Schwab vs Vanguard

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Schwab vs Vanguard

Postby Don46 » Thu Mar 21, 2013 10:01 pm

What are the pros and cons of going with Vanguard vs Schwab re investment costs, services, convenience.
For many years now I have had a taxable and IRA accounts with Schwab, both currently managed by an independent investment manager in Schwab's network.
I am now persuaded by The Bogleheads Guide and this forum that I want to go DIY with three or four funds or ETFs. I am going to be adding to my taxable fund soon and will roll over about three tax deferred accounts into the main one when I retire in another year or two. When all this is consolidated I want it all with one company. I will have about 2 million in the taxable and about 1.6 million in the IRA.
What advantages does Vanguard offer to accounts of this size?
I am interested in occasional hand holding: advice on asset allocation, taxable vs. deferred, strategies for drawing down funds, and, help for my survivors after I die.
I'd be very interested in hearing from members of this forum as to their views on these two companies, or others possibly.
Thanks for any advice you can offer.
Don
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Re: Schwab vs Vanguard

Postby zebrafish » Thu Mar 21, 2013 10:11 pm

If you're going to do it yourself, I think either place is fine.

Schwab has some very low-cost index ETFs.

Vanguard has very low costs as well.

I think there is not a significant difference.
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Re: Schwab vs Vanguard

Postby dhodson » Thu Mar 21, 2013 10:17 pm

I have schwab for 401k and defined benefit.

Fees are similar but schwab etfs seem to have a larger bid ask spread if using market orders. Schwab also has fewer index funds. Schwab is probably a better platform if buying individual stocks in particular. Overall they are pretty similar for most folks here with a slight advantage to vanguard.
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Re: Schwab vs Vanguard

Postby livesoft » Thu Mar 21, 2013 10:26 pm

We have seen that Schwab index ETFs & funds may not be as tax-efficient as Vanguard ETFs, so one would probably want to buy Vanguard ETFs instead of Schwab ETFs in a taxable account.

I would suggest that you just open accounts at both places and try them out. If you use Vanguard ETFs at both places, you can transfer-in-kind without tax consequences to the vendor of your choice. You don't have to put all your money at one place, but you could try the other place with a small amount of money as a trial.

I have accounts at vanguard, wellstrade/PMA, TDAmeritrade, and Fidelity. Vanguard offers no special advantages for anybody based on account size unless you consider free TurboTax special. They are pretty egalitarian, so don't expect any specials. Free trades, low-expense ratios, etc are offered to all.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Schwab vs Vanguard

Postby Gd3Jax » Thu Mar 21, 2013 11:59 pm

I am probably not anywhere near an expert here, but i would have to agree with the other posts so far. I have both an account at Schwab (Roth/tIRA, UTMA, Taxable, etc) and an account at Vanguard/VBS (Roth only).

In my opinion, and this could just be an illusion on my part, I feel that the service is much better at Schwab. I have literally woken up in the middle of the night, wondered about something, called Schwab, and received a knowledgable answer. it seems that the service has been very good and they have expanded into other areas. That being said, they obviously encourage trading and their fees are a bit higher on some things. I know i will probably get flamed for saying this, but i only use Schwab to maintain my small portfolio of dividend paying stocks and a non-Vanguard actively managed fund. The interface is miles ahead of vanguards and so are the tools.

On the other hand, the vanguard account holds the lions share of my mutual funds, which happen to be mostly Vanguard actively managed funds. I just don't think you can beat the quality of their funds and the integrity of their managers. I don't always drink the vanguard KoolAid, but I would definitely lean towards their mutual funds and etfs over Schwabs. I just wish the interface at VBS was better.

I think for the occasional hand holding...you could always "get a guy" to help in this area that is local to you that you trust having knowledge of your finances. After a lot of the horror stories I have heard from people dealing with brokerage reps, Im beginning to wonder if they know any more than some of the posters on here or over at the Morningstar forums know.

just my .02....worth what you paid for it...

