Jaszbo
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Maybe I am mistaken. You seem to be correct about the fees associated between vanguard and scottrade the more I look at it. But if you want to purchase a fund from vanguard every month as part of your portfolio, how much are you charged?
From looking here http://www.scottrade.com/frame_commissions.asp
It looks like 20 dollars no matte what and then there's addition fees on top of that, which are:
Mutual Fund orders placed through a broker are an additional $20. NTF and No-Load Fund shares purchased from Scottrade that are held fewer than 180 days will be charged a $17 short-term redemption fee in addition to the commissions above, except for Rydex, Profunds and Potomac funds, which are intended for short-term traders. With regard to No-Loads that are not in the NTF program, Systematic Purchase/Redemptions will be charged $2 per occurrence. *NTF funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through record keeping, shareholder or SEC Rule 12b-1 fees. For more complete information on any mutual fund offered through Scottrade, refer to the fund’s prospectus. Prospectuses should be read carefully before you invest or send money.**Not applicable if the fund charges a contingent deferred sales charge.
Also looks like reblancing your portfolio is going to cost you, even if it's in a tax sheltered account there's a sell involved.
After googling for awhile to read as much as possible, I found in on another board how these posters explain why you shouldn't use scottrade to buy from fidelity or vanguard:
http://moneycentral.groups.msn.com/StartInvesting/drip.msnw?action=get_message&mview=0&ID_Message=125844&LastModified=4675530785112548341
I personally don't have an account with scottrade, but I've heard great thing about them. For ETFs I've been happy with sharebuilder, they charge 4 dollars, which is much cheaper than scottrade, but depends on what you like to do. sharebuilder's 4 dollars is because they purchase it only weekly on Tuesday so it's cheaper for them, but scottrade from my reading, seems like it's the sameday. I'm not intrested in daily trading personally, but tradeking is actually cheaper for day trading as it's only 4.95 to buy and sell.
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Sat Feb 25, 2006 9:42 pm |
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vethost.com
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quote:
Originally posted by Jaszbo
Maybe I am mistaken. You seem to be correct about the fees associated between vanguard and scottrade the more I look at it. But if you want to purchase a fund from vanguard every month as part of your portfolio, how much are you charged?
Zero.
quote:
Originally posted by Jaszbo
From looking here http://www.scottrade.com/frame_commissions.asp
It looks like 20 dollars no matte what
No. Read below.
quote:
Originally posted by Jaszbo
Mutual Fund orders placed through a broker are an additional $20. NTF and No-Load Fund shares purchased from Scottrade that are held fewer than 180 days will be charged a $17 short-term redemption fee in addition to the commissions above, except for Rydex, Profunds and Potomac funds, which are intended for short-term traders. With regard to No-Loads that are not in the NTF program, Systematic Purchase/Redemptions will be charged $2 per occurrence. *NTF funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through record keeping, shareholder or SEC Rule 12b-1 fees. For more complete information on any mutual fund offered through Scottrade, refer to the fund’s prospectus. Prospectuses should be read carefully before you invest or send money.**Not applicable if the fund charges a contingent deferred sales charge.
The key here is NTF (No Transaction Fee), which means their list of hundreds of funds. Sales charges do apply only when a non-NTF is bought or sold. They do charge $18 to sell no-load funds, NTF or non-NTF, if they are held less than 6 months.
quote:
Originally posted by Jaszbo
Also looks like reblancing your portfolio is going to cost you, even if it's in a tax sheltered account there's a sell involved.
Only true if qualifying funds are held less than 160 days (6 months).
quote:
Originally posted by Jaszbo
After googling for awhile to read as much as possible, I found in on another board how these posters explain why you shouldn't use scottrade to buy from fidelity or vanguard:
http://moneycentral.groups.msn.com/StartInvesting/drip.msnw?action=get_message&mview=0&ID_Message=125844&LastModified=4675530785112548341
If I were moving mutual funds to Scottrade, I would make sure they'd reinvest dividends and cap gains. In sum, I'd say keep it where you are most comfortable.
quote:
Originally posted by Jaszbo
I personally don't have an account with scottrade, but I've heard great thing about them. For ETFs I've been happy with sharebuilder, they charge 4 dollars, which is much cheaper than scottrade, but depends on what you like to do. sharebuilder's 4 dollars is because they purchase it only weekly on Tuesday so it's cheaper for them, but scottrade from my reading, seems like it's the sameday. I'm not intrested in daily trading personally, but tradeking is actually cheaper for day trading as it's only 4.95 to buy and sell.
