Rebalancing YES, Schwabbery-Robbery NO

[goodasgold]

Gold has hit a trading band for my portfolio, which calls for some juggling among the four PP components.

Thanks to SteveGo's recent posting, we have been alerted to Schwab's hidden costs for trading bonds.  Has anyone else discovered other hidden fees for trading PP components, at Schwab or anywhere else?

My own case is rather complicated. First of all, I don't like to put all my eggs in one basket. Secondly, due to a transition from a work-related 401K setup to the PP, my portfolio is distributed among several mutual funds, brokerage houses, TreasuryDirect and private holdings (i.e., gold coins.) Shifting funds and money between these entities is getting rather complicated, and the fact that some of them involve traditional and Roth IRAs adds to the complexity. I imagine other PPers are in the same boat.

Any suggestions as to the best combination of ETFs, mutual funds, etc., to simplify portfolio rebalancing while keeping costs at a minimum?

[Pointedstick]

Here's one I just found about: TDAmeritrade's commission-free ETF program requires that you not sell any security you bought within 30 days. BUT--and here's the nasty part--it's not just individual shares you held for less than 30 days, it's any share of a security where other shares have been held less than 30 days.

So for example, if you buy 100 shares of VTI, wait a year, buy 20 more, and then sell the original 100 a week later, you get hit with a $20 fee.

If you fall prey to this, call them up and explain that the last customer service rep you talked to told you otherwise and they'll reverse the fee! 

All in all, I've found that TDAmeritrade's staff has a really poor grasp of the nuances of their own commission-free ETF program.

[notsheigetz]

I imagine other PPers are in the same boat.

You got that right. Between me and my wife our PP consists of 10 different accounts with 5 different brokerages and all three tax flavors.

It does help that Fidelity doesn't charge anything for buying and selling U.S. bonds, especially since that amounts to half of the portfolio, so I keep all my bonds there.

I wanted to convert our Roth IRA's, which aren't a very large portion of our portfolio yet, into the Vanguard Wellsley fund and call it my variable PP but Fidelity wanted $75 to purchase it. That'd be $150 a year for the Roth contribution if we made only one per year. I think I'll be transferring those accounts to Vanguard. So make that 6 brokerages.

[melveyr]

Schwabb you can trade SGOL for free correct? That seems quite nice. I wish Fidelity had IAU now that they are iShares pushers

[KevinW]

IMO right now the all-ETF portfolio that comes closes to obeying all PP best practices is: VTI, TLT, SGOL, BIL

Note that this is diversified across 4 different fund sponsors and uses true T-bills for cash. IAU and GLD are more popular for gold; and SHV, SHY, and SCHO are more popular for cash; but all of those bend one or both of those guidelines.

Personally I find switching brokers, and feeling tricked by my broker, to be very exasperating. So I just use Vanguard, whose structure tends to prevent those frustrations. They aren't always the best at everything, but they are very unlikely to disappoint.

[Pointedstick]

I also appreciate Vanguard's stability and no-gotchas approach, and their automatic investment is so nice and easy! But I find their trading platform to be extremely frustrating. You're definitely not supposed to be doing buying and selling in a non-automatic manner.

A few days ago I did a switcheroo of SGOL for GTU when it was trading at a 5% premium, and was able to do it instantly in my Schwab 401k. With Vanguard, each transaction takes take 3 days to settle, and the opportunity would have been lost.

[KevinW]

I seem to only need to make trades about once per year or less, so the 3 day delay doesn't bother me. I guess I can see how it could be an issue if you're moving things around all the time.

[BearBones]

A few days ago I did a switcheroo of SGOL for GTU when it was trading at a 5% premium, and was able to do it instantly in my Schwab 401k. With Vanguard, each transaction takes take 3 days to settle, and the opportunity would have been lost.

I think same for Vanguard. Price locked in on trade date but money exchanged T+3. This gives you time to move money in from bank, etc, if needed to cover trade. In the case of selling SGOL, it would be available immediately.

[rocketdog]

I also appreciate Vanguard's stability and no-gotchas approach, and their automatic investment is so nice and easy! But I find their trading platform to be extremely frustrating. You're definitely not supposed to be doing buying and selling in a non-automatic manner.

A few days ago I did a switcheroo of SGOL for GTU when it was trading at a 5% premium, and was able to do it instantly in my Schwab 401k. With Vanguard, each transaction takes take 3 days to settle, and the opportunity would have been lost.

