Help with Schwab investing; Newbie...

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Help with Schwab investing; Newbie...

Postby AnesBH » Sat Dec 29, 2012 12:28 pm

Hello all! Firstly a sincere thanks. I've been lurking for a while...(blah, blah, so on and so forth) and have learned so very much from all of you and I really appreciate it. A little background- I finished school and training in 2006 and up until now all I've been doing is reducing debt but I am beginning to see the light at the end of the tunnel. I would love some input if you have the time.

Age: 42, married, no children, 1mil in term life, 1/2 net salary disability that picks up in 6 months

Emergency funds:
6 months of net salary in cash

Debt:
$275,000 in a 10 yr home mortgage at 3% (recent refi from 4.3% but rolled $115k of student loan debt). We still have ~$50k in home equity after this.
$50,000 RV at 4.9%

Tax Filing Status: Married Filing Jointly

Tax Rate: 35% Federal, 6% State
State of Residence: MO

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 20% of stocks

Current total portfolio: Mid six-figures

Current assets:

Cash~14%

Taxable
Vanguard (just opened) ~0.2% in their Target retirement 2020 index fund (will change to TSM most
likely)

His Roth IRA at Vanguard
~1% Vanguard TSM index fund (Just opened TIRA and converted to Roth this year, will max every year form here)

His 401K, Pension plan, and Safe harbor at Schwab:
~80% in a Money market fund right now (Just rolled this over from a RPS plan thru Schwab yesterday so I can take advantage of better/cheaper funds in the Personal Choice accts there)

Her 401k
~0.8% in a State Farm Ins company fund we haven't done anything with for about 6 yrs

Her Roth IRA at Vanguard
~1% Vanguard TSM index fund (Just opened TIRA and converted to Roth this year, will max out every year)

HSA through HSA bank:
~ 3% which is in the process of being transferred. We'll invest anything over $5k thru TD ameritrade in Vanguard ETF's, following similar AA's there.

Contributions:

New annual Contributions
~$50K/year (max) his 401k, PP, Safe harbor
$5500 his Roth converted IRA
$5500 her Roth converted IRA
$6500 taxable, scheduled to have $125/wk taken out automatically
Max ~$6200 HSA (we won't touch this and will treat it like a precious gift...)

What we are planning to do is pay off the RV by this summer, then roll the payment into the home mortgage with the thought of being debt free mid 2015. As far as the Schwab accounts, the thoughts are Vanguard ETF's ($9 per trade, or if I can purchase the index funds directly thru Vanguard, within Schwab in their Personal Choice Retirement Account, I'll do that to save the $50 fee per fund) to match our AA% as above and reallocate every year. I think I'll assign them to the "Core Four" with some TIPS added. I'll use Vanguard index funds to match our AA in our Roths (or I'm thinking about using this Roth space for ~8% REITS) and taxable account there. Also, I plan to roll my wife's 401k into her Roth this year via the tIRA.

Questions:
1. How does that sound as of now until I at least increase my financial knowledge base?

2. Were going to need at least one newer vehicle in a couple years so we're pre-funding that now but are there any other areas we might think about to save more of our extra cash until our debt is paid off- Muni's, savings bonds, power down debt, add to our taxable?

Pre-thanks for all your help!
Last edited by AnesBH on Tue Jan 01, 2013 9:19 pm, edited 7 times in total.
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Re: Help with Schwab investing; Newbie...

Postby Johm221122 » Sun Dec 30, 2012 6:30 am

Welcome to forum,
You don't want target fund in taxable
http://www.bogleheads.org/wiki/Principl ... _Placement
Schwab has funds for index (3) fund portfolio
" With Schwab, investors can construct a three-fund portfolio using: [footnotes 1]

Schwab Total Stock Market Index (SWTSX) Schwab International Index (SWISX) Schwab Total Bond Market (SWLBX)"
http://www.bogleheads.org/wiki/3-fund_portfolio
Hope this bumps yo up
John
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Re: Help with Schwab investing; Newbie...

Postby Rainier » Sun Dec 30, 2012 8:24 am

Your wife doesn't need to earn 5500 to contribute 5500 to an IRA. She can use your earnings. Assuming you file jointly.
- Bill
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 8:30 am

Johm221122 wrote:Welcome to forum,
You don't want target fund in taxable
http://www.bogleheads.org/wiki/Principl ... _Placement
Schwab has funds for index (3) fund portfolio
" With Schwab, investors can construct a three-fund portfolio using: [footnotes 1]

Schwab Total Stock Market Index (SWTSX) Schwab International Index (SWISX) Schwab Total Bond Market (SWLBX)"
http://www.bogleheads.org/wiki/3-fund_portfolio
Hope this bumps yo up
John


Thanks (and thx for the bump too!)

