Author Topic: Vanguard $50 redemption fee for selling shares within 60 days?  (Read 1494 times)

Fields of Gold

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I read this about Vanguard fees: "Additionally, for no-transaction-fee funds, Vanguard Brokerage Services imposes a $50 redemption fee for all sales within 60 calendar days of the trade date of the most recent purchase." https://personal.vanguard.com/pdf/vbsfreq.pdf
It's dated 2016, but is this a current policy in 2018?

Over at Fidelity, if your last purchase was a thousand dollars or less, then you can sell it the very next day without penalty.  However, if the last purchase was over $1000, then you have to wait only 30 days to sell without violating their trading agreements.

60-day Vanguard redemption period seems like a very long time if one needs to tax harvest immediate losses, and I've never heard any Vanguard clients mention this, especially the $50 fee. Maybe they just eat the $50 fee to harvest.  That's why I'm asking if it's a current policy?  Thank you for feedback.

DreamFIRE

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #1 on: March 23, 2018, 06:33:59 PM »
That's for non-Vanguard mutual funds.

For Vanguard funds, it says the following - also note the exclusions:

Vanguard funds
For Vanguard funds, Vanguard Brokerage Services will seek to apply the fundsí frequent-trading policy in each
fundís prospectus at the time a trade is placed. That policy generally limits an investorís purchases or exchanges
into a fund account for 30 calendar days (60 calendar days for participants in employer-sponsored defined contribution
plans recordkept directly by Vanguard) after the investor has redeemed or exchanged out of that fund account. The
policy does not apply to Vanguard money market funds, short-term bond funds (except for Vanguard Short-Term
Inflation-Protected Securities Index Fund), or ETF Shares.

Fields of Gold

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #2 on: March 23, 2018, 06:52:03 PM »
Thank you for the clarification. 

Sounds like Vanguard clients are able to buy VTSAX and then sell it all on the very next day without a $50 fee, but they won't be able to repurchase into VTSAX for 30 days.


BTDretire

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #3 on: March 24, 2018, 11:11:59 AM »
Thank you for the clarification. 

Sounds like Vanguard clients are able to buy VTSAX and then sell it all on the very next day without a $50 fee, but they won't be able to repurchase into VTSAX for 30 days.

 That's OK, just buy VTI.

smallstache

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #4 on: March 27, 2018, 04:50:04 AM »
Thank you for the clarification. 

Sounds like Vanguard clients are able to buy VTSAX and then sell it all on the very next day without a $50 fee, but they won't be able to repurchase into VTSAX for 30 days.

What is the point of repurchasing with 30 days?  Any tax loss would not be "harvested" because it would be a wash sale.

secondcor521

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #5 on: March 27, 2018, 11:49:53 AM »
Vanguard prefers customers who have longer term holding periods and prefers not to have customers who like to trade frequently.  They actively put policies in place to discourage frequent trading.  A big part of this is their philosophy that frequent trading drives up costs and higher costs results in lower returns.

If you don't think Vanguard's policies are good for you, then you're probably not their target market.  You would probably be happier at Fidelity or Schwab or Scottrade.  There is some market segmentation going on and Vanguard and Fidelity do not compete head-to-head for every single customer out there.

chadat23

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #6 on: March 27, 2018, 01:33:50 PM »
Quote
What is the point of repurchasing with 30 days?  Any tax loss would not be "harvested" because it would be a wash sale.

I've actually been looking into this in the form of Tax Gain Harvesting as a way to lower the taxes my wife and I will presumably pay in the future when we presumably sell a lot of stock in a single year to fund a home purchase.

Right now our AGI is about $55k so, assuming I'm understanding it all correctly, given that long-term capital gains is 0% up to about $77k, we can, in effect, make about $22k worth of future taxable income go away by raising out cost basis now (or towards the end of the year once we can better see how the year's earnings play out).

DreamFIRE

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Re: Vanguard $50 redemption fee for selling shares within 60 days?
« Reply #7 on: March 27, 2018, 03:14:35 PM »
What is the point of repurchasing with 30 days?  Any tax loss would not be "harvested" because it would be a wash sale.
I think he was just paraphrasing how it works after my post quoting Vanguard's policy but was actually concerned that there was a $50 redemption fee even for Vanguard funds, but there isn't.

These links have more info about Vanguard commissions and fees:

https://investor.vanguard.com/investing/trading-fees-commissions
https://personal.vanguard.com/us/whatweoffer/overview/redemptionpolicy
https://investor.vanguard.com/mutual-funds/fees
https://investor.vanguard.com/investing/benefits/at-a-glance