I've always experienced a 2-3 day delay before settlement at Schwab in my IRA accounts.  What makes you think your trades settle "instantly"?  When I sell a fund at Schwab I always have to wait 2-3 days before the cash becomes available to purchase another fund.  The "sell" is immediate, but Schwab gets to take a float on my money while I wait until I can put that money to work again in another fund.  At least that's been my experience. 

[Pointedstick]

I have never had this problem at any broker, IRA or not. Sell one stock. Funds in account. Buy another stock 30 seconds later. Warning from broker that funds must clear, but trade still goes thru, no problem.

Yeah, that's been my experience too, with every broker but Vanguard. Everywhere else, I can buy immediately after selling with the proceeds of the sale.

[l82start]

i have only had that problem with vanguard once, but since a help desk person was walking me through the website/process at the time and had told me to make the transaction, he got on the phone with a supervisor as soon as he saw the error and had it ok'ed and they covered the lag-time no problem..

[rocketdog]

I have never had this problem at any broker, IRA or not. Sell one stock. Funds in account. Buy another stock 30 seconds later. Warning from broker that funds must clear, but trade still goes thru, no problem.

Maybe that was it then: I got the warning and misinterpreted it?  But I could swear that I tried to buy another fund after selling one, and it prevented me from doing so even though I had more cash from the sale than was required for the buy. 

[rocketdog]

I have never had this problem at any broker, IRA or not. Sell one stock. Funds in account. Buy another stock 30 seconds later. Warning from broker that funds must clear, but trade still goes thru, no problem.

Maybe that was it then: I got the warning and misinterpreted it?  But I could swear that I tried to buy another fund after selling one, and it prevented me from doing so even though I had more cash from the sale than was required for the buy.

If it was a mutual fund rather than an ETF or stock, that's a different story. Mutual funds clear on the next business day after buy/sell IIRC, and the funds would then not be available for use until the 2nd business day after the trade. However, there is a way around that as well. Instead of 'selling' the mutual fund, do an 'exchange' into the new fund. Under that scenario, the money is immediately taken from the sale of the 1st fund and used to buy the equivalent dollar amount of the 2nd fund. The entire transaction takes place at the closing NAVs for both funds on the day the trade is requested.

Good thought, but no, I only buy ETFs.  I'll have to pay special attention the next time I rebalance to see what happens. 

[sophie]

I have never had this problem at any broker, IRA or not. Sell one stock. Funds in account. Buy another stock 30 seconds later. Warning from broker that funds must clear, but trade still goes thru, no problem.

Maybe that was it then: I got the warning and misinterpreted it?  But I could swear that I tried to buy another fund after selling one, and it prevented me from doing so even though I had more cash from the sale than was required for the buy.

Fidelity blocks you from making a purchase with funds that are waiting to settle.  As I found out when I tried to pull the same trade as PointedStick.  And, they hold on to your funds for a good 4-5 days before settlement.  Irritating doesn't cover it.  Fidelity, shame on you.

[rocketdog]

Fidelity blocks you from making a purchase with funds that are waiting to settle.  As I found out when I tried to pull the same trade as PointedStick.  And, they hold on to your funds for a good 4-5 days before settlement.  Irritating doesn't cover it.  Fidelity, shame on you.

Damn, it seems like there's no place left to go!  I always figured if I ever switch jobs I'll convert my Fidelity 401K to an IRA, but not if I'm going to have to put up with that.  Hell, at that point I may as well just transfer it to Schwab with everything else I have. 

[Pointedstick]

Personally, Schwab is my favorite of all the brokerages I have accounts with. Here's my assessment of the brokerages I use for my various PPs:

Schwab
Worst disadvantages: Costs $25 to sell bonds and you have to pick up the phone to do it
Best advantages: $1000 minimum for bond purchases; SGOL is commission-free: can set up a 100% commission-free ETF PP!

Vanguard
Worst disadvantages: Trades take forever for funds to become available; awkward platform; only Vanguard funds are commission-free
Best advantages: Great for automatic investment; wide variety of high-quality Vanguard funds; $1000 minimum for bond purchases

TDAmeritrade
Worst disadvantages: $10 trades; nickel-and-diming attitude re: fees; $5,000 minimum for bond purchases
Best advantages: Large selection of PP-friendly commission-free ETFs; bond laddering tool; easy to sell bonds

[Tyler]

I use Fidelity, and have purchased ETFs using funds waiting to settle with no issues (definitely with money transferred in from a bank, and I believe also with cash from freshly sold funds). 