I researched the Schwab funds and they look similar but either certain fees were higher or they werent rated as good, etc. If I can get the vanguard funds thru Schwab that's what I'm probably going to do. Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's? I would just have to invest in a TIPS at vanguard if I went this route, any thoughts?
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 8:34 am

Rainier wrote:Your wife doesn't need to earn 5500 to contribute 5500 to an IRA. She can use your earnings. Assuming you file jointly.


Thanks for reassurance on this- I got to thinking about that last night and re-read about this in the wiki and realized I still could max hers out because of mine. I'll correct my mistake on the original.
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Re: Help with Schwab investing; Newbie...

Postby sscritic » Sun Dec 30, 2012 8:36 am

AnesBH wrote:Debt:
$275,000 in a 10 yr home mortgage at 3% (recent refi from 4.3% but rolled $115k of student loan debt in to be able to deduct that interest).

Some of it at least. It depends on how much your old mortgage was.
Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt
...
There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:
• $100,000 ($50,000 if married filing separately), or
• The total of each home’s fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home.
http://www.irs.gov/pub/irs-pdf/p936.pdf
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 8:43 am

sscritic wrote:
AnesBH wrote:Debt:
$275,000 in a 10 yr home mortgage at 3% (recent refi from 4.3% but rolled $115k of student loan debt in to be able to deduct that interest).

Some of it at least. It depends on how much your old mortgage was.
Any secured debt you use to refinance home acquisition debt is treated as home acquisition debt. However, the new debt will qualify as home acquisition debt only up to the amount of the balance of the old mortgage principal just before the refinancing. Any additional debt not used to buy, build, or substantially improve a qualified home is not home acquisition debt, but may qualify as home equity debt
...
There is a limit on the amount of debt that can be treated as home equity debt. The total home equity debt on your main home and second home is limited to the smaller of:
• $100,000 ($50,000 if married filing separately), or
• The total of each home’s fair market value (FMV) reduced (but not below zero) by the amount of its home acquisition debt and grandfathered debt. Determine the FMV and the outstanding home acquisition and grandfathered debt for each home on the date that the last debt was secured by the home.
http://www.irs.gov/pub/irs-pdf/p936.pdf


Huh...that's a new one. We'll still save a bundle on the lower rates and what deductions I can take. I hope turbotax guides me thru that in 2014...
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Re: Help with Schwab investing; Newbie...

Postby Johm221122 » Sun Dec 30, 2012 8:43 am

AnesBH wrote:
Johm221122 wrote:Welcome to forum,
You don't want target fund in taxable
http://www.bogleheads.org/wiki/Principl ... _Placement
Schwab has funds for index (3) fund portfolio
" With Schwab, investors can construct a three-fund portfolio using: [footnotes 1]

Schwab Total Stock Market Index (SWTSX) Schwab International Index (SWISX) Schwab Total Bond Market (SWLBX)"
http://www.bogleheads.org/wiki/3-fund_portfolio
Hope this bumps yo up
John


Thanks (and thx for the bump too!)

I researched the Schwab funds and they look similar but either certain fees were higher or they werent rated as good, etc. If I can get the vanguard funds thru Schwab that's what I'm probably going to do. Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's? I would just have to invest in a TIPS at vanguard if I went this route, any thoughts?

Fees don't appear unreasonable
http://www.schwab.com/public/schwab/inv ... ol%3DSWTSX
John
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Re: Help with Schwab investing; Newbie...

Postby Rainier » Sun Dec 30, 2012 8:45 am

Sscritic is correct. Not all the interest is tax deductible.
- Bill
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 10:24 am

AnesBH wrote:Cash as above plus collectables ~34%


:confused

I think Cash and collectibles should be in different piles. Also, collectibles may be a useful investment, but I think it goes beyond the scope of this forum. I don't even know how I'd begin to recommend allocation, contribution and rebalancing practices for collectibles as part of a investment/retirement saving strategy. They are valid for measuring net worth, but perhaps should be itemized separately in the post, and thus out of sigh/out of mind when considering the investment portfolio for forum purposes.

My next pieces of confusion, if you could clarify:

With "cash as above" are you referring your emergency savings? Usually one keeps emergency cash separate, however please clarify if that is not the case for you. (There are a some who are in/near retirement or who have large portfolios that decide that their portfolio is an emergency fund and that emergencies would have a muted effect on one's balance sheet.)

If you intend to include your emergency cash with the portfolio, please specify how much of the portfolio it is. I'll also assume that we need your percents to be adjusted for a portfolio sans collectibles.