Good luck!
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Re: Schwab vs Vanguard

Postby donall » Fri Mar 22, 2013 12:04 am

I seem to remember that Schwab has some awesome hours to call.
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Re: Schwab vs Vanguard

Postby norookie » Fri Mar 22, 2013 12:31 am

good luck ! :D
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Re: Schwab vs Vanguard

Postby bogleblitz » Fri Mar 22, 2013 12:34 am

I also recommend opening an account at both for your own protection. IRA at one location, and taxable in the other.

In case one of them goes out of business, you don't have money all in one location.
Bear Stearns, Enron, and Lehman Brothers are all out of business.
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Re: Schwab vs Vanguard

Postby john94549 » Fri Mar 22, 2013 12:57 am

I have had a Schwab trading (aka "fun money") account for years. Great platform, easy to use (even for this old dinosaur). Agree that customer service/advice is superb. If the person who fields the call can't answer your question, he or she will find someone who can. Right then. They also have brick-and-mortar locations for live one-on-ones, seminars, or just socializing with other folks. Only gripe with Schwab is the annual dividends on funds, e.g., SWPPX. Schwab really should go to quarterly.

Vanguard is first-rate as well. All our custodian-to-custodian IRA transfers have been handled promptly, the paperwork is very user-friendly, and phone support is great. Can't speak to VBS (see above).
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Re: Schwab vs Vanguard

Postby louis c » Fri Mar 22, 2013 11:40 am

If Vanguard had account tools like Schwab, I would move to Vanguard in a flash. Until then, I hold mostly Vanguard funds in my Schwab account. I check from time to time to see what both are doing. Vanguard just upgraded their password protection. Schwab still has not in terms of password length and not having ability to have special characters and 20+ characters. I would consider fund expenses to be about the same, but Schwab has more features if you use the brokerage or banking functions. In short, I like Schwab's website features and customer service, and I like Vanguard's funds.
There is no free lunch.
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Re: Schwab vs Vanguard

Postby Default User BR » Fri Mar 22, 2013 1:50 pm

I moved part of a Roth and did some rollover from my 401(k) to Schwab to take advantage of their brokerage bonus offer.

http://content.schwab.com/web/retail/public/cashbonusandtradesira/

They have been fine so far. I have accounts at Fidelity, ETrade, and OptionsHouse as well.


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Re: Schwab vs Vanguard

Postby Don46 » Fri Mar 22, 2013 2:06 pm

Many thanks for all these helpful and informed replies.
My instinct is to centralize, not spread my accounts around. So, I want to stay with Schwab or go with Vanguard, and bring all my funds under one umbrella once I retire.

Do I understand correctly that if I choose to invest in Vanguard funds through Schwab, there is no additional cost I would avoid by having a Vanguard account?
What about Vanguard's advertised Flagship service for larger accounts, such as mine would be?
Do any of you have experience with the Vanguard financial planning service they offer?

As it happened I had a minor but urgent customer service issue with Schwab just now--a missing 1098 form for my home mortgage. They solved the problem quickly and smoothly. I was impressed.
--Don
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Re: Schwab vs Vanguard

Postby MnD » Fri Mar 22, 2013 4:00 pm

Now and/or in the past I've had Schwab taxable brokerage account, IRA, inherited IRA, Coverdell accounts, bank checking, bank savings, credit card and a HELOC.
I believe they have exited the mortgage and credit card business.

I've always had excellent service both through the web site and via a dedicated account rep (same person for 10 years now).
If he doesn't know the answer he will connect me to the specialist that does, and stay on the line on that forwarded call to ensure that my question is answered.

I like to have one stop shopping financially and Schwab certainly fits the bill for that type of customer.
I would be comfortable rolling over 401-K assets and all banking to them when we retire.

I like several Vanguard ETF's that Schwab doesn't cover with their offerings and have those both at Schwab and at Fidelity (where one of our 401-K's are), but that's the only experience I have with Vanguard.
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Re: Schwab vs Vanguard

Postby Gleevec » Fri Mar 22, 2013 4:17 pm

Both are fantastic. Fidelity is good as well, especially with the new ETFs which you buy and hold are commission free.