I checked into quite a few companies before settling for Scottrade, Ameritrade was a joke...they charge you $50 for not trading as often as they'd like you to. Sharebuilder is cheap enough, but I prefer watching the realtime quotes and the charts before diving in. I'll often set a limit order so if the stock or fund does not hit my buy (or sell) price, I make no moves. Can't do that with Sharebuilder. Scottrade also lets you set trailing stops by percent or dollar amount at no charge. My guess is tradeking doesn't have all those features.
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Sun Feb 26, 2006 1:11 am |
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Jaszbo
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I really don't know enough about tradeking to say anything about them. I know they have buying on margin and their buying and selling is 4.95 real time.
The thing is that slowly I change the way I invest. I used to use sharebuilder to dollar cost average into ETFs, but now I've been putting a little bit into doing biweekly dollar cost averaging into a mutual fund and just making one large purchase on ETFs after my tax return and when ever I pull a lot of money each year.
It does look like if you want to go with a few family funds that scottrade broker has better options than vanguard's broker. Personally I've never used vanguard to purchase non-vanguard funds.
I do though see that if you are still going to end up with only vanguard funds that you are better off just sticking with vanguard itself. If you want a few funds then scottrade does look like a better alternative.
Why does it say this though:
"Mutual fund orders placed by Scottrade brokers will be subject to an additional $20.00 handling fee"
I took it from this:
You can invest in the mutual funds available through Scottrade without paying a transaction fee when investing in a No Transaction Fee, No-Load mutual fund online. However, all fees and expenses as described in the prospectus will still apply. Please read the prospectus carefully before investing. Scottrade will assess a short-term redemption fee upon the sale or redemption of a no-load position held less than 180 days, except for Rydex, Profunds and Potomac families of funds. Mutual fund orders placed by Scottrade brokers will be subject to an additional $20.00 handling fee. Please read Important Mutual Fund Information for other order processing information and trading restrictions.
The word "additional" makes it seem like no matter what, but if you are using scottrade you would know.
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Sun Feb 26, 2006 1:58 am |
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vethost.com
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quote:
Originally posted by Jaszbo
Why does it say this though:
"Mutual fund orders placed by Scottrade brokers will be subject to an additional $20.00 handling fee"
I took it from this:
You can invest in the mutual funds available through Scottrade without paying a transaction fee when investing in a No Transaction Fee, No-Load mutual fund online. However, all fees and expenses as described in the prospectus will still apply. Please read the prospectus carefully before investing. Scottrade will assess a short-term redemption fee upon the sale or redemption of a no-load position held less than 180 days, except for Rydex, Profunds and Potomac families of funds. Mutual fund orders placed by Scottrade brokers will be subject to an additional $20.00 handling fee. Please read Important Mutual Fund Information for other order processing information and trading restrictions.
The word "additional" makes it seem like no matter what, but if you are using scottrade you would know.
Yes. When I first signed up with Scottrade, I read everything carefully and called them when I wasn't sure.
Scottrade is cheap but has a lot of features for researching and tracking. It's low in cost because they expect all trading to be done through the web. If you prefer to call the broker to place a trade, then they do charge more. That's what "Mutual fund orders placed by Scottrade brokers will be subject to an additional $20.00 handling fee" refers to.
I started investing on a whim in 1967 when I was in the Air Force. I had $110 burning a hole in my pocket so I bought 16 shares of a gold mining stock at the advice of a broker. It split 2 for 1 after 2 weeks. I just held on to that certificate until I lost it...anyway, Anglo American took it over some years ago, and I ended up with $865. It wasn't until the 80's that I learned about mutual funds, and I took the plunge into Fidelity, Vanguard and Scudder for my IRA. The funds maintained those.
Now that there's $100,000 sitting in my TSP and I'm retired, I'm going to make the move to a self-directed IRA. I intend on using closed-end funds that trade just like stocks (a good source is at etfconnect.com), and maybe a few stocks. I may pepper it with a couple mutual funds...and keep them with the funds  For the next few years, I expect gold mining shares and resource stocks to continue higher, but will buy the dips. Yeah. I know. I'm older so I should play it safe. Well, I want to get rich, and playing it conservatively will fail to deliver, IMHO.