Also, are you allowed to DIY with fund selection for the pension? For the 401k, Pension and Safe Harbor, are you allowed to access anything through Schwab that a retail customer would? Or, is that you are merely expecting to ignore plan-specific funds to use a PCRA (Personal Choice Retirement Account) a.k.a. SBD (Self-Directed Brokerage option) that your plan also provides? If there are plan-specific funds, please list them with their accompanying tickers and expense ratios.
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 11:35 am

pingo wrote:
AnesBH wrote:Cash as above plus collectables ~34%


:confused

I think Cash and collectibles should be in different piles. Also, collectibles may be a useful investment, but I think it goes beyond the scope of this forum. I don't even know how I'd begin to recommend allocation, contribution and rebalancing practices for collectibles as part of a investment/retirement saving strategy. They are valid for measuring net worth, but perhaps should be itemized separately in the post, and thus out of sigh/out of mind when considering the investment portfolio for forum purposes.

My next pieces of confusion, if you could clarify:

With "cash as above" are you referring your emergency savings? Usually one keeps emergency cash separate, however please clarify if that is not the case for you. (There are a some who are in/near retirement or who have large portfolios that decide that their portfolio is an emergency fund and that emergencies would have a muted effect on one's balance sheet.)

If you intend to include your emergency cash with the portfolio, please specify how much of the portfolio it is. I'll also assume that we need your percents to be adjusted for a portfolio sans collectibles.

Also, are you allowed to DIY with fund selection for the pension? For the 401k, Pension and Safe Harbor, are you allowed to access anything through Schwab that a retail customer would? Or, is that you are merely expecting to ignore plan-specific funds to use a PCRA (Personal Choice Retirement Account) a.k.a. SBD (Self-Directed Brokerage option) that your plan also provides? If there are plan-specific funds, please list them with their accompanying tickers and expense ratios.


Sorry for the confusion- I added emergency funds in the mix, I corrected the percentages in the original. I plan to ignore plan specific funds and use any fund that would be available to a retail customer thru the PCRA- so anything goes but fees will apply for some but not others. The plan specific ones are expensive and very limited.
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 12:07 pm

Thanks for the update! I have a couple more questions...

AnesBH wrote:Her 401k
~0.8% in a State Farm Ins company fund we haven't done anything with for about 6 yrs


I know it hardly matters, given the relative size, but what are the funds available in her plan (with tickers and expense ratios)?

Does "haven't done anything" mean it's a old 401k from a former employer? If so, I'll assume it hasn't been rolled over because it'll ruin the backdoor Roth contributions?
Last edited by pingo on Sun Dec 30, 2012 12:14 pm, edited 1 time in total.
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 12:12 pm

AnesBH wrote:Cash~14%

Taxable
Vanguard (just opened) ~0.2% in their Target retirement 2020 index fund (will change to TSM most
likely)


Since your portfolio will be covering for emergencies, how do you feel about the following?

Placing Cash Needs in a Tax-Advantaged Account

It would mean having zero emergency cash in a taxable account, rather you would hold all equities in taxable and use them in the case of an emergency, but it has some advantages.
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 12:34 pm

I really have to think my questions through so I can get them all in with a single post... :oops:

Anyway, I assume the 401k, Pension and Safe Harbor are technically separate accounts with separate amounts of contributions, but they all have access to Schwabs PRCA. If so, will you let us know roughly how much in contributions will go to each one? (It might help us help you keep fund location, contributions and rebalancing simpler.)
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Re: Help with Schwab investing; Newbie...

Postby retiredjg » Sun Dec 30, 2012 1:16 pm

AnesBH wrote:Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's?

Paying transaction fees pretty much flies in the face of low cost investing. You can get Vanguard mutual funds at Vanguard without any transaction fees. I don't trade Vanguard ETFs, but I'm would think you would not pay any transaction fees for them either.
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 1:17 pm

pingo wrote:I really have to think my questions through so I can get them all in with a single post... :oops:

Anyway, I assume the 401k, Pension and Safe Harbor are technically separate accounts with separate amounts of contributions, but they all have access to Schwabs PRCA. If so, will you let us know roughly how much in contributions will go to each one? (It might help us help you keep fund location, contributions and rebalancing simpler.)


All retirement funds are deposited thru the RPS benefits wing where I have all distributions allocated to the PRCA. It shows up there in a single simple Schwab MM fund and I can allocate it from there any way I want. Do I need to keep track of each employer contribution separately (IE, 401k, Pension and Safe Harbor all in separete MM's) after the funds are transferred to my PRCA or does that matter? I was under the impression that all the funds are treated similarly.
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Re: Help with Schwab investing; Newbie...

Postby zebrafish » Sun Dec 30, 2012 1:21 pm

AnesBH wrote: I researched the Schwab funds and they look similar but either certain fees were higher or they werent rated as good, etc. If I can get the vanguard funds thru Schwab that's what I'm probably going to do. Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's? I would just have to invest in a TIPS at vanguard if I went this route, any thoughts?


