Do I need a new broker account?

[foomanchoo]

OK 2nd post here so bear with me if this has already been beaten to death. I'm trying to setup a long term rolling post-tax investment account where I allocate a certain amount each paycheck into my brokerage account.  Based on recommendation on here and others, I'm looking at investing in index funds. The idea being :
1.) dump money into said account.
2.) either automatically or manually add to my existing fund position.

I'm looking at VTSMX which seems to have a very nice track record for the past 10 years( I'm open to other similar suggestions. Please pass them on!)

Much to my chagrin, I discovered that each transaction there is a $50 fee from my brokerage.
What strategies do you use to avoid these fees ? Is there a better way?

[iamlindoro]

If you want VTSMX (and when you hit 10K in VTSMX, you'd actually convert to VTSAX), then just open your account at Vanguard.  You can buy and sell their funds for free, and if you set up for e-statements, there's no annual fee (otherwise it's $20 a year).

It wouldn't be a brokerage account at Vanguard, it would be a mutual fund account.

I presume you're already maxing out all your pre-tax options?  401k, then Roth IRA?

[Another Reader]

Who is your broker?  For example, Fidelity and Schwab both offer very low cost index funds.  Fidelity's Spartan series comes in two flavors of expense ratios, depending on how much you have, just like Vanguard.  Schwab allows you to get started in their index funds with very low minimums and has similar low costs.  Your broker may offer the same thing.

I am not fond of Vanguard's website.  It just took me over a week to fix an issue of the trading page not appearing.  Vanguard and Comcast each blamed the other for the problem but neither party could fix it.  That's a week of not having on-line access to buy or sell.  Unacceptable in my book.

[foomanchoo]

Iamlindoro,

Thanks for the reply. I'm working on maxing out those but haven't quite gotten there yet. This is really for a separate purpose. I envision using it for planned expenditures like vacations / car fund. So long term in this case meaning between 1-2 years.

Thanks for the tip about vanguard m. fund account. I did not realize that was an option.

[foomanchoo]

Another,

I'm currently using tdameritrade, which I've been happy with for the most part. Can you be more specific on the index funds you are referring to? (I.e. symbols?)
When I brought this up with TDameritrade they mentioned that they have some funds that do not incur the transaction fee but I haven't research any that have as good a track record as some of the vanguard MF's.

[Honest Abe]

This is really for a separate purpose. I envision using it for planned expenditures like vacations / car fund. So long term in this case meaning between 1-2 years.

I'd recommend Betterment for this... You could set up distinct accounts and risk tolerances for each of these goals.

[Another Reader]

Investing in the stock market is for money that you will not need for many years.  If you expect to need this money in one to two years, you are taking on a lot of risk to your principal.  In your shoes, I would put money needed in that time frame in savings.

[dragoncar]

Investing in the stock market is for money that you will not need for many years.  If you expect to need this money in one to two years, you are taking on a lot of risk to your principal.  In your shoes, I would put money needed in that time frame in savings.

"Need" is relative here, since it's vacations/car fund.  Maybe he's willing to defer those in a bad market?

[Another Reader]

TD Ameritrade does not list their mutual funds on their public website.  The website does not mention any proprietary funds, so they may not offer their own funds.  If you log in and limit your search to NTF (No Transaction Fee) funds, you should be able to find out which index funds are available through them.  If that does not work, call them and ask what low cost index funds are available with NTF.

If you are saving for a specific date and purpose under two years, the stock market is not appropriate because of risk.  If you can defer the intended purchase because the market has a bad couple of years, you could invest.  Generally, things like vacations have a schedule, and if you need the money to be there at a specific date, go for a less volatile alternative.