I prefer Schwab for:
1) Checking/ATM/banking-- amazing ATM card with 0% ATM fees and 0% international fees. Best in industry IMHO
2) Coverdell-- they actually have one. May seem minor, but huge plus for me and a major issue I have with Vanguard.
3) Superior customer service. Email and phone service blow away Vanguard (even Flagship) and Fidelity.

I prefer Vanguard for:
1) 529 Nevada is the best plan IMHO if you do not get a specific state tax deduction
2) Greater variety of cheaper index funds
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Re: Schwab vs Vanguard

Postby JupiterJones » Fri Mar 22, 2013 5:48 pm

There is an important difference in the structure of the two companies. The mutual funds at Vanguard are really the only true "mutual" funds out there, in that the funds own Vanguard, therefore the holders of the funds are essentially shareholders in the company managing the funds. Vanguard profits go back into the funds. What's good for Vanguard is automatically good for the Vanguard investor.

Other companies have a potential conflict-of-interest, on the other hand. The managers of a fund have to make money for the company shareholders and not necessarily the investors of their funds.

That said, I have investments with Schwab and not with Vanguard. I'll probably move them to Vanguard at some point, but I'm not in any rush.

JJ
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Re: Schwab vs Vanguard

Postby nisiprius » Fri Mar 22, 2013 5:53 pm

Not sure if there's anything that hasn't been covered, but there's an article in our Wiki:
Schwab, with some information how to do Boglehead-style investing at Schwab.
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Re: Schwab vs Vanguard

Postby retiredjg » Fri Mar 22, 2013 6:07 pm

Don46 wrote:My instinct is to centralize, not spread my accounts around. So, I want to stay with Schwab or go with Vanguard, and bring all my funds under one umbrella once I retire.

Do you know what you want to buy? The Schwab list of Schwab index mutual funds is extremely limited - nothing compared to Vanguard's choices. But Schwab also has a no-transaction fee list of other company's mutual funds so that might not be an issue.

Do I understand correctly that if I choose to invest in Vanguard funds through Schwab, there is no additional cost I would avoid by having a Vanguard account?

I believe you are mistaken about this. I think there would be a transaction fee for each purchase and each sale of a Vanguard mutual fund or ETF at Schwab. That would sort of defeat the purpose, wouldn't it?

I suggest you go to the Schwab website and see just what is available without transaction fees before you use them for your entire portfolio.
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Re: Schwab vs Vanguard

Postby tainted-meat » Fri Mar 22, 2013 6:28 pm

You can't really go wrong with either company. If you do Schwab, just stick with the ETFs that are commission free with very low ERs.
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Re: Schwab vs Vanguard

Postby truenorth418 » Fri Mar 22, 2013 7:04 pm

I have brokerage accounts with Schwab and Vanguard and my IRA at Fidelity. While I value simplicity, I think there is value in working with a couple of different companies at once. In the event of a Lehman Bros type incident, you would not have all your assets with one firm. But more importantly, Schwab and Fidelity have excellent educational resources available online and through their local branches. I consider my local representatives part of my "team" and use them to "pressure test" my strategies and tactics. And Vanguard has had many interesting webinars recently. I have consolidated all of my financial assets among these three, and I think they are all great in their own way.
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Re: Schwab vs Vanguard

Postby louis c » Fri Mar 22, 2013 8:05 pm

Don46 wrote:Many thanks for all these helpful and informed replies.
My instinct is to centralize, not spread my accounts around. So, I want to stay with Schwab or go with Vanguard, and bring all my funds under one umbrella once I retire.

Do I understand correctly that if I choose to invest in Vanguard funds through Schwab, there is no additional cost I would avoid by having a Vanguard account?
What about Vanguard's advertised Flagship service for larger accounts, such as mine would be?
Do any of you have experience with the Vanguard financial planning service they offer?