Schwab has some of the cheapest index ETFs on the market. Some are cheaper than Vanguard. They don't have the Schwab ETFs in your plan?
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 1:26 pm

retiredjg wrote:
AnesBH wrote:Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's?

Paying transaction fees pretty much flies in the face of low cost investing. You can get Vanguard mutual funds at Vanguard without any transaction fees. I don't trade Vanguard ETFs, but I'm would think you would not pay any transaction fees for them either.


I am unable to move my retirement funds out of Schwab and I'd like to use the vanguard funds for simplicity. I think I can have access to the vanguard funds at schwab without transaction fees (I'll call Monday to find out). If not, my options are either 1. Eat the $50/transaction up front cost and invest in them anyway, 2. Use vanguard etf's (only $9/trade) with lower ER's or 3. Use Schwab index funds but when compared to the vanguards equivalents some ER's are higher, extra fees are added here and there, and they aren't rated as good , especially the TBM. I just wanted to hear how others would handle it.
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Re: Help with Schwab investing; Newbie...

Postby tainted-meat » Sun Dec 30, 2012 1:30 pm

I'd take zebrafish's advice and look at the Schwab ETFs. Those are some of the lowest cost funds in the industry.
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 1:32 pm

AnesBH wrote:Do I need to keep track of each employer contribution separately (IE, 401k, Pension and Safe Harbor all in separete MM's) after the funds are transferred to my PRCA or does that matter? I was under the impression that all the funds are treated similarly.


No idea, but I'll wager that if your employer doesn't have to, then you don't.

retiredjg wrote:
AnesBH wrote:Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's?

Paying transaction fees pretty much flies in the face of low cost investing. []


OP is referring to purchasing VG fund through the 80% employer-plan portion that would be at Schwab. But I agree with retiredjg that I'd probably avoid paying fees for purchasing VG ETFs. I haven't run the numbers, though, so I don't know for sure if it's cost effective.


AnesBH wrote:I think I can have access to the vanguard funds at schwab without transaction fees (I'll call Monday to find out).


I'd be really surprised, but it would be a dream come true for you, that's for sure.

AnesBH wrote:If not, my options are either 1. Eat the $50/transaction up front cost and invest in them anyway.


Bleck! No! Not even for Vanguard access!

AnesBH wrote:2. Use vanguard etf's (only $9/trade) with lower ER's []


Less blecky, but no.

AnesBH wrote:3. Use Schwab index funds but when compared to the vanguards equivalents some ER's are higher, extra fees are added here and there, and they aren't rated as good , especially the TBM. I just wanted to hear how others would handle it.


There are ways to work with and around Schwab's options, and their ETFs are fine. VG ETFs merely have a small, theoretical edge that are cannot overcome the transaction costs.
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 1:33 pm

zebrafish wrote:
AnesBH wrote: I researched the Schwab funds and they look similar but either certain fees were higher or they werent rated as good, etc. If I can get the vanguard funds thru Schwab that's what I'm probably going to do. Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's? I would just have to invest in a TIPS at vanguard if I went this route, any thoughts?


Schwab has some of the cheapest index ETFs on the market. Some are cheaper than Vanguard. They don't have the Schwab ETFs in your plan?


(I just noticed you mentioned etf's but...)
Here is a comparison and the vanguard funds are the investor shares (I'll have admiral so the ER's will be even lower). Would you use Schwab other than vanguard?

https://www.schwab.wallst.com/RESEARCH/ ... JTV0xCWCJd
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 1:43 pm

pingo wrote:
AnesBH wrote:Do I need to keep track of each employer contribution separately (IE, 401k, Pension and Safe Harbor all in separete MM's) after the funds are transferred to my PRCA or does that matter? I was under the impression that all the funds are treated similarly.


No idea, but I'll wager that if your employer doesn't have to, then you don't.


On the RPS benefits site the funds are separate and the employer sends the funds separate but when transferred to the PRCA it is in one lump sum.

Maybe I'll just look into the schwab funds then- other than the lower ER's any thoughts on using the ETF's vs their regular index funds or is it a wash?

Thanks for everyone input so far
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Re: Help with Schwab investing; Newbie...

Postby retiredjg » Sun Dec 30, 2012 1:45 pm

AnesBH wrote:I am unable to move my retirement funds out of Schwab and I'd like to use the vanguard funds for simplicity. I think I can have access to the vanguard funds at schwab without transaction fees (I'll call Monday to find out).

Sorry - I was scanning and missed the part about the PCRA. Nevertheless, the point is still the same. If you are paying transaction fees, your total fees could easily be higher than just using the best funds in your original RPS plan. Have you actually calculated it out? If not, you should. You only need 2 or 3 usable funds in your 401k. What are the best things offered there?

