Vanguard or American Funds for my Roth IRA?

[Guest IRAnewbie]

Hi guys, just quick question. Based on long-term performance (not-recent obviously) how do Vanguard and American Funds compare?

Both are very respectable companies, offer great returns for Roth IRAs. The question is: is there a better one of the two?

Vanguard only charges a $10 a year custodial fee.

American Funds charges some commission percentages( 5.75% initial, .75% yearly).

Vanguard can handle Roth IRAs directly and easily through their web site.

American Funds looks like it can only be invested through third-party (i.e. brokerage, or online investor, Ameritrade etc...)

Lastly, does anybody know of any good mutual fund comparison sites, that I can use to determine the strength, value, etc... of funds within a family over the past few years.

I look forward to your replies. Thank you

[Guest Joel Lee]

Think of two super horses that in every respect are identical. Before placing your bet in comes to your attention that one of the horses has three pounds of rocks placed in his saddle. I'm sure you would bet on the other horse.

[John G]

Vanguard and American are "families" of mutual funds. You did not provide two specific funds.

However, no contest on the choices. Vanguard is more like Lance Armstrong on hills. It is one of the premier low cost mutual fund operations.

Newbie, there are only 8,000+ mutual funds out there. You are overthinking the issue and the choice. At this stage you only need one good mutual fund.... it doesn't have to be the best performer in the coming year. Just a decent performer. No one can tell you which funds will do best. Not me not anyone. But over the long haul, a fund with low expenses and a broad portfolio of different kinds of stocks will do just fine. Don't sweat the details on which one, focus on the concepts of broad coverage of the market and low expenses.

In my prior posts, I have recommended that you only look in the universe of NOLOAD funds. Apparently the American fund you are considering is not a no load.

I would imagine that a total market index fund or an S&P500 index fund would have a huge overlap with almost any general purpose mutual fund. Why pay the commisson and higher fees for much the same stocks. Do some real homework and ask for the prosectus of the funds and then set them side by side and note how many stocks are found in both.

I am begining to wonder if you just can't pull the trigger and make a decision. Listen carefully, in investing you can never be completely assured that your choices will be successful. If you are frozen over "the right choice" you may never make any choice.

[Guest IRAnewbie]

Very well put John G! Since I just wanted to be thorough, I think though place of the convenience, and overall good nature, Vanguard will be my "host" now its just a matter of choosing the right mutual fund. A broad stock pick like the index will probably be my best choice.