As it happened I had a minor but urgent customer service issue with Schwab just now--a missing 1098 form for my home mortgage. They solved the problem quickly and smoothly. I was impressed.
--Don


If you buy Schwab select ETFs or mutual funds, they are no fee transactions. No Vanguard funds are on the list, so you would pay for transaction fees. I don't mind paying since that is a minor amount, $8 for ETFs. Mutuals are more like $50.
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Re: Schwab vs Vanguard

Postby stlutz » Fri Mar 22, 2013 9:08 pm

Do I understand correctly that if I choose to invest in Vanguard funds through Schwab, there is no additional cost I would avoid by having a Vanguard account?


If Vanguard Mutual Funds (i.e. not ETFs) are what you want to invest in, then just invest with Vanguard. It's easier and cheaper. Buying VG funds from another broker usually just adds unnecessary costs and you often don't have access to to the lower-cost share classes.
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Re: Schwab vs Vanguard

Postby Toons » Fri Mar 22, 2013 9:24 pm

Vanguard :happy
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Re: Schwab vs Vanguard

Postby livesoft » Fri Mar 22, 2013 10:00 pm

louis c wrote:If you buy Schwab select ETFs or mutual funds, they are no fee transactions. No Vanguard funds are on the list, so you would pay for transaction fees. I don't mind paying since that is a minor amount, $8 for ETFs. Mutuals are more like $50.

Once again, I would like to point out that the Schwab index funds appear to be less tax-efficient than the Vanguard index funds. In a tax-advantaged acccount like an IRA, this would not make a difference to me, but in a taxable account, the extra taxes that one would pay because they used Schwab index funds would probably dwarf the commissions that would one pay to own the more tax-efficient Vanguard index funds.

So my recommendation if you use Schwab for a taxable account is to purchase Vanguard index ETFs or at least investigate the tax-efficiency differences for your situation.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Schwab vs Vanguard

Postby B'Falls_JT » Fri Mar 22, 2013 11:18 pm

Hi Don46,

In our experience, both Schwab and Vanguard are very good companies. We have brokerage accounts with both, and our retirement accounts are with Schwab. We prefer Vanguard's ETFs/Funds and use them exclusively, even in our Schwab accounts. However, we prefer Schwab's customer service and tools, so, most of our accounts are there. Schwab's online capabilities are very good, and our Financial Consultant at Schwab has been very good to work with (very helpful, cooperative, and responsive). Just my opinion, but I believe this approach plays to the strengths of each company. No major complaints to-date related to either.

JT
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Re: Schwab vs Vanguard

Postby Alskar » Sat Mar 23, 2013 4:08 am

I didn't have a good experience with Schwab; too much high-pressure sales tactics for me. I left there years ago.

I gave Vanguard a try by rolling over a 401(k) last fall. The customer experience at Vanguard was just horrible. However, you have enough assets to qualify for Flagship status, so you'll probably get better customer service at Vanguard than I ever did. I was a Voyager Select client.

I currently hold my all-Vanguard ETF portfolio at Fidelity. I am very pleased with the customer service at Fidelity and the Fidelity website is top-notch. I plan to stay at Fidelity for the foreseeable future.

You mentioned wanting some occasional hand-holding: Allan Roth, the author of "How a Second Grader Beats Wall Street" provides financial planning services on a hourly basis. The first hour consultation is free. I use his services for precisely what you're talking about. His website is: http://www.daretobedull.com.

Good luck!
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Re: Schwab vs Vanguard

Postby Gleevec » Sat Mar 23, 2013 8:17 am

Alskar wrote:I didn't have a good experience with Schwab; too much high-pressure sales tactics for me. I left there years ago.

I gave Vanguard a try by rolling over a 401(k) last fall. The customer experience at Vanguard was just horrible. However, you have enough assets to qualify for Flagship status, so you'll probably get better customer service at Vanguard than I ever did. I was a Voyager Select client.

I currently hold my all-Vanguard ETF portfolio at Fidelity. I am very pleased with the customer service at Fidelity and the Fidelity website is top-notch. I plan to stay at Fidelity for the foreseeable future.