Schwab does have a fair list of no-fee ETFs available and they probably also have a list of no-transaction-fee mutual funds. Don't be so fixated on Vanguard funds - they are the best largely because they are the cheapest. If you add a transaction fee for every purchase, they would probably no longer be the best.

Perhaps if you transferred money once a year and only paid that $9 fee once for each of 3 funds, it might make sense.

Buying Vanguard mutual funds or ETFs at Schwab with no transaction fee? Snowball's chance in you-know-where. :wink:
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 1:47 pm

AnesBH wrote:
zebrafish wrote:
AnesBH wrote: I researched the Schwab funds and they look similar but either certain fees were higher or they werent rated as good, etc. If I can get the vanguard funds thru Schwab that's what I'm probably going to do. Question: if I can get the vanguard ETF's at $9/trade vs vanguard index funds at $50/trade but investor share ER's should I just go with the ETF's? I would just have to invest in a TIPS at vanguard if I went this route, any thoughts?


Schwab has some of the cheapest index ETFs on the market. Some are cheaper than Vanguard. They don't have the Schwab ETFs in your plan?


(I just noticed you mentioned etf's but...)
Here is a comparison and the vanguard funds are the investor shares (I'll have admiral so the ER's will be even lower). Would you use Schwab other than vanguard?

https://www.schwab.wallst.com/RESEARCH/ ... JTV0xCWCJd


All things being equal, I'd go with Vanguard, but all things are not equal.

I'll add to my prior post that I don't see a problem making a large initial purchase of Vanguard ETFs, but I'd use the Schwab funds/ETFs for the incremental purchases at least until you have another lump large enough that making another VG purchase is at least as cost effective. The problem there is that it makes for a messy portfolio.
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 1:50 pm

Deleted to avoid confusion with later suggestion.
Last edited by pingo on Thu Jan 03, 2013 1:29 am, edited 1 time in total.
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 2:19 pm

retiredjg wrote:
AnesBH wrote:I am unable to move my retirement funds out of Schwab and I'd like to use the vanguard funds for simplicity. I think I can have access to the vanguard funds at schwab without transaction fees (I'll call Monday to find out).

Sorry - I was scanning and missed the part about the PCRA. Nevertheless, the point is still the same. If you are paying transaction fees, your total fees could easily be higher than just using the best funds in your original RPS plan. Have you actually calculated it out? If not, you should. You only need 2 or 3 usable funds in your 401k. What are the best things offered there?

Schwab does have a fair list of no-fee ETFs available and they probably also have a list of no-transaction-fee mutual funds. Don't be so fixated on Vanguard funds - they are the best largely because they are the cheapest. If you add a transaction fee for every purchase, they would probably no longer be the best.

Perhaps if you transferred money once a year and only paid that $9 fee once for each of 3 funds, it might make sense.

Buying Vanguard mutual funds or ETFs at Schwab with no transaction fee? Snowball's chance in you-know-where. :wink:


Thanks for your input and you're right, I might be too fixated on the vanguard funds. I read somewhere on the Schwab site where "some third party funds can be purchased without a transaction fee" but I'm like you, its probably not happening. If I did go with the vanguard etf's I definitely would purchase large blocks but it seems like the Schwab funds will work. I'll have a smaller % of total in the schwab acct in a few years anyway. Thanks again.
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 2:31 pm

pingo wrote:Some thoughts to mull over:

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 20% of stocks <--For simplicity, this is 23%, but only 15% of equity contributions would go here.
Current total portfolio: Mid six-figures

Taxable (14%)
14% Vanguard Total International Stock Idx Fund - Adm (VTIAX) ER 0.18% <--$6500/yr. I placed emergency savings here.

His 401K, Pension plan, and Safe harbor at Schwab (80%)
46% Schwab Total Stock Market Index Fund (SWTSX) ER 0.09% <--$35,000/yr. There is no reason not to use this fund!
20% Schwab Total Bond Market fund (SWLBX) ER 0.29% or ETF (SCHZ) ER 0.05% or Interm Treasuries ETF (SCHR) ER 0.10% <--$15,000/yr.
14% Cash or Short-Term Bond ETF (SCHO) ER 0.08% <--Here are your emergency savings per Placing Cash Needs in a Tax-Advantaged Account

Her Inactive 401k (1%)
01% <--Lowest cost Bond or Equity fund.

His Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. VBMFX would become Admiral class in 2013.

Her Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. VBMFX would become Admiral class in 2013.

HSA through HSA bank/TDAmeritrade (3%)
03% Vanguard Total Bond Index ET (BND) <--$6,200/yr. Commission-free.

I'll add that it is okay to make large initial purchases of VG ETFs instead of the Schwab versions (say 20% of the 401k,etc. in BND), but I'd still make your purchases throughout the year in Schwab Index funds/ETFs until you can cost-effectively lump them back over with the VG holdings.