Good luck to all.
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Sun Feb 26, 2006 2:44 am |
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Jaszbo
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thanks for all the info
I really never have delt with close fund mutual funds, because everybody says stay away from close end mutual funds. As a matter of fact I was hearing not too long ago that some people were trying to sue a company that was calling close end mutual funds exchange trade funds.
I couldn't find the article, but doing a search in google I found http://www.streetauthority.com/cmnts/sp/2004/04-19.asp as some people try to market close end funds as ETFs. I personally really do like ETFs.
thanks again for all the info on scottrade.
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Sun Feb 26, 2006 5:59 am |
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vethost.com
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quote:
Originally posted by Jaszbo
thanks for all the info
I really never have delt with close fund mutual funds, because everybody says stay away from close end mutual funds. As a matter of fact I was hearing not too long ago that some people were trying to sue a company that was calling close end mutual funds exchange trade funds.
I couldn't find the article, but doing a search in google I found http://www.streetauthority.com/cmnts/sp/2004/04-19.asp as some people try to market close end funds as ETFs. I personally really do like ETFs.
thanks again for all the info on scottrade.
CEFs are quite legitimate. Whomever said "stay away" does not know what they are talking about, and I'd stay away from that advice and instead invest some time in reading the facts. The link I gave earlier is etfconnect.com. You'll find more at morningstar.com and other major financial sites.
The article you pointed to is self-serving as the guy is trying to sell his newsletter on ETFs. He also made some statements that are misleading:
" -- Closed-end funds rarely trade near their net asset value (NAV), whereas ETFs tend to trade very close to their NAV. This is because ETFs offer an easy-to-use way for institutional investors to create or sell the underlying portfolio of stocks. This creates and arbitrage opportunity that tends to keep the ETFs very close to the underlying value of their holdings. Closed-end funds do not have this capability. In fact, unlike ETFs, where the fund's current holdings are public knowledge, closed-end funds, like open-end mutual funds, typically do not disclose their exact portfolio holdings on a timely basis.
-- Closed-end funds are actively managed; ETFs are passively managed. Since most portfolio managers tend to underperform their benchmark, there is little incentive for me to track these funds."
What he FAILS TO SAY is funds do trade at DISCOUNTS too and using tools at financial sites it is possible to find a fund trading at a discount that normally sells for a premium. Get my drift?
He also bemoans the fact that CEFs are actively managed and puts them in the same category as mutual funds. That's fine as there are funds, both closed and open-ended, that are actively managed and BEAT their indexes often by wide margins. A better choice in an ETF newsletter is the one offered by Donoghue at cbs.marketwatch.com.
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Sun Feb 26, 2006 7:30 am |
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Jaszbo
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It wasn't one single person it's been multiple books that recommend staying away from Close ended mutual funds.
Actually one of the basic popular books mutual funds for dummies goes on and on of reasons why to stay away from them. The author doesn't get into ETFs much, but only has one page about them as far as I can remember and it seemed he didn't have much to say about them either or at least nothing positive, but I've seen a change in the industry.
Vanguard's John Bogle made a comment that was posted in random walk down wallstreet, basically saying how he's against ETFs that anything that encourages trading is just simply bad. Maybe John changed his mind about ETFs though as the book was published awhile ago and in the recent years vanguard's vipers are really pushing ETFs and as you can see they don't even have a 5 year history http://flagship4.vanguard.com/VGApp/hnw/FundsVIPERByName
ETFs aren't anything knew, but I guess vanguard has changed their mind about them for some reason.
Personally CEFs just don't intrest me at all.
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Sun Feb 26, 2006 7:03 pm |
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vethost.com
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quote:
Originally posted by Jaszbo
It wasn't one single person it's been multiple books that recommend staying away from Close ended mutual funds.
Personally CEFs just don't intrest me at all.
Before you throw out the baby with the bathwater, take a look at the one closed-end fund I own:
http://quicktake.morningstar.com/CEF/snapshot.asp?Country=USA&topnav2=hetopquote&Symbol=kf
Are you getting these returns? To top it all off, it is selling at a 2% discount.
Maybe I should write a book as I think a good one is needed.
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Sun Feb 26, 2006 7:15 pm |
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Rolo
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quote:
Originally posted by Jaszbo
There is somethings wrong with your logic Rolo. "Assume a low-ball TSP return of 9% plus 15% income tax break; can you ensure a 24%+ return? " you cannot add percentages like that for one.
