In my last two articles I talked about the reasons why I think my current retirement plan sucks, and I also mentioned several traps I want to avoid moving forward with my retirement plan.
In today’s article I’m going to cover three places I’ve been considering as possible options to move my retirement funds over to. However all three of these options are unique in their own way and they all present specific benefits that meet the criteria I’m looking for.
Also I would like to mention that I’m interested in hearing other options as well. So if you know of a company that I might be interested I’d like to hear your thoughts in the comments below.
Option 1: Vanguard
The first option I’ve considered was Vanguard. Now for those of you who don’t know Vanguard is an at cost investment company that charges little to nothing to invest with them, hence the phrase At Cost Investing.
What this means specifically is that they don’t have any sale charge fees, and their annual fees are very small typically around 0.30% which is very cheap. You can check out my full review of them here.
With that everything looks very attractive on the outside but when I took a deeper look I found a huge issue with them, their returns just don’t stack up. In fact when I looked over almost all of their funds I found that their typical returns don’t average more than 4%.
If you don’t believe me check out this article I did awhile back where I compared Vanguard over another company that charges higher fees. In the end I found that even with paying the fees they still beat out Vanguard because the returns were higher.
Now obviously returns cannot be guaranteed but when you look at things over the long term it’s evident that Vanguard can’t bring the returns I’m looking for.
Option 2: Lending Club
The second option I considered was Lending Club. Once I first heard about this company I was drawn into the idea of playing banker with my own money. On top of that returns look very promising averaging around 8 – 10%.
However there’s one huge problem with using Lending Club or any other peer to peer lender, they are not available in Ohio. Yup, that’s right you can’t invest with Lending Club in Ohio, and since I live in Ohio this is pretty much out of the question. In fact I’ve gone as far to email them several times and ask the were going to open Ohio up to investing in Lending Club and I have yet to ever hear from them.
The second problem I have with them is that investing strictly with Lending Club would be like investing all of my money in gold, which could prove to be risky. On top of that nearly 82% of all Lending Club loans are debt consolidation loans. This in itself could be very risky if a lot of people would happen to default on their loans.
Option 3: Betterment
Finally, the last option I’ve been considering is Betterment. I recently came across a great review of them by Joshua over at Modest Money and decided to check them out, and one of the things that I noticed right off the bat that I liked was the fact that they kept things simple and user friendly.
Secondly the fees are very low typically between 0.15% to 0.35% with no sale charge fees. On top of that they are very transparent showing me exactly where my money is invested and I can change things at the drop of a hat.
However there’s one thing I didn’t like about it, and that is if you have under $10,000 a month you need to contribute at least a $100 a month since my account isn’t at that mark yet.
However, I plan to start contributing to it again so this isn’t really that big of a deal.
So those are my 3 options that I’ve been considering. However I would like to hear your thoughts. Where are you investing your retirement money? Is their a specific company you like using and why?