Vanguard Roth IRA - Question

[bcoop]

I'm opening a Roth IRA account with Vanguard, most likely, unless someone is aware of something better. My question boils down to Admiral Shares, which you can read about here.

https://investor.vanguard.com/mutual-funds/admiral-shares?WT.srch=1

I have an emergency fund, should I get laid off, or something like that. It currently equates to roughly 10 months of expenses, and the goal there was to have 12 months expenses in that fund. I know most people say 3-6 months is plenty, but I am not comfortable with only 3-6 months expenses in that account.

Would it be worth raiding my emergency account to maintain that $10,000 balance needed for the Admiral shares? It won't wipe the whole emergency fund out, but will take about $4000 of it. And obviously, I can build that emergency account back up (as long as I don't get laid off, which shouldn't be a problem based on this year and next year's forecasts). Doing so will make me uneasy, but also give me motivation to get that built back up. What say ye, the collective minds of DFWM? I do also have a 401k through work, fwiw. Shouldn't influence the decision here imo.

[Snatch Napkin]

Given your track record with your company and the forecast of the next year, I say do it.
How long will it take you to build your emergency fund back up?

[bcoop]

How long will it take you to build your emergency fund back up?

Depends on how much I buckle down. I'm already cutting back on expenses where I can, saving for the new place.

I'll say this. My IRA will be maxed out each year. So at the 2 year mark, I would get the Admiral shares anyhow. I could probably have the money I raid from the emergency fund back in 10ish months.

[Snatch Napkin]

10 months sounds better than 2 years for the same savings.
We've also gotta wait almost a year to see who the new boss is gonna be. Who knows what they'll do to tax shelters.
Get Grandfathered in and start saving more, sooner.

[slow99]

You're looking to take $4k from the emergency fund to save roughly $20-$25 in fees if I'm thinking about this correctly. I place a high value on liquidity and ability to sleep at night, so there's no way I'd do that, ceteris paribus. Of course, the benefit would be you'd have an extra $4k invested. However, it sounds to me like your question is focusing strictly on saving the fees and that amount isn't even close to being meaningful.

[bcoop]

You're looking to take $4k from the emergency fund to save roughly $20-$25 in fees if I'm thinking about this correctly. I place a high value on liquidity and ability to sleep at night, so there's no way I'd do that, ceteris paribus. Of course, the benefit would be you'd have an extra $4k invested. However, it sounds to me like your question is focusing strictly on saving the fees and that amount isn't even close to being meaningful.

Was hoping you'd chime in. Thank you. Folks on Reddit seem to make a big deal about the fees, as if they're astronomical. Good to hear a different point of view, and it is precisely why I didn't ask the same question there.

[Snatch Napkin]

You're looking to take $4k from the emergency fund to save roughly $20-$25 in fees if I'm thinking about this correctly. I place a high value on liquidity and ability to sleep at night, so there's no way I'd do that, ceteris paribus. Of course, the benefit would be you'd have an extra $4k invested. However, it sounds to me like your question is focusing strictly on saving the fees and that amount isn't even close to being meaningful.

I was led to believe the savings are closer to $750 a year.
I opted to invest it elsewhere, in the end, but I've often wondered if I made the right choice.

[Fordblue625]

Often times the Vanguard ETF's may carry the same expense ratio as the admiral funds. I'd look to see if Vanguard offers an ETF version of the admiral fund you're looking into. I believe the ETF's also trade commission free on the Vanguard platform.

[slow99]

I was led to believe the savings are closer to $750 a year.
I opted to invest it elsewhere, in the end, but I've often wondered if I made the right choice.

Their site says the Admiral fees are 16 bps lower than their other products. That's $1.60 a year saved per each thousand $ compared to other Vanguard non admiral products. I'm pretty sure you can find quality index funds for about 50 bps a year; $5 per thousand, anywhere.

Unless you're talking big numbers it just doesn't really matter that much. The difference in tracking errors among different mutual funds is likely greater than 15 bps.

It's kinda like when I have people ask me about potential investments and then say they have $500 or $1000 to put to work. The commissions alone start eating up your profits when you're talking about amounts like that. If you wanted to round trip a trade, the commission alone will eat up the first 4% of your trade. That's not even taking into consideration taxes, before you can even start to think about any real profit made.

[Snatch Napkin]

Their site says the Admiral fees are 16 bps lower than their other products. That's $1.60 a year saved per each thousand $ compared to other Vanguard non admiral products. I'm pretty sure you can find quality index funds for about 50 bps a year; $5 per thousand, anywhere.

Unless you're talking big numbers it just doesn't really matter that much. The difference in tracking errors among different mutual funds is likely greater than 15 bps.

It's kinda like when I have people ask me about potential investments and then say they have $500 or $1000 to put to work. The commissions alone start eating up your profits when you're talking about amounts like that. If you wanted to round trip a trade, the commission alone will eat up the first 4% of your trade. That's not even taking into consideration taxes, before you can even start to think about any real profit made.

Yeah, it's pretty negligible for my bracket.
I definitely made the right choice.

Sorry, Brent. I was going off of what was told to me. I obviously should research this shit better.

[Broncojohnny]

I would do anything to avoid the fees, I hate them. But this is an IRA and it isn't like you can get the money back out easily.

[Fordblue625]

I would do anything to avoid the fees, I hate them. But this is an IRA and it isn't like you can get the money back out easily.

He's using a Roth, so his contributions can come back out tax and penalty free. Which Vanguard fund are you trying to use Bcoop?

[bcoop]

Sorry, Brent. I was going off of what was told to me. I obviously should research this shit better.

Don't apologize. I want different opinions so I can then weigh everything and make a decision.

He's using a Roth, so his contributions can come back out tax and penalty free. Which Vanguard fund are you trying to use Bcoop?

Undecided right now.

[slow99]

Don't apologize. I want different opinions so I can then weigh everything and make a decision.

As you should. I just want to clarify that I'm taking my position b/c there's lots of evidence in your initial post that says you're averse to taking money out of that emergency fund, as I would be too. I value the liquidity and a "safety net" and I wouldn't forego that to save $10-$20. I agree that fees suck and should be avoided, just taking the scenario as a whole I don't think I'd dip into the emergency fund.

[Broncojohnny]

Check the rules for withdrawal, there are rules to it. Like you can only withdraw up to the contribution amount or it has to be five years old.