An Update on My Investing Project
Here’s where I am with all of my investment accounts: NOWHERE.
Or, more accurately: IN THE PROCESS OF GETTING SOMEWHERE, BUT NOT AS QUICKLY AS I WANT TO.
I dropped $5,500 into my newly-opened Capital One Investing traditional IRA account last Friday, to get my 2017 retirement contribution taken care of. Then I paid $19.95 to invest it in a Vanguard mutual fund. $19.95 isn’t that much when you compare it to a $5,500 investment, right?
Yeah. Um. Then I transferred 5 percent of that week’s freelance paychecks into my traditional IRA, and another 5 percent into my newly-opened Capital One Investing personal investment account, and learned that I’d have to pay another $19.95 per investment to get those dollars into Vanguard mutual funds.
Capital One does offer a few cheaper options. If I wanted to do the Vanguard S&P ETF, for example, that would only cost me $6.95 per transaction. Which… sure, that’s a lot less than $19.95, but I want to do this every week! Or at least every month! How am I going to handle all of these fees?
So I started researching. I learned that some roboinvestors don’t charge per-trade fees but do take a small percentage of your assets as a “management fee.” This is probably because these roboinvestors are doing the trades for you, so to speak; when I signed up with Ellevest, for example, I filled out a bunch of information about my income and my goals and then they told me how they wanted to invest my money on my behalf.
I really liked Ellevest — they’re personable, and their website is a lot of fun — but they also made a lot of assumptions about my income and career that were based on an employee’s trajectory, not a freelancer’s. Until they get better at understanding how freelancers earn and spend money, I can’t responsibly invest with them.
I also tried signing up with Betterment and was kind of turned off by their website. (Is there a nice way to say that the Betterment Guy — the face that guides you through the onboarding process — isn’t actually smiling? He looks tired.)
Then I went back to Vanguard and started looking at what would happen if I switched all of my investing over to them: the Roth IRA, the traditional IRA, the rollover IRA, and my personal investment account. I know I said I wasn’t going to do this because I like the ease of transferring money from my Capital One checking account to my Capital One investing accounts, but I’d prefer fewer fees — and it looks like Vanguard is going to deliver.
Vanguard charges $20 (annually?) per brokerage or mutual-fund-only account, but I can get that fee removed if I sign up for electronic delivery and/or have more than $10K in the account. I’ll also get commission-free trading in Vanguard mutual funds and ETFs. If I understand this correctly, this means I won’t have to pay $19.95 every time I want to add money to a mutual fund.
I had already planned to do my Rollover IRA directly with Vanguard — you might remember that they couldn’t verify my identity and wanted me to fill out a bunch of forms — and I went ahead and tried to apply for a Vanguard personal investment account as well. I got the same message about not being able to verify my identity and needing to mail in a form, but this time the form was super-short: just my personal information and a voided check.
So yesterday I put the Vanguard personal investment account form (plus the voided check) in the mail. I’m hoping that once they verify me for the personal investment account, I’ll be able to do the rest of my account transfers — the 403(b) rollover, plus the traditional and Roth IRA rollovers — online.
But I’m probably not going to hear back from Vanguard until the end of the month, and I am IMPATIENT.
Also, here’s an update on my HSA: they couldn’t confirm my identity either, so last Friday I faxed them a copy of my Social Security card and driver’s license. It’ll take at least a week to get that all sorted out — I know because I called and asked — and once it’s done I’ll want to transfer $1K into my HSA in the first 90 days to get the $36 admin fee waived.
I totally get why people avoid investing, by the way. Because it’s way more complicated than it needs to be.
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