>>923122 I was being absurd. My question is just about Vanguard and if it is a reliable company ? I've heard good things but I would love to hear from someone who uses them for long term savings/retirement.
>>923576 >Bernard L. Madoff Investment Securities LLC, est. 1960 >50 year old company >still a ponzi scheme The moral of the story isnt that Vanguard is a ponzi scheme, its that you never put all your eggs in one basket. CitiBank wasnt a ponzi scheme either, but of you had your life savings there in 2008 you were praying for the US government to come save your ass.
I never understood how such risk-averse ETF enthusiasts could not understand this most basic principle of diversification.
>>923640 You aren't buying shares of Vanguard. You own shares that represent ownership in the underlying companies. If Vanguard goes tits up, your ownership of 2 million dollars worth of the S&P500 doesn't just disappear. It'll be split up and no longer bundled together as one VOO ticker.
>>923687 Thats not true at all. Vanguard doesnt buy the SP500, it creates indexes for various sectors. You dont own any actual stock in an ETF. The comparison youre trying to make would be if Standard and Poor went belly up and you owned SP500 index shares. You wouldnt own a percentage of 500 companies on the index.
>>924610 Vanguard owns the stock, you moron. Its essentially a mutual fund that trades like a stock. You dont own shit except a piece of paper that says "Vanguard owes me, $XXX,XXX." Or in your case, "Vanguard owes me, $XX."
>>923640 >Bernard L. Madoff Investment Securities LLC The Madoff company was a broker/dealer that provided fee-based investment services to clients. While the SEC regulates broker/dealers, the regulations principally focus on the client relationship, attempting to ensure that the broker/dealer deals in an honest and equitable manner when soliciting new funds. Notably, the regulations provide very few restrictions on what the broker/dealer can do with the money once it comes in house, the types of investments or other transactions the broker/dealer can engage in, and the amount of disclosure or transparency that is required into the internal operations of the firm. A broker/dealer firm is private, and investors have no direct claim to assets of the enterprise.
By contrast, a mutual fund or ETF is a registered investment company. Each fund is essentially a trust owned by the investors. Mutual funds have much stricter rules and are subject to much greater regulatory oversight than broker/dealers. Mutual fund holdings a publicly reported, and fund transactions are subject to mandatory audits. There are liquidity regulations which assure that the fund must redeem your shares at the current NAV. Also, registered investment companies are subject to strict limitations on the types of transactions they can engage in, which makes it virtually impossible for a fund to have any creditors who's claims might impact the value of the funds shares.
>>924637 >Vanguard owns the stock, you moron. You're 100% wrong. The stock, bonds, or other holdings of each fund are owned by the separate investment companies (the funds themselves). Investors own shares in the funds, and have a direct claim on all residual assets in the fund.
Indeed, in the case of Vanguard, the funds also own Vanguard who serves as the fund advisor. Vanguard does not own the investor's assets. The investors actually own Vanguard, through their ownership of each of the funds.
>>924643 Informative. Thank you. I did not realize how different Vanguard was from other mutual fund management companies. I stand corrected. Regardless, in no way would I ever keep all my life savings with one company. If they did go bellyup, I could imagine the years of headaches trying to sort out where it had all gone.
>>924655 >I did not realize how different Vanguard was from other mutual fund management companies. Yes, Vanguard being investor-owned is what puts it ahead of other low-fee fund providers such as Schwab or Fidelity, in my opinion. Vanguard itself has essentially no incentive to cheat its investors or steal from them because any ill-gotten profits that Vanguard might earn simply flow back to the funds themselves, which are themselves collectively owned by the investors.
Indeed, this is also one of the reasons why Vanguard will always charge some of the lowest fees in the industry. There's simply no economic incentive for Vanguard to be greedy because its profits flow back to the funds, and hence to the investors.
>Regardless, in no way would I ever keep all my life savings with one company. If they did go bellyup, I could imagine the years of headaches trying to sort out where it had all gone. I understand where you're coming from, and I've wrestled with this concern myself. For me, the convenience and economic benefits of consolidating my assets under one roof outweigh the risks. But I wouldn't fault someone for being cautious, as long as they're doing it on an informed basis.
2004 Money Magazine: >What happens if my fund company fails? >Your money is safe. Under the Investment Company Act of 1940, which governs the industry, each fund is set up as an individual corporate entity, with its own board of directors. Essentially, your fund hires the fund company to manage its assets. If the company were to file for bankruptcy, its creditors would not be able to touch the funds’s assets. And the fund’s directors could immediately hire a new manager, pending shareholder approval.
Quit spreading lies.
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