Author Topic: Brokers  (Read 6645 times)

mrpercentage

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Brokers
« on: September 17, 2015, 07:15:34 PM »
Okay,
I was looking at Vanguard for a taxable:
<$50,000
" First 25 trades: $7; subsequent trades: $20
By phone. All trades: $25

AHHHH!!!!!!! Smashing objects. I hate it when companies favor rich people. Granted I will probably have 50,000 in my taxable well before my 25th trade. Especially if I keep buying in chunks of 2,000 because I plan to keep my DGI companies for pretty much forever

Scottrade: (I have an account here)
Like to keep you from getting money. You must set up a bank account with them or call for a check to be mailed. Makes long term DGI a hassle but I do like their flexible dividend reinvestment program, their platform, and their low fees.

Robinhood:
Pays you nice. All transfers take at least 3 days but at least they are direct deposit. No fuss. No fees. But stuck with a phone platform and can't transfer stock from Scottrade into Robinhood

Direct Stock Purchase:
I like it. Especially for companies you want to build into over a long time. They usually provide fractional shares and many have no fees at all. But, you have no control over the timing of a purchase what-so-ever. You all know Im a dirty market timer. Come on.


Okay. For those who know. Sell me Vanguard. Why would I want a Vanguard taxable? Will they direct deposit my dividends into my regular bank account when I ask? Do they reinvest dividends for free? Do they provide fractional shares? Can I buy shares of a different company with dividends with no fee like Scottrade? If Vanguard won't do it who will? Who has the best- most customer loving- awesome sauce- I am never going to leave you- platform for a guy that wants to live off of dividends later?


protostache

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Re: Brokers
« Reply #1 on: September 17, 2015, 07:33:25 PM »
Vanguard specializes in very low cost index funds and free trades in and out of them. Vanguard does not specialize in being a low cost general purpose broker. That's not their business. The only time one would use Vanguard's brokerage service is when you transfer assets in and need to sell them to exchange into Vanguard funds.

Different accounts for different purposes. Your purposes run counter to Vanguard's.

Edit to add: I don't have any particular affinity to a broker. Our IRAs and our taxable account are at Vanguard because they're invested in Vanguard funds. My solo 401k is currently at Fidelity because it's invested in Fidelity funds, and I wanted the other features Fidelity's non-prototype account includes.
« Last Edit: September 17, 2015, 07:36:00 PM by protostache »

johnny847

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Re: Brokers
« Reply #2 on: September 17, 2015, 07:53:07 PM »
I don't think anybody can "sell you Vanguard" because your goals aren't in line with the kind of customer that Vanguard services. For the reasons protostache said.

Ramparts

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Re: Brokers
« Reply #3 on: September 18, 2015, 07:02:25 AM »
Quote
I was looking at Vanguard for a taxable:
<$50,000
" First 25 trades: $7; subsequent trades: $20
By phone. All trades: $25

Note that the $50,000 is the amount of funds invested in Vanguard mutual funds & ETFs. So having 50k in various DGI companies in your brokerage doesn't qualify - you need 50k in things like VTSAX. Also it's the first 25 trades each year, not the first 25 trades ever. As protostache said, in your case it sounds like your needs don't align with Vanguard. If you wanted most of your stash in Vanguard funds with some play money for DGI companies or whatever, it would be a fine option since you would qualify for cheaper commissions. (And of course, there are no commissions for building up for main Vanguard fund stash, just the small expense ratios).

GGNoob

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Re: Brokers
« Reply #4 on: September 18, 2015, 08:13:29 AM »
If you are actively trading or only purchasing stocks that require commission, you probably want to go somewhere cheaper than Vanguard.

Check out TradeKing.com. They have a promo for $1,000 in free trade commissions, after that its $4.95 per trade.
http://welcome.tradeking.com/free-1000/?engine=google&extension=sitelink&sitelink=free1000&network=g&device=c&model=&keyword=trading%20king&matchtype=e&position=1t1&adid=82594204391&ADTRK=sgo+sitelink+-+free1000&promo=free1000&gclid=CJSZktjhgMgCFZCIaQodw-oKLg

JetBlast

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Re: Brokers
« Reply #5 on: September 18, 2015, 09:04:12 AM »
Vanguard determines what your fees will be based on total assets in their funds and ETFs across ALL accounts in your household (you and immediate family members at the same address). So if you have an IRA or 401k with them that has over $50,000 in their funds then you qualify for the Voyager Services level of $7 per trade on your taxable brokerage account. If your spouse has $50,000 in Vanguard funds in their retirement account you would also qualify for Voyager Services even if the accounts are held individually.