Yes you can...for an EFFECTIVE return.
quote:
Originally posted by Jaszbo
Also I think you really aren't understanding what a Roth IRA is versus a 401k plan.
Yes I do; I have both.
quote:
Originally posted by Jaszbo
A 401k plan/TSP is pretax dollars and a Roth IRA is after tax dollars. Both get taxed Rolo.
Wrong. I said the TSP CONTRIBUTIONS are not taxed as they are not. TSP withdrawals are what is taxed. Use precision when dealing with money. You completely forgot a critical element in the retirement formula: time.
If you read one tenth of my posts, you would know what I do and do not understand. You should spend a little more time reading and less time typing. :/
quote:
Originally posted by Jaszbo
First you can't add 9% plus 15% because of a tax break and second you do not understand the Roth IRA.
Why not? Explain it. Rather than try to explain what you think others do not understand, how about explaining what you do understand? Or would that make you mute?
Would you pay a 15% fee to invest in a regular ole IRA setup? How about a 25% front-end load on a regular ole mutual fund? You wouldn't pay that? Yes, you would, since you would pay an additional 15/25/35% in income tax to invest in a Roth over a 401k/403b/traditional IRA. So tell me how my math is flawed?
[I stopped reading the rest of your post due to its bunkness.]
"Expect me when you see me."
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Sun Feb 26, 2006 11:09 pm |
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Rolo
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quote:
Originally posted by Jaszbo
... you shouldn't use scottrade to buy from fidelity or vanguard:
Only a fool would do that...that's like buying a fine fountain pen, organic ink, and learning calligraphy...to write on a Post-It.
If you want to stick with the Wal-Mart of mutual/index funds because you cannot do it on your own, then just go to Wal-Mart and let the prepackaged products for the masses do their thing....don't be a poseur. 
"Expect me when you see me."
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Sun Feb 26, 2006 11:17 pm |
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Jaszbo
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I don't mean to disrespect you rolo, so don't get offened.
Your comparison of pretax dollars is fine, but when you retire you pay taxes, with a Roth IRA you pay taxes first. So do not add the 15% return to your formula, because it's simply just wrong.
This is what you wrote:
quote:
The question, bigjer, is: Can you build a Roth that outperforms a TSP allocation's returns (say L2040) PLUS the tax break?
Assume a low-ball TSP return of 9% plus 15% income tax break; can you ensure a 24%+ return? "
Yes without a question, YES YES YES
My Roth IRA has been outpeforming the TSP.
You are suggesting that a Roth IRA has to make a 24% return to match a 9% return from a 401k plan, just doesn't add up.
quote:
If not, stick with TSP until you can, then fund BOTH.
Where you negative in 2000, 2001 and 2002? Do you just simply think everybody was just because the total stockmarket and the internetaionl stock market index was down?
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Mon Feb 27, 2006 1:55 am |
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Jaszbo
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vethost.com
You have me more and more intrested now. I just never got into CEF, but doesn't mean it's not a good thing. Learn somethign new everyday.
I was reading though that in the past discounts were better and discounts are really good during bear markets, because everybody wants to get out and you can get deep discounts.
Do you have any books you would recommend? I can't seem to ever read enough.
Thanks for all the input
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Mon Feb 27, 2006 2:02 am |
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vethost.com
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Jaszbo--
No books. It's all in my head after absorbing research. You should find a lot at etfconnect.com. I noticed they've retooled their website and it has a great search feature.
Good luck to us all!
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Mon Feb 27, 2006 5:06 pm |
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Rolo
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quote:
Originally posted by Jaszbo
Your comparison of pretax dollars is fine,
It is more than just fine, it is a significant factor in retirement planning.
quote:
Originally posted by Jaszbo
with a Roth IRA you pay taxes first.
Like I said, it's like paying a huge front-end load. You cannot dismiss the traditional IRA's tax break just because income tax has to be paid at retirement, calling them 'the same'.
quote:
Originally posted by Jaszbo
So do not add the 15% return to your formula, because it's simply just wrong.
Your inability to provide a logical argument against it solidifies my argument. Saying someone is wrong without explaining why is offensive.
Let me give you some food for thought to illustrate how my argument works:
One has $4,000/year to invest and they wonder if TSP/403b/401k or Roth is better. You say Roth. Fine, they fully fund their Roth IRA.