Thanks a lot for the ideas! It's great to have someone with more experience add their thoughts on what they would do- that is why this is such a great site. My wife will have a tough time with putting the emergency fund in anything but a MM acct. I've mentioned the cash into a tax advantaged acct thing but she is very resistant! If momma ain't happy... I've considered exactly what you suggest with the roths and the Schwab acct looks reasonable as well. It will be neater to just use Schwab at Schwab- as I posted above, the taxable acct will grow larger than the ret acct in a few years anyway. Thanks for your time.
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Re: Help with Schwab investing; Newbie...

Postby retiredjg » Sun Dec 30, 2012 2:53 pm

AnesBH wrote:I read somewhere on the Schwab site where "some third party funds can be purchased without a transaction fee"...

Almost every brokerage has a no-transaction-fee list of mutual funds. That is probably what that refers to. However, it is my understanding that Vanguard is not on anybody's no-fee list (other than at Vanguard).

Schwab does have a list of at least 13 no-fee ETFs. Check out this article and look at the chart. You'd have to be sure you know just what is included in the international funds though. http://online.wsj.com/article/SB1000142 ... lenews_wsj
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Re: Help with Schwab investing; Newbie...

Postby pingo » Sun Dec 30, 2012 3:16 pm

pingo wrote:
AnesBH wrote:Do I need to keep track of each employer contribution separately (IE, 401k, Pension and Safe Harbor all in separete MM's) after the funds are transferred to my PRCA or does that matter? I was under the impression that all the funds are treated similarly.


No idea, but I'll wager that if your employer doesn't have to, then you don't.


Come to think of it, it maybe wise to ask both your plan administrator and Schwab. Imagine: You're ready to retire and want to rollover assets over to Vanguard. You first have to liquidate Schwab assets and then transfer them back to your employer plan(s). How much of what will go back into the 401k? Pension? Safe Harbor account?

As I stated, I doubt you're responsable for the accounting, but I'd want to know...
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Re: Help with Schwab investing; Newbie...

Postby curiouskitty » Sun Dec 30, 2012 4:00 pm

retiredjg wrote:Almost every brokerage has a no-transaction-fee list of mutual funds. That is probably what that refers to. However, it is my understanding that Vanguard is not on anybody's no-fee list (other than at Vanguard).


TD Ameritrade has 32 ETFs from Vanguard commission-free.
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Re: Help with Schwab investing; Newbie...

Postby retiredjg » Sun Dec 30, 2012 4:08 pm

curiouskitty wrote:
retiredjg wrote:Almost every brokerage has a no-transaction-fee list of mutual funds. That is probably what that refers to. However, it is my understanding that Vanguard is not on anybody's no-fee list (other than at Vanguard).

TD Ameritrade has 32 ETFs from Vanguard commission-free.

I was just talking about mutual funds, but you are right about the ETFs. Still amazes me.... What a deal!
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 4:11 pm

pingo wrote:
pingo wrote:
AnesBH wrote:Do I need to keep track of each employer contribution separately (IE, 401k, Pension and Safe Harbor all in separete MM's) after the funds are transferred to my PRCA or does that matter? I was under the impression that all the funds are treated similarly.


No idea, but I'll wager that if your employer doesn't have to, then you don't.


Come to think of it, it maybe wise to ask both your plan administrator and Schwab. Imagine: You're ready to retire and want to rollover assets over to Vanguard. You first have to liquidate Schwab assets and then transfer them back to your employer plan(s). How much of what will go back into the 401k? Pension? Safe Harbor account?

As I stated, I doubt you're responsable for the accounting, but I'd want to know...


I'll find that out- I'd rather know now than be surprised later.
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sun Dec 30, 2012 4:12 pm

curiouskitty wrote:
retiredjg wrote:Almost every brokerage has a no-transaction-fee list of mutual funds. That is probably what that refers to. However, it is my understanding that Vanguard is not on anybody's no-fee list (other than at Vanguard).


TD Ameritrade has 32 ETFs from Vanguard commission-free.


I saw that too when I moved my HSA to HSA bank- I'll be using vanguard etf's there for sure.
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Re: Help with Schwab investing; Newbie...

Postby pingo » Thu Jan 03, 2013 1:28 am

I adjusted my suggestion in hopes that it helps. The cash remains where it is (my wife had the same response when I suggested a similar idea to her for our portfolio, so it didn't happen for us, either). You would make single, lump sum purchases of 3 International ETFS in the Schwab employer-sponsored account. New contributions are proportioned according to desired AA, but since you have to transfer contributions over to a Schwab money market account, you could try to use new money to maintain your portfolio balance in an effort to avoid formally rebalancing assets later on. TIPS are low now, but 37% of new bond purchases are TIPS (a nice-and-easy building of TIPS toward retirement).