Many here have crossed the $500,000 mark and would pay $2 per trade.

hodedofome

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Re: Brokers
« Reply #6 on: September 18, 2015, 09:53:39 AM »
I think Merrill Lynch Edge gives you 30 free trades a month if you keep a certain cash/savings balance (like $25k) with either Merrill or Bank of America.


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mrpercentage

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Re: Brokers
« Reply #7 on: September 18, 2015, 08:29:16 PM »
Good points guys. Im not in a rush to do anything yet but must admit that Im in the brokers I use by total chance. Vanguard does have 2 ETF's for DGI I think look okay. VYM and VNQ
I looked at VYM's top ten holdings:
1       Exxon Mobil Corp.
2       Microsoft Corp.
3       Wells Fargo & Co.
4       Johnson & Johnson
5       General Electric Co.
6       JPMorgan Chase & Co.
7       AT&T Inc.
8       Pfizer Inc.
9       Procter & Gamble Co.
10       Verizon Communications Inc.

Yep, those have DGI all over them. Im just concerned with whatever else they are holding. I really like their #1 though. Im DRIPing in it right now. I like pretty much all their top ten

GGNoob

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Re: Brokers
« Reply #8 on: September 19, 2015, 09:42:44 AM »
Why are you only focusing on DGI?

You can see the entire holdings of VYM here: https://personal.vanguard.com/us/FundsAllHoldings?FundId=0923&FundIntExt=INT&tableName=Equity&tableIndex=0&sort=marketValue&sortOrder=desc

Why not invest in total stock market funds?


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mrpercentage

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Re: Brokers
« Reply #9 on: September 19, 2015, 11:28:52 AM »
I trust DGI more. Equity swings too much. It will keep me focused on acquiring successful businesses. DGI in index will not come close to actually investing in the companies themselves.

Take Chevron. If you dropped $10,000 when it was yielding 6% you would get $600 a year in dividends. Lets assume it keeps its track record of increasing its dividend by 7% a year. Well in that case, ten years from now you would be yielding 12% off of that original 10k investment. That doesn't even include the fact that it was buying itself for you the whole time increasing your yield more that way as well. Even if it wasn't you would be collecting $1200 a year in dividends at year ten. Maybe it would be buying $1200 a year for you.

DGI is a very slow snowball that throws insane amounts of money at you in the end game if you have the patience and foresight to stick to the plan, diversify properly, and stick with your companies through thick and thin.

Don't think its possible. Look here
http://www.dividendinvestor.com/projected_divyield.php?symbol=CVX&proj_div_yield=10

edited again to add

After looking at the whole portfolio VIG is the better dividend fund for sure. Im not satisfied with the yield itself though. I would like to see it closer to 4%
« Last Edit: September 19, 2015, 06:59:41 PM by mrpercentage »

mrpercentage

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Re: Brokers
« Reply #10 on: September 19, 2015, 07:14:51 PM »
Considering the yield is 1% higher then VTI and the S&P500 and the performance tracks pretty close-- Im not sure why someone would pick the 500 over VIG. A 3% yield might possibly be lived off of without the need to sell shares. I know VTI is doing better now but look at the long run. And the yield is likely to grow instead of stay the same. It also did better in the recession.


frugledoc

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Re: Brokers
« Reply #11 on: September 20, 2015, 12:38:53 PM »
good to see that you are moving from stock picking to index investing.

The problem with the dividend aristocrats is that they are retrospective.  Nobody knows who the aristocrats will be in 10 - 20 years.

Have you heard the phrase, past performance is no guarantee of future performance?

Also, lower dividend paying companies tend to reinvest their profits rather than paying them out, potentially leading to higher growth and a higher share price.


sirdoug007

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Brokers
« Reply #12 on: September 20, 2015, 01:04:42 PM »
Td Ameritrade and others offer $0 commission etf trades on a pretty long list of etfs.

I do this in my HSA and buy a share of VTI commission free when ever I get enough money in there.

Sounds like you want to play the individual stock game though which you will have to pay for from what I have seen.


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« Last Edit: September 20, 2015, 01:45:00 PM by sirdoug007 »

mrpercentage

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Re: Brokers
« Reply #13 on: September 20, 2015, 01:10:17 PM »
I really am exploring everything. I have enough broker accounts to keep me from jumping into another by chance. I will carefully consider my options and begin a slow consolidation process to the winner. I still love the aristocrats. I just might dollar cost average some (not all) of my money into Exxon and others for life. I don't think most people have the patience to watch their yield grow. They focus on the faster moving equity. I don't plan to live off equity. I don't plan on retiring entirely. I will shoot for financial independence. My goals are a little off from a typical MMM lurker.

