Author Topic: eTrade Laziness/Non-automatic automatic investing strategy  (Read 4514 times)

thelamb

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eTrade Laziness/Non-automatic automatic investing strategy
« on: February 06, 2015, 10:21:41 AM »
I've been using eTrade for over a decade now and generally stick with them cuz I know where everything is.  I have a MM account that I contribute to a couple thousand a month and have a simple, standard MMM portfolio:  VTSMX, VGTSX, VBMFX.  Unfortunately, eTrade doesn't support automatic investing for these funds and I have to make additional purchases at $20 a pop.  I haven't quite nailed down my strategy here--whether to always buy quarterly or just every month; the closest I've had to a strategy is to buy at least once a quarter and buy more often if one of the funds seems cheap (as in the market is in a down week).  If I made one purchase a month, I'd be spending $240/yr in transaction fees.  My guess is that I'll be spending less than half that (about .5% of yearly contribution). 

Should I just be moving all of this over to an actual Vanguard account to take advantage of cheaper, automatic investing or would most consider these transaction fees small peanuts and not worth the worry?  Also, any thoughts on a purchase strategy?   

hodedofome

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Re: eTrade Laziness/Non-automatic automatic investing strategy
« Reply #1 on: February 06, 2015, 10:31:50 AM »
I'd switch but then again I'm cheap and don't ever want to pay commissions. $20 per fund or $20 total for all 3 funds each month? What about when you rebalance, are you charged for that too? $20 is 1% of the $2k you put in each month.

neil

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Re: eTrade Laziness/Non-automatic automatic investing strategy
« Reply #2 on: February 06, 2015, 10:48:44 AM »
http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp
https://www.fidelity.com/etfs/ishares

I'm not endorsing either of these, they just happen to be where I'm at.  But a lot of brokers have free options and you should be able to hit your desired allocation among them without too much effort.  Though I think long term you should just go with the lowest fees, and I assume opening an account with Vanguard gives you access to their ETFs commission free.  (ishares/etc seem to be about 0.05% more, or so, and there's no reason to pay it if you have the choice.  $50 per $100K, after all)

I'm guessing these are in a taxable account and I am not sure if mutual funds are generally commission free, even if you were to move to Vanguard.  But you can leave these where they are (since selling them would create capital gains) and move new money into a different broker and buy their commission-free products.  Rebalance according to your entire portfolio, but only through the commission free products.

skyrefuge

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Re: eTrade Laziness/Non-automatic automatic investing strategy
« Reply #3 on: February 06, 2015, 11:13:18 AM »
Should I just be moving all of this over to an actual Vanguard account to take advantage of cheaper, automatic investing

Yes.

Since you are following a simplified Vanguard-based approach, there is absolutely no reason to be anywhere but Vanguard. Lighting $20 bills on fire every quarter is dumb.

I've heard people say that non-Vanguard brokerages sometimes have better websites/platforms/etc, and I've been tempted to believe it. But, holy fuck, eTrade doesn't allow you to do scheduled, automatic investing?! What kind of ridiculous garbage is that? "Uh, it's just way beyond our ability to program that in"?!?

In addition to the straight-up cost, I'd say there's a behavioral reason to move to Vanguard too: it will eliminate the opportunity for market-timing that you're currently doing with your purchases. Yeah, you think that market-timing is helping you, but it's probably not.

I'm guessing these are in a taxable account and I am not sure if mutual funds are generally commission free, even if you were to move to Vanguard.

Yes, they are. Just in case people who use non-Vanguard brokerages are unaware, paying commissions for Vanguard funds is not normal! It's not something that you should just accept because it applies everywhere. If you invest through Vanguard, you never pay anything, ever.

But you can leave these where they are (since selling them would create capital gains) and move new money into a different broker and buy their commission-free products.

You can do an "in-kind transfer" to Vanguard, which does not create any gains/losses.

Here's the link, go do it: https://personal.vanguard.com/us/openaccount (click "Transfer an account")
« Last Edit: February 06, 2015, 11:16:24 AM by skyrefuge »

neil

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Re: eTrade Laziness/Non-automatic automatic investing strategy
« Reply #4 on: February 06, 2015, 11:59:25 AM »
It would be more accurate if I just said to check the rules, because I simply don't know what they are.  I don't own any sort of mutual fund except VIIIX in my fidelity 401k because I have limited options for employer contributions.

I'm actually a little surprised there isn't a sticky on the top of the forum explaining the real consequence of fees and opening Vanguard accounts and what it has access to.  I don't think it is hyperbole to suggest 99% of investing advice does not direct you to indexing through Vanguard directly.