Instead, I say put $4,600 into TSP. (The $600 you would have given to the tax man now goes into the TSP instead.)
After 30 years:
Roth: $1,351,529.78
TSP: $1,554,259.25
Difference: $202,729.47, which happens to be 15%!
However, you won't pay income-tax on the entire amount unless you drain the account completely, which is not something one plans to do, but if you did, the end-result is the same.
However, the TSP nest-egg is larger and will generate more income as an annuity and will be a larger amount left to the beneficiary after your death.
quote:
Originally posted by Jaszbo
My Roth IRA has been outpeforming the TSP.
So has mine (30% vs. 18% 1-year, but only 25% vs. 20% 3-year, annualised), but I am not going to ignore the impact TSP tax-breaks have on my finances overall--it keeps me from getting slammed an additional 10% on income taxes.
quote:
Originally posted by Jaszbo
You are suggesting that a Roth IRA has to make a 24% return to match a 9% return from a 401k plan, just doesn't add up.
Quit sayin' that and prove it!
quote:
Originally posted by Jaszbo
quote:
If not, stick with TSP until you can, then fund BOTH.
Note I said *IF*. Not everyone is capable of ensuring a 24%+ return in their retirement accounts. Personally, FOR ME over the long haul, that is a reasonable estimate for strictly mutual fund performance. I cannot recommend my style to someone who is not compatible with it.
quote:
Originally posted by Jaszbo
Where you negative in 2000, 2001 and 2002? Do you just simply think everybody was just because the total stockmarket and the internetaionl stock market index was down?
You really make a lot of assumptions about people and you shouldn't do that.
In 2002, I lost a few hunded bucks; that's it...so I was essentially at zero, which is a helluva lot better than most. And that was because bonds didn't do what they typically do, and that is the opposite of stocks...an historical rarity. 'sok...I more than doubled my money the following year...when everyone I knew personally swore off stocks forever. Whatz yer point and how is it relevant to this topic?
"Expect me when you see me."
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Tue Feb 28, 2006 1:17 am |
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Jaszbo
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You really have some way of thinking. I don't know how to say it, but here, put in the numbers yourself
http://www.planningtips.com/cgi-bin/roth.pl
Your comparison isn't correct. You have to take into consideration that you are paying say 25% taxes now and when you retire you'll pay 25% taxes that is if you want the same amount of money and that is assuming tax rate won't change, becuase that is the only fair way to compare.
I'm not sure if you understand taxes and that could be another reason you are confused. The first part of your money you don't pay the same amount of taxes as your last dollars.
Here maybe this calculator will help you even better
http://www.moneychimp.com/articles/rothira/rothcalc.htm
Leave the fist part black, put in zero (we are comparing the two from scratch)
then put in 4,000 for the amount you will contribute and the maximum amount 4,000
then put in 30, 30
Now change it so that the pretaxed dollars and the after tax dollars are the same. 28% and then go below and change the button on the bottom to pretaxed dollars. Now you'll see it's exactly the same (exactly).
For me it's simple math. Let's use simple numbers:
10% is the only tax rate until you die. You put in 10 dollars
401k = 10 before taxees = 10 dollars plus it increases 12% = $11.20 and now you want to withdraw the money, you pay 10% taxes = $10.08
This $10.08 is what will end up in your bank, this is after taxes. You can't avoid taxes, it's something you cannot avoid like death. Understand it's $10.08 that will be in your bank
Roth = 10 minus taxes = $9 plus it increases 12% = $10.08 no more paying taxes, you end up with $10.08.
You can take some assumption, some people assume they will pay less when they retire, others assume they will pay more, because taxes have been lower now than they ever have.
"huge front-end load." a front end load means that you pay something before you invest. So are you calling a TSP a huge back-end load? lol
"However, you won't pay income-tax on the entire amount unless you drain the account completely, which is not something one plans to do, but if you did, the end-result is the same. "
Very very very incorret again, unless you are in the highest tax bracket, which you aren't or you wouldn't qualify for a Roth IRA. If your in a say 28% tax bracket and you withdrew the entier 1.5 million, what do you think your tax bracket will be? Ok Roth IRA was invested with 28% and 1.5 million was taken out at 33% if you take out the entire thing. So this also is incorrect.
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Wed Mar 01, 2006 2:02 am |
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