I will buy about $400 a month of the dividend aristocrats until I die or collect from them. Whatever comes first. I will probably index the rest in tax sheltered accounts. I would like to use Vanguard but I find their minimum for trade fees a little unsettling. If they offered $7 a trade period I would have no reason not to dump 4 broker accounts into them right now as long as there is not any red tape collecting dividends via direct deposit into my normal checking account. I would do it today--- but my stocks don't count for their 50,000  >:[

mrpercentage

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Re: Brokers
« Reply #14 on: September 20, 2015, 03:10:13 PM »
Geeze I read it wrong. It yields 2%? How can a dividend fund yield 2%?

Financial.Velociraptor

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Re: Brokers
« Reply #15 on: September 20, 2015, 04:13:18 PM »
Geeze I read it wrong. It yields 2%? How can a dividend fund yield 2%?

Fed ZIRP at work in the markets...

protostache

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Re: Brokers
« Reply #16 on: September 20, 2015, 05:51:55 PM »
Geeze I read it wrong. It yields 2%? How can a dividend fund yield 2%?

That's how diversification works. The index that VIG matches (pdf) has 180 stocks in it, and they pay a wide variety of dividends. By buying an index, you're trading yield for lower risk.

If you're still interested in VIG, you might want to look into the equivalent mutual funds (VDAIX and VDADX). You wouldn't be paying any trading fees, and Vanguard has zero issues with depositing dividends from a fund into a checking account if that's what you want. By investing via the funds instead of the ETF, you don't have to pay the spread.

mrpercentage

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Re: Brokers
« Reply #17 on: September 20, 2015, 06:54:50 PM »
I do like VIG a lot. It just yields too low. It shows what I have been saying for a while-- that good dividend companies do better in poor markets. I experimented and mixed it with VYM. That would give it a yield of 2.75 (much better) and still track the market fairly well over the last 15 years. I think my wires were crossed on these two. I was probably thinking of VYM with the 3% yield. That said Exxon yields 4%, Proctor & Gamble 3.8%, Chevron 5.5%, Johnson & Johnson 3.2%, Southern 5%, Southwest Gas 3%, Verizon 5%, and AT&T 5.5%. This is why Im still strongly tempted and do still buy individual stocks.
here is the mix of VIG and VYM its portfolio 1

sheepstache

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Re: Brokers
« Reply #18 on: September 20, 2015, 07:40:11 PM »
My understanding is that Vanguard will reinvest dividends for free for most stocks. They will support fractional shares for that. I would doublecheck for non-US stocks. For example I learned there was a weird thing for rds.b. They will do a scrip-type program where dividends will be reinvested, but technically the program reinvests in rds.a, so now you have a rds.a position, but Vanguard liquidates accounts with less than one full share at the end of the day, so unless you received enough dividends to buy a full share...    If you don't reinvest, the dividend is deposited into your money market settlement fund, so that sounds like they won't send it direct to your personal checking account. But then there's a note in the faq that if the security is held directly in your name, the company sends it directly to you, so I don't know how you register it that way or if you can do that for all securities.

mrpercentage

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Re: Brokers
« Reply #19 on: September 20, 2015, 08:51:39 PM »
But then there's a note in the faq that if the security is held directly in your name, the company sends it directly to you, so I don't know how you register it that way or if you can do that for all securities.

My Direct purchases will send them strait to me. I have them set to reinvest. I must admit the impish part of me enjoys the fact that shares in my name can not be borrowed and sold in short selling. I know it wouldn't effect me even if they were but it feels like a solution to a common problem. My shares are not Scottrade's shares or Robinhood's shares-- they are mine. There is stronger feeling of ownership in that and greater commitment from me in those companies. I don't know how it would work if I transferred them. I have been half tempted to receive the paper certificates just because I think it would be cool.

Thank you for the information. Sometimes its hard to tell without using the platform and its good to here from those who have.

index

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Re: Brokers
« Reply #20 on: September 20, 2015, 09:58:41 PM »
If you are going to buy and sell shares of individual companies, no brokerage is better than interactive brokers. They are not going to hold your hand though. You will have to figure out how to make your purchases and use their online guide to say up your account. It's not really a retail platform. If you decide to  use them though, you are looking at commissions of 60c to $1.50 for 1-500 share trades using their cost plus pricing program. Options contacts are about 70c each of you want to write covered calls. They really have no peer.