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 20% of stocks
Current total portfolio: Mid six-figures

His 401K, Pension plan, and Safe harbor at Schwab (80%)
44% Schwab Total Stock Market Index Fund (SWTSX) ER 0.09% <--$34,500/yr. There is no reason not to use this fund!
09% Schwab Int'l Large Cap ETF (SCHF) ER 0.09% <--$0/yr. No Emerging Mkts or Int'l Small Caps.
03% Schwab Emerging Markets ETF (SCHE) ER 0.15% <--$0/yr.
02% Schwab Intil Small/Mid Cap ETF (SCHC) ER 0.20% <--$0/yr. If you prefer not to mess with this ETF, then change SCHF to 10% and SCHE to 4%.
22% Schwab Total Bond Market fund (SWLBX) ER 0.29% or ETF (SCHZ) ER 0.05% or Interm Treasuries ETF (SCHR) ER 0.10% <--$15,500/yr.

Taxable (14%)
14% Cash <--Emergency savings are part of portfolio.
00% Vanguard Total International Stock Idx Fund - Adm (VTIAX) ER 0.18% <--$6500/yr.

HSA through HSA bank/TDAmeritrade (2%)
02% Vanguard Total International Stock Index ETF (VEU) ER 0.18 <--$3,100/yr. Commission-free.

HSA through HSA bank/TDAmeritrade (2%)
02% Vanguard Total Bond Index ET (BND) <--$3,100/yr. Commission-free.

His Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. Or, VBMFX would become Admiral class in 2013.

Her Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. Or, VBMFX would become Admiral class in 2013.

Her Inactive 401k (1%)
01% <--Lowest cost Bond or Equity fund. <--If bonds, reduce Schwab employer plan bond percent and add to Schwab Total Stock (SWTSX).
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Re: Help with Schwab investing; Newbie...

Postby AnesBH » Sat Jan 05, 2013 9:11 am

pingo wrote:I adjusted my suggestion in hopes that it helps. The cash remains where it is (my wife had the same response when I suggested a similar idea to her for our portfolio, so it didn't happen for us, either). You would make single, lump sum purchases of 3 International ETFS in the Schwab employer-sponsored account. New contributions are proportioned according to desired AA, but since you have to transfer contributions over to a Schwab money market account, you could try to use new money to maintain your portfolio balance in an effort to avoid formally rebalancing assets later on. TIPS are low now, but 37% of new bond purchases are TIPS (a nice-and-easy building of TIPS toward retirement).

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 20% of stocks
Current total portfolio: Mid six-figures

His 401K, Pension plan, and Safe harbor at Schwab (80%)
44% Schwab Total Stock Market Index Fund (SWTSX) ER 0.09% <--$34,500/yr. There is no reason not to use this fund!
09% Schwab Int'l Large Cap ETF (SCHF) ER 0.09% <--$0/yr. No Emerging Mkts or Int'l Small Caps.
03% Schwab Emerging Markets ETF (SCHE) ER 0.15% <--$0/yr.
02% Schwab Intil Small/Mid Cap ETF (SCHC) ER 0.20% <--$0/yr. If you prefer not to mess with this ETF, then change SCHF to 10% and SCHE to 4%.
22% Schwab Total Bond Market fund (SWLBX) ER 0.29% or ETF (SCHZ) ER 0.05% or Interm Treasuries ETF (SCHR) ER 0.10% <--$15,500/yr.

Taxable (14%)
14% Cash <--Emergency savings are part of portfolio.
00% Vanguard Total International Stock Idx Fund - Adm (VTIAX) ER 0.18% <--$6500/yr.

HSA through HSA bank/TDAmeritrade (2%)
02% Vanguard Total International Stock Index ETF (VEU) ER 0.18 <--$3,100/yr. Commission-free.

HSA through HSA bank/TDAmeritrade (2%)
02% Vanguard Total Bond Index ET (BND) <--$3,100/yr. Commission-free.

His Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. Or, VBMFX would become Admiral class in 2013.

Her Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. Or, VBMFX would become Admiral class in 2013.

Her Inactive 401k (1%)
01% <--Lowest cost Bond or Equity fund. <--If bonds, reduce Schwab employer plan bond percent and add to Schwab Total Stock (SWTSX).


It certainly helps- thanks for your thoughts. I decided to use Vanguard etf's thru Schwab after all just for simplicity with tracking- the $8.95 per trade wasn't that big of a deal in the big scheme and I'll do my AA only twice a year from here on out in 1 or 2 funds at a time. Here's what it looks like now...