You mentioned wanting some occasional hand-holding: Allan Roth, the author of "How a Second Grader Beats Wall Street" provides financial planning services on a hourly basis. The first hour consultation is free. I use his services for precisely what you're talking about. His website is: http://www.daretobedull.com.

Good luck!


Vanguard Flagship is about on par with Fidelity for me. I have had much better luck with Schwab (emails responded to in 1 day; rare instances I have to call get someone on phone in 2-5 minutes). To me these are the 3 best brokerages/fund companies so Im probably nitpicking about the minor differences between the 3 (except for me, the Checking accounts from Fidelity and Schwab, Fidelity AmEx, and the Coverdell from Schwab-- are big deals, but just for me probably)
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Re: Schwab vs Vanguard

Postby Phineas J. Whoopee » Sun Mar 24, 2013 5:37 pm

louis c wrote:... Vanguard just upgraded their password protection. Schwab still has not in terms of password length and not having ability to have special characters and 20+ characters. ...

On the other hand, at Schwab you have the option of using 2-factor authentication. They will, without additional charge, send a VPN token you can use. I highly recommend it for Schwab customers.

http://www.schwab.com/public/schwab/nn/legal_compliance/schwabsafe/we_guard_your_account

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Re: Schwab vs Vanguard

Postby Alskar » Sun Mar 24, 2013 7:29 pm

Gleevec wrote:Vanguard Flagship is about on par with Fidelity for me. I have had much better luck with Schwab (emails responded to in 1 day; rare instances I have to call get someone on phone in 2-5 minutes). To me these are the 3 best brokerages/fund companies so Im probably nitpicking about the minor differences between the 3 (except for me, the Checking accounts from Fidelity and Schwab, Fidelity AmEx, and the Coverdell from Schwab-- are big deals, but just for me probably)

That's interesting. I'm a Premium Services customer at Fidelity. I was a Voyager Select client at Vanguard. I assumed that some of the difference in customer service had to do with the difference in the amounts I invested.

For whatever it's worth: As a Premium Services client at Fidelity they answer the phone immediately and emails get a response in less than one day. I do love my Fidelity AMEX (2% cash back on everything) and my Fidelity Signature Visa (1.5% cash back on everything) cards.

My 529 plan is in Utah Educational Savings Plan (UESP).
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Re: Schwab vs Vanguard

Postby Alskar » Sun Mar 24, 2013 7:34 pm

Phineas J. Whoopee wrote:
louis c wrote:... Vanguard just upgraded their password protection. Schwab still has not in terms of password length and not having ability to have special characters and 20+ characters. ...

On the other hand, at Schwab you have the option of using 2-factor authentication. They will, without additional charge, send a VPN token you can use. I highly recommend it for Schwab customers.

http://www.schwab.com/public/schwab/nn/legal_compliance/schwabsafe/we_guard_your_account

PJW

Vanguard told me as I was leaving that they were adding two-factor authentication to their accounts. They were very vague on the details and on the schedule for the roll-out. Since I couldn't get the same answer from any two Vanguard CS reps, I'm not even sure if they knew what two-factor authentication means.

Fidelity offers two-factor authentication to their Premium Services clients. Fidelity uses Symantec (formerly VeriSign) VIP Access.
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Re: Schwab vs Vanguard

Postby keystone » Mon Mar 25, 2013 1:23 pm

Schwab vs. Vanguard is something that I have had to ponder the last few weeks. I have a joint taxable account at Schwab that I used to buy some individual stocks in 2009. Recently I added some money to the account for long term taxable investing, but in the end I just couldn't invest it the way that I wanted to at Schwab, so I will be transferring it to Vanguard.

My overall feeling is that Schwab is great if you want to buy individual stocks, also fine for a retirement account if you want mimic something like the 3 Fund Portfolio, but it is most lacking when it comes to mutual funds, particularly municipal funds.

