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I am looking to open a roth account and am interested in a simple set up with low fees. I just want to be able to put the money in each month and check it out in 30 years. What are the good, the bad and the ugly on each of the big three in this category (Fidelity, Vanguard and T. Rowe Price)? How will the account be set up to receive funds after taxes?
If you're just buying and holding index funds, Vanguard and Fidelity are very similar. I don't really see any positives or negatives to recommend one over the other. I'm not familiar with T. Rowe Price's setup.
I have been with Vanguard for over 20 years and am very happy with them. I do most of my own research on their website and online, but whenever I have had a question I called and they were very helpful.
I started with the Total Stock Market Fund, but the crash brought that down and at the age of 56 I started to panic. So when it had recovered sufficiently I moved it all to a different slightly more actively managed fund and have been very pleased with it. The fees are extremely low and getting good returns. I have both a Roth IRA and regular IRA with them.
Location: Chapel Hill, NC, formerly NoVA and Phila
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I have funds in all three. Vanguard generally has low expense ratios. Fidelity has 24/7 customer service - not sure if the others do. At least at some point Fidelity was the only one I could call at 2 AM and talk to a person (sounds silly, but that's usually when I am working on my finances). T. Rowe Price is also fairly low cost, and used to be known for their international funds - not sure if that is still the case.
They all have some good funds. Narrow it down to which funds you like and then compare those specific funds to each other. All three companies are good, solid firms.
I can compare Fidelity with Vanguard since I have both accounts. I much prefer Fidelity over Vanguard. Vanguard's website is cumbersome and they impose fees for marginal account balances and will not waive despite having large sums of money in another Vanguard acct. Vanguard is superior in the lower costs of its ETFs. Otherwise, my vote is for Fidelity because of the superior website.
I have most of my funds at Vanguard with 401(k)s at Fidelity and T. Rowe Price. In general, they are all are decent investment companies to work with and have pretty good customer service.
The MAJOR difference between the three companies is that Vanguard is a MUTUAL company OWNED by the Vanguard shareholders. Fidelity, I believe, is for-profit and privately owned. TRP is a publicly traded organization.
The critical difference between the three is that Vanguard has the lowest expenses. I was shocked to see the difference in expenses when my last employer moved our 401(k) plan from Vanguard to Fidelity. It was between 30-60 basis points. That might not make a big deal early on but as your portfolio grows, they are substantial.
As for Vanguard's fees, they charge customers who cost them more (frequent traders, small balance holders, and the like) higher fees. I think that is fair as that is disclosed upfront.
Getting started, I highly recommend T Rowe. Lower minimums. I would look at the Capital Appreciation Fund or something like the 2040, 2050, etc.
Vanguard is better, but more fees if you have less money to invest.
I agree with the above. I also highly recommend the T. Rowe Price Capital Appreciation Fund as well. While it's true we can't predict future returns, this fund has pretty amazing returns without insane volatility.
Looking at the big picture, I think all 3 fund families have their strengths and weaknesses. Personally, I would say T. Rowe Price & Vanguard are a toss up as to which is better. It depends on the type of funds you want to own. Vanguard has the lowest fees. Fees are definitely important, but they don't guarantee great performance...although low fees certainly increase the odds. If you are an index fund fan, then definitely go with Vanguard.
Outside a few funds, I think Fidelity just has way too many junky or mediocre funds, so while they are ok, I would rank the other 2 fund families above them. Fidelity is also notorious for a lot of management turnover in their funds, which can lead to a lot of inconsistency. T. Rowe Price generally is better at keeping manager turnover low and having smooth, well planned transitions when managers do leave. Fidelity does have its star funds, though, such as Fidelity Contrafund, which has been a top performer since its inception in 1967. But that fund is also asset bloated, so it may not be able to perform as well in the future as it has in the past. They have other decent funds as well. But I generally just don't think they are consistent enough to be worth the risk.
Outside a few funds, I think Fidelity just has way too many junky or mediocre funds, so while they are ok, I would rank the other 2 fund families above them. Fidelity is also notorious for a lot of management turnover in their funds, which can lead to a lot of inconsistency. T. Rowe Price generally is better at keeping manager turnover low and having smooth, well planned transitions when managers do leave. Fidelity does have its star funds, though, such as Fidelity Contrafund, which has been a top performer since its inception in 1967. But that fund is also asset bloated, so it may not be able to perform as well in the future as it has in the past. They have other decent funds as well. But I generally just don't think they are consistent enough to be worth the risk.
When we switched plans, I looked at the Lipper and Morningstar ratings on the Vanguard funds in the old plan. There were some great funds in the old plan with mostly 5* and 4* with just a couple 3*
In the new plan, they were mostly 3* rated funds ... that they were offering Fidelity Magellan was a big red flag that I should review the fund selections. I had to reallocate my funds to the better funds and rebalance the rest of my portfolio. I will admit that there were perhaps three excellent funds out of the thirty Fidelity funds offered.
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