I know they reserve the right to tighten that on an individual basis if they feel you're abusing the system (like, for example, day trading with that float space).  Perhaps there are also more rules in the fine print -- cash vs margin account, max float trades a year, etc. 

[Coffee]

I can't stand Vanguard.  Their web interface is unnecessarily complicated/clunky and their customer service is crummy.  The last time I called, the phone rang several times and the guy who finally picked up didn't know the answer to some basic questions.  And to be honest-- just didn't seem all that sharp.

In contrast, Schwab's customer service seems to be spot-on.  But I didn't want to keep everything with Schwab, which is why I opened an account at Vanguard (and because the Bogleheads rave about it so much). 

What about ScottTrade?

[Pointedstick]

Scottrade's was the first brokerage account I opened and I don't really care for them. Their trading platform is clearly optimized for day-traders and can be confusing and over-complicated for those with different investment goals. Their selection of commission-free funds and ETFs is also pretty poor, especially in the PP-friendliness department. I don't know what buying bonds through them is like since I've never tried it. On the plus side, trades aren't too expensive: only $7 a pop.

If you're shopping for another broker, I'm a fan of TDAmeritrade. They're my second-favorite after Schwab. They are pretty PP-friendly, and their customer service is pretty sharp. Everyone I've called has seemed to know what they were doing... aside from that one dude who misinformed me about the restrictions on their commission-free ETF program, of course. But they were cool about reversing the fee I got charged as a result.

If you want to PM me your email address, I can refer you and you'll get a ton of free trades for the first such-and-such number of months (I think three).

Full disclosure: I'd get $100 from the deal.

[MachineGhost]

http://www.onlinebrokerrev.com/main_men ... eviews.php

Schwab owns optionsXpress, BTW.  TD Ameritrade is my least favorite broker, but I guess Vanguard (who I don't really view as a real broker) deserves that honor.

[Libertarian666]

Fidelity blocks you from making a purchase with funds that are waiting to settle.  As I found out when I tried to pull the same trade as PointedStick.  And, they hold on to your funds for a good 4-5 days before settlement.  Irritating doesn't cover it.  Fidelity, shame on you.

If you have a margin account,  Fidelity will let you purchase before the funds clear if you have enough equity. You'll have to pay a tiny amount of margin interest, but the accrual will stop as soon as the funds clear.

[frugal]

Scottrade's was the first brokerage account I opened and I don't really care for them. Their trading platform is clearly optimized for day-traders and can be confusing and over-complicated for those with different investment goals. Their selection of commission-free funds and ETFs is also pretty poor, especially in the PP-friendliness department. I don't know what buying bonds through them is like since I've never tried it. On the plus side, trades aren't too expensive: only $7 a pop.

If you're shopping for another broker, I'm a fan of TDAmeritrade. They're my second-favorite after Schwab. They are pretty PP-friendly, and their customer service is pretty sharp. Everyone I've called has seemed to know what they were doing... aside from that one dude who misinformed me about the restrictions on their commission-free ETF program, of course. But they were cool about reversing the fee I got charged as a result.

If you want to PM me your email address, I can refer you and you'll get a ton of free trades for the first such-and-such number of months (I think three).

Full disclosure: I'd get $100 from the deal.

For an european citizen which one you recommend?

Thanks PS!

[Pointedstick]

For an european citizen which one you recommend?

Thanks PS!

Couldn't say; I don't know much about non-US citizens opening US brokerage accounts. Maybe a non-US-based member who's done it can chime in.

[frugal]

For an european citizen which one you recommend?

Thanks PS!

Couldn't say; I don't know much about non-US citizens opening US brokerage accounts. Maybe a non-US-based member who's done it can chime in.

For US-PP I think we can make free cost ETF portfolio in SCHWAB, right?

Scottrade is good for pennystocks?

Regards

[rocketdog]

For US-PP I think we can make free cost ETF portfolio in SCHWAB, right

You could get a free (no commission) PP at Schwab:

SCHO = Cash
SCHB = Stocks
SGOL = Gold
TLO = Bonds

Average expense ratio is 0.16%.  If you wanted to add some foreign stock exposure, you could swap out some of the SCHB and replace it with SCHF.