing to pay a 0.25% management fee to prevent SIM swapping attacks. Vanguard will not allow you to remove SMS as a 2FA option, and their Yubikey authentication doesn't work with Firefox, which is pretty unique. The little millennial brokerages (Robinhood, Wealthfront, Betterment) are all more secure.

Is there something specific about Vanguard that you use it for, I can buy ETFs on e-trade and other platforms right?

Yes, you can. Vanguard is a brokerage, just like E-Trade, Schwab, Fidelity, etc. They provide all sorts products, such as IRAs.

A good reason to use Vanguard as a company is their mutual funds. (Though you can trade Vanguard mutual funds elsewhere, they'll usually come with transaction fees.) Mutual funds are arguably superior to ETFs for many investors, in a few ways.

* Mutual funds are fractional by nature — you can trade as little as $1. Right now, only a very small handful of brokers support fractional shares of ETFs.

* Since MFs aren't traded as whole units, you can set up automatic investing. Let a certain % of your paycheck go into the MF every month. Not possible with ETFs on most platforms, a notable exception being M1.

* Since MFs only settle their NAV once a day, you're discouraged from compulsively checking your portfolio every few hours. If the market is temporarily down, you won't see it reflected in real time. Some people consider the real-time aspect of ETFs superior, but for long-term investing, this lack of an instant dopamine rush means it's easier to just not think about it. Fewer emotional decisions.

* Mutual funds can be "funds of funds". Regulations prevent ETFs from doing the same thing. A good example of a FoF is Vanguard's target date retirement funds, which are nearly exactly equivalent to a Boglehead-style three-fund portfolio.

MFs have a reputation for being expensive, but Vanguard's have some of the lowest fees on the market. MFs also can be tax-inefficient, but Vanguard has patented a loophole that makes them as efficient as ETFs when held in a taxable account.

Vanguard is also a great company; easily my favourite investment company. Its ownership structure is inverted: The company is collectively owned by its funds, which means that you, as a MF shareholder, will own a part of Vanguard.

Note: The above points about MFs are largely moot with robo advisors like Betterment.

> MFs also can be tax-inefficient, but Vanguard has patented a loophole that makes them as efficient as ETFs when held in a taxable account.

Incredible... You weren't kidding: https://www.bloomberg.com/graphics/2019-vanguard-mutual-fund...

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