Desired International allocation: 20% of stocks
Current total portfolio: Mid six-figures

His 401K, Pension plan, and Safe harbor at Schwab
35% Vanguard Total Stock Market ETF (VTI)
18% Vanguard Total Int stock ETF (VXUS)
~4% Vanguard REITs ETF (VNQ)
33% Vanguard Total Bond Market ETF (BND)

Taxable
6 mo Cash (not counted in total)
1% Vanguard 2020 target fund

HSA through HSA bank/TDAmeritrade (3%)
~1% Vanguard Total Stock Market ETF (VTI)
~1% Vanguard Total Stock Index ETF (VXUS)
~1% Vanguard Total Bond Index ET (BND)

His Vanguard Roth (3%)
Vanguard TIPS (VIPSX)

Her Vanguard Roth (3%)
Vanguard TIPS (VIPSX)

Her Inactive 401k (1%)
1% nothing yet...
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Re: Help with Schwab investing; Newbie...

Postby pingo » Tue Jan 08, 2013 12:46 am

AnesBH wrote:
pingo wrote:I adjusted my suggestion in hopes that it helps. The cash remains where it is (my wife had the same response when I suggested a similar idea to her for our portfolio, so it didn't happen for us, either). You would make single, lump sum purchases of 3 International ETFS in the Schwab employer-sponsored account. New contributions are proportioned according to desired AA, but since you have to transfer contributions over to a Schwab money market account, you could try to use new money to maintain your portfolio balance in an effort to avoid formally rebalancing assets later on. TIPS are low now, but 37% of new bond purchases are TIPS (a nice-and-easy building of TIPS toward retirement).

Desired Asset allocation: 60% stocks / 40% bonds
Desired International allocation: 20% of stocks
Current total portfolio: Mid six-figures

His 401K, Pension plan, and Safe harbor at Schwab (80%)
44% Schwab Total Stock Market Index Fund (SWTSX) ER 0.09% <--$34,500/yr. There is no reason not to use this fund!
09% Schwab Int'l Large Cap ETF (SCHF) ER 0.09% <--$0/yr. No Emerging Mkts or Int'l Small Caps.
03% Schwab Emerging Markets ETF (SCHE) ER 0.15% <--$0/yr.
02% Schwab Intil Small/Mid Cap ETF (SCHC) ER 0.20% <--$0/yr. If you prefer not to mess with this ETF, then change SCHF to 10% and SCHE to 4%.
22% Schwab Total Bond Market fund (SWLBX) ER 0.29% or ETF (SCHZ) ER 0.05% or Interm Treasuries ETF (SCHR) ER 0.10% <--$15,500/yr.

Taxable (14%)
14% Cash <--Emergency savings are part of portfolio.
00% Vanguard Total International Stock Idx Fund - Adm (VTIAX) ER 0.18% <--$6500/yr.

HSA through HSA bank/TDAmeritrade (2%)
02% Vanguard Total International Stock Index ETF (VEU) ER 0.18 <--$3,100/yr. Commission-free.

HSA through HSA bank/TDAmeritrade (2%)
02% Vanguard Total Bond Index ET (BND) <--$3,100/yr. Commission-free.

His Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. Or, VBMFX would become Admiral class in 2013.

Her Vanguard Roth (1%)
01% Vanguard TIPS (VIPSX) ER 0.20% or Total Bond (VBMFX) ER 0.22% <--$5500/yr. Or, VBMFX would become Admiral class in 2013.

Her Inactive 401k (1%)
01% <--Lowest cost Bond or Equity fund. <--If bonds, reduce Schwab employer plan bond percent and add to Schwab Total Stock (SWTSX).


It certainly helps- thanks for your thoughts. I decided to use Vanguard etf's thru Schwab after all just for simplicity with tracking- the $8.95 per trade wasn't that big of a deal in the big scheme and I'll do my AA only twice a year from here on out in 1 or 2 funds at a time. Here's what it looks like now...


Desired International allocation: 20% of stocks
Current total portfolio: Mid six-figures

His 401K, Pension plan, and Safe harbor at Schwab
35% Vanguard Total Stock Market ETF (VTI)
18% Vanguard Total Int stock ETF (VXUS)
~4% Vanguard REITs ETF (VNQ)
33% Vanguard Total Bond Market ETF (BND)

Taxable
6 mo Cash (not counted in total)
1% Vanguard 2020 target fund

HSA through HSA bank/TDAmeritrade (3%)
~1% Vanguard Total Stock Market ETF (VTI)
~1% Vanguard Total Stock Index ETF (VXUS)
~1% Vanguard Total Bond Index ET (BND)

His Vanguard Roth (3%)
Vanguard TIPS (VIPSX)

Her Vanguard Roth (3%)
Vanguard TIPS (VIPSX)

Her Inactive 401k (1%)
1% nothing yet...


Sounds like you've got a handle on it. :sharebeer
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