What is a brokerage account vanguard
Dis advantage of a VG Brokerage account: Anna - re "the same state protection that a Traditional or Rollover IRA gets" - I have no idea what you are referring to here. Could you give an example of the "state protections" for WA? In a brokerage account, you can't automatically send distributions from one vanguard fund to another vanguard fund as you can with a non-brokerage vanguard account.
It looks like you're new here. If you want to get involved, click one of these buttons! Categories All Categories Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor. October in Fund Discussions. Vanguard has been after me to make this transition for months.
They list a number of good reasons why I should. It won't cost me anything. Does anyone know of negative consequences for doing so? Using a Vanguard brokerage might present a minor what is a brokerage account vanguard when doing Roth conversions. In contrast, if an IRA is directly with the fund, then you can do a precise dollar conversion. Check whether Vanguard can do this from a brokerage account. If you were able to write what is a brokerage account vanguard directly from your fund some bond funds may have had this featureyou'll lose that with the brokerage.
The brokerage can offer check writing, but not directly from the funds what is a brokerage account vanguard the brokerage. If you're converting a taxable account, you'll get multiple s for the split year. Okay, that's a really small downside. But consolidating s is the only upside I see what is a brokerage account vanguard the conversion.
This would be state specific; I live in WA State. You might take your question to: October edited October IMHO, only a fool would convert to brokerage. The brokerage account offers SIPC protection. The regular account does not.
Although this is probably no issue given it's Vanguard I'd rather have the protection than not. This advantage outweighed any disadvantages in my case so I made the switch years ago when first presented with the option. Spoke to VG rep. He indicated that basically if you plan to hold only VG mutual funds, it what is a brokerage account vanguard not really worth your while. For that reason, I did not convert my accounts over.
At first, the directed dividend "problem" looked like a show stopper because I currently use VMMXX as my settlement fund for distributions. Exactly how do they define a "trade"? Vanguard might actually pay you some incentive to move assets from other firms.
Dividend reinvestment might not count as a "trade" at Vanguard; it doesn't at Fidelity. On Oct 27 msf asked: You own a number of Vanguard mutual funds, in a retirement account which is held in the form of a VG regular [non-brokerage] account.
Many of the funds pay regular or semi-regular distributions. You take your RMD monthly. Interest rates what is a brokerage account vanguard unattractively low.
Then you could - for example - direct all of your distributions from all of your other funds to a single -for want of a better term- 'distribution fund'. This might be the Vanguard Wellesley fund or the new Global Wellesley fund.
The 'distribution fund' might have been pre-seeded or funded with some money in addition to the distributions that it automatically collects. You could then take all of your monthly RMD distributions from the single 'distribution fund' e. When you check your RMD at the beginning of each year, you could look at the balance of the 'distribution fund', and fudging a little for expected distributions and appreciation or depreciation - make sure that you have enough in the 'distribution fund' to cover the upcoming year's RMD requirements.
Can't do this with a brokerage account. While one may hold ETFs in addition to VG Mutual Funds prior to retirement and time to take RMD's, once one starts taking RMDs, can liquidate all ETFs in retirement accounts, transfer to more-or-less equivalent Vanguard funds held in regular non-brokerage retirement accounts and take advantage of the wonders of directed dividends.
One can also - from time to time - "buy low" or reinforce an existing position, by directing all of the dividends from all of what is a brokerage account vanguard other mutual funds to the fund that is "low" or which you want to gradually build a position. As I understand it, you're prefunding the Wellesley account to ensure that it has enough to cover the year's RMDs after also including the expected dividends from other funds in the IRA. You're having Vanguard automatically make your with RMD withdrawals monthly.
That is certainly functional. But by having the fund distributions directed out of the funds and into the Wellesley account, you're throwing your asset allocation out of whack. The higher yielding funds are getting depleted more quickly, the others less quickly. Rebalancing appears to take on more importance with this strategy. In this sense, it seems you're trading ease in one area for a bit more complexity in another. If it works for you, fine, that's why you're better off investing directly in the funds.
In working through the mechanics of what you're doing, I discovered a related downside to the Vanguard brokerage. In essence, directing dividends is equivalent to: One could achieve a similar effect to what you're doing by reinvesting dividends and periodically using automatic exchanges from the other IRA funds into Wellesley.
