The Frugal Paragon Rescues Her Money
Investing can be a lucrative hobby for those with knowledge and luck. But it is not, and has never been, one of my hobbies. My favorite ways to advance our family financially are more along the lines of cloth diapering, hemming my own pants, making laundry detergent, that sort of thing. Or working at my laptop, especially with Leapforce at Home. So while I ambitiously created a “Finance” category for this blog, it is nearly empty.
Frankly, we don’t have a lot of money to worry about anyway, but we do both have 403(b)s. I had half-forgotten about my orphan TIAA-CREF account from back when I used to be a middle school teacher. I remembered it last week when Mr. FP asked me to look over his allocations. HIS were fine; his current plan has a lot of good fund options. But MINE were dreadful. Many of my funds were underperforming and I had few better options.
Time to rescue my money! Since it’s an old account with no money going into it from an employer, I can move it at will (with permission from Mr. FP). By moving it to Vanguard, I can get much lower fees–especially by buying Admiral shares–and therefore better returns. Here’s what it took to move:
- 40 minute phone call with Vanguard, later conferencing with TIAA-CREF. I already have a Vanguard account, so it took about one minute on the phone to create the rollover IRA.
- Form to fill out, get notarized, scan, and upload to TIAA-CREF.
- About an hour researching investment options and choosing how to allocate.
- Check Vanguard every few days to see if the money’s there yet.
- Click some buttons to put money in the right baskets.
That’s less than two hours of time now that could add up to thousands of dollars by the time I retire.
I have about $16000. My first thought was to break it up into four or five funds to “diversify.” Then I realized that I could get Admiral shares of the Vanguard Total Stock Market Index. The general consensus on the interwebs is that that particular fund is the best one that exists. By making a $10,000 initial investment, you can reduce the already-low fees by getting Admiral shares. So why not put most of my money there?
I eventually decided to put about $13K in the VTSAX and the balance, about $3K, in the Small-Cap Value Index Fund, which is also well-regarded and increases exposure to smaller companies. When I get more money, then I will worry about adding more diversity in the form of foreign markets, REITS, bonds, and other fanciness. (Mr. FP has some of those in his 403(b) anyway.) But for now, I think most investors would agree I’m making a wise choice.