Within my taxable account, I primarily want to invest in long term muni funds. While Schwab does have a long term muni fund, it just isn't comparable with Vanguard's selection. Plus the expense ratio is considerably higher with the Schwab muni fund. Sure I could purchase the Vanguard fund within the Schwab account, but the last time I looked it would have resulted in a $75 fee per fund. It just seemed silly for me to pay this when I could easily open up an account at Vanguard.

If I could have found everything I wanted via Vanguard ETFs, I would have kept my money in Schwab, but Vanguard ETFs are limited when it comes to munis.
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Re: Schwab vs Vanguard

Postby FedGuy » Mon Mar 25, 2013 11:15 pm

Phineas J. Whoopee wrote:On the other hand, at Schwab you have the option of using 2-factor authentication. They will, without additional charge, send a VPN token you can use. I highly recommend it for Schwab customers.

http://www.schwab.com/public/schwab/nn/legal_compliance/schwabsafe/we_guard_your_account

PJW


Thanks! I've been a Schwab customer for years and never knew this. I just ordered my token.
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Re: Schwab vs Vanguard

Postby Copernicus » Mon May 13, 2013 1:06 pm

I WISH I HAD READ THESE BOARDS IN THE PAST. THEY ARE A WEALTH OF INFO AND PERSPECTIVES!!
I am currently facing the same situation as Don 46. I am looking to move my accounts from a money manager (who charges 1.25% on assets) to self-management using passive index investing. I have a IRA and a taxable account in Schwab, no accounts with Vanguard. I am also debating whether to move my 401k's from former employer to existing Schwab IRA or to a new Vanguard IRA, the main attraction of the latter being the funds they offer.
(1) Is there a charge also to sell Vanguard Mutual fund shares in a Schwab account?
(2) A Thought: In fact, the costs to buy/sell Vanguard mutual funds in Schwab account could be a discouragement of frequent trading! If I elect Schwab, I will be induced to keep my trading to bare minimum, just for periodic (infrequent) rebalancing tweaks, which is what passive investing teaches, the costs would not be terrible.
(3) Is there any benefit in combining all retirement accounts into one and all taxable heritage accounts into one big taxable account or to split them into couple of accounts each? Are there future events like partial withdrawals of funds in future when it would make a difference whether one big account or two smaller accounts EACH for taxable and retirement portfolios?
(4) If I decide to stay with Schwab, how can I find the best alternatives (maybe not perfect) to Vanguard mutual funds (see below), while accounting for low costs, adequate diversification and no or minimal bid-ask spreads (liquidity)? I am searching for the best -
- International small cap value fund/ETF
- Emerging markets core fund/ETF
- Vanguard Total Bond Market Index - Signal
- Inflation-Protected securities
- High-yield corporate
- Intermediate-term tax-exempt

Thank you in anticipation of helpful comments!
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Re: Schwab vs Vanguard

Postby TimesAWastin » Mon May 13, 2013 2:02 pm

I've considered this myself in the past. My company's 401(k) plan is through Schwab so when I wanted to open a personal investment account, I opened it there just so I could have it all in one place. Since then I've been constantly tempted by Vanguard, but in the end I think Schwab is just fine and it's not worth the hassle of transferring. The research tools are pretty great (though I have not seen Vanguards for comparison). I was concerned by Schwabs mutual funds, i.e. SWLBX, which have had some issues in the past. But, I've decided on preferring ETFs to Mutual Funds unless I simply can't get what I want out of an ETF, and the commission-free options at Schwab are pretty swell there as well. That 0.04% ER on SCHB..