In fact, that might even work a little better, because you could control the timing and amounts shifted, rather than being subject to the randomness of dividends. It turns out that automatic exchanges are available for funds but not within a Vanguard brokerage: Not available for brokerage accounts. As you say, it works for me. And yes, I rebalance yearly. Since brokerage does not allow either directed dividends or -as you noted- the automatic exchange between funds that you mentioned in above postI consider brokerage what is a brokerage account vanguard be inferior to the 'standard' account and would never convert.
As for the asset allocation 'drift' that what is a brokerage account vanguard mentioned, the Wellesley fund is more 'conservative' than the aggregate allocation of the entire portfolio. For that reason, I am pleased with the 'drift' that you discussed. Note - I mentioned Wellesley as just one example. The beauty of directed dividends for those that have not given it up by converting to brokerage is that you can pick ANY Vanguard fund to receive the dividends from any of the other funds.
Also, to emphasize, while you note in your paragraph "One could achieve a similar effect What is a brokerage account vanguard can only do this with a traditional non-brokerage account. If you think about what I what is a brokerage account vanguard need to do in a brokerage account to get the same effect, by maintaining my non-brokerage account, I have effectively hired a clerk to periodically move money around for me to feed the RMD distribution accounts gradually alter asset allocation, The cost to me of this 'clerk' is effectively nothing.
What - really - are the benefits of a VG what is a brokerage account vanguard account, versus a non-brokerage account, and how do these compare to 'directed dividends' benefits, as noted above? Again to clarify - I meant that you or anyone using Vanguard funds as opposed to its brokerage could use automatic exchanges in lieu of directed dividends.
Advantages of VBS over individual funds are limited, but they do exist: In a brokerage, you have access to the pending settlement proceeds immediately. But if you want to buy Vanguard funds outside of the brokerage say, you sold BRK. B in a Vanguard brokerageyou'd have to wait days - for the trade to settle and then to place the order to buy the Vanguard fund. Vanguard says this will take at least four days. Personally, I think this is little more than a technicality - handling a few extra papers isn't a big deal, especially if you download the tax statements directly into tax prep programs.
What is a brokerage account vanguard features of mutual funds usually require some minimum amount for the checks. In contrast, brokerages usually have no minimum requirement - you can write checks for a penny if you want. So - if I could summarize at the risk of putting words in your mouth While there is some "reduced tax preparation paperwork" benefit for brokerage accounts, that evaporates when the accounts - either brokerage or non-brokerage - are held in tax deferred retirement accounts.
Paradoxically then, for Vanguard to promote brokerage, no? I assume that this must come down to costs - since what doesn't at Vanguard? Brokerage must be cheaper for What is a brokerage account vanguard and the funds it administers and which own Vanguard.
So what I think we have is that Vanguard is promoting what is a brokerage account vanguard platform for which the apparent initial benefits would seem to benefit traders, rather than investors an unusual stance for them except that in the longer run, the impact of lower assumed costs in brokerage flow through to the funds in lower expense ratios - benefiting eventually both traders and investors.
However, as an individual - who rarely trades - it would seem that the optimal position would be to maintain non-brokerage accounts to benefit from the flexibility of directed dividends and automatic investment, while at the same time benefiting from the lower expense ratios as everyone else is herded into brokerage.
Having said that and 'figured' it out I should say no more on the topic. Thank you Anna for this link: The only item I'd disagree with is the speed of what is a brokerage account vanguard money between investments. If the market goes up more than it goes down, it is preferable on average not to be out of the market longer than necessary. So faster movement is a desirable feature whether you trade several times a month, or a few times a decade.
Having the funds inside a brokerage keeps your time out of the market to a minimum.
However, we do appreciate a high level of discussion; therefore, in order to maintain honest and gentle discourse, please keep the following criteria in mind when adding a comment: Use Standard Writing Skills and Style. Just don't take the freedom of speech away from us.
Avoid abusive language and personal attacks, directed either at the broker or the author. Users caught spamming or abusing will be deleted from the site and prohibited from future what is a brokerage account vanguard at thatsucks.