That said, if I were to start again and had done my research first, I might have opted for Vanguard instead. I agree more with their philosophy of investing, and how they run their company. With the Schwab website you're being sold to at every corner. Also, Vanguard's logo is a boat. How badass is that? Fortunately, my company's 401(k) gives us access to institutional shares of several Vanguard index funds which keeps me satiated. :-)

One other note, what I've learned is it's not necessary to have it all in one account. It's nice, sure. But why not have accounts at both? Buy the Vanguard funds you want from Vanguard, and the Schwab ETFs you want from Schwab. It might be a bit confusing with Roth IRA (just have to be careful with contributions), but for a taxable account, why not? Something like Mint, SigFig, or PersonalCapital can help keep it all in one place.
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Re: Schwab vs Vanguard

Postby MnD » Mon May 13, 2013 2:14 pm

At Schwab (all accounts except 401-K) I have a mix of Vanguard and Schwab ETF's.
At Fidelity (401-K with brokerage link) I have a mix of Vanguard and iShares ETF's.
No transaction fee for the Schwab and iShare ETF's, $8 for the Vanguard ones.
Overall ER of these ETF's is rock bottom.

Now if you just have to have Vanguard mutual funds (not ETF''s) - it would be pricey to buy-sell those elsewhere besides at Vanguard.
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Re: Schwab vs Vanguard

Postby Copernicus » Mon May 13, 2013 4:48 pm

Thank you, MnD. Do you or anyone else have comments on my question in item 4 about good alternative ETF's to the Vanguard funds I listed?
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Re: Schwab vs Vanguard

Postby frugaltype » Mon May 13, 2013 5:44 pm

Don46 wrote:Do I understand correctly that if I choose to invest in Vanguard funds through Schwab, there is no additional cost I would avoid by having a Vanguard account?


That's not correct. Schwab does charge fees for doing some stuff with Vanguard funds that you will not incur if the funds are at Vanguard. I can't remember what they are... But it was the last straw that sent me entirely to Vanguard a few years ago.
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Re: Schwab vs Vanguard

Postby frugaltype » Mon May 13, 2013 5:48 pm

[quote="Alskar"][/quote]

A Dala horse! What a nifty avatar!

Now back to our regularly scheduled programming.
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Re: Schwab vs Vanguard

Postby Iorek » Mon May 13, 2013 10:49 pm

I've been going back and forth this as well and I think I'm going to just open a Vanguard account (for VG funds) to go with my Schwab account (for other investments, such as a few random stocks and non-VG funds)-- sounds like Vanguard makes it easy and personally I have a mild preference for funds over ETFs.
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Re: Schwab vs Vanguard

Postby Rolyatroba » Wed May 15, 2013 11:52 am

I am going thru this exercise as well, the primary driver being rebalancing costs. I am at Schwab now, but soon I want to get some funds in asset classes that Vanguard has, but Schwab does not in their no-load/no-fee category.

I need to stay at Schwab for their superior banking feature (like an earlier poster mentioned, no fees, even for Int'l transactions, but also because you never have to worry about the balance in the checking account, it being attached to your taxable brokerage account).

So, in my updated portfolio about 75% of the funds/etfs I can get at Schwab with no trading costs. Unless that improves I will move approx. that percentage of my account to Vanguard. In this day and age of electronic funds transfers, I have every expectation that this won't be difficult to manage.

I know the etf option is cheap when it comes to rebalancing, but I'm cheaper! My $150 cost per year estimate of rebalancing if all is at Schwab, is a very nice dinner and bottle of wine (or two) somewhere in the Alps, where I plan to spend a lot of time in retirement. :)
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Re: Schwab vs Vanguard

Postby Copernicus » Wed May 15, 2013 8:29 pm

I understand. I would hope that the electronic transfers might be rapid, but will there be any charges for transfers to another fund family? Have you checked?
Every author and experts warns that it is difficult to maintain a timely and disciplined rebalancing schedule, just for an individual to maintain the asset allocation. I have not done this, but I imagine this warning is therefor a reason. ................I am concerned that if I need too many steps like fund transfers between companies, I may lose sight of the goal. I wonder whether a bit less cost-efficient and smaller mutual fund or etf might be a prudent choice over meticulous cost-control, if that has the potential of messing up disciplined rebalancing. I wish there was an easy and quick (one step) reallocation process. I am hoping we will get some comments from experienced indexers.
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Re: Schwab vs Vanguard

Postby Iorek » Wed May 15, 2013 8:48 pm

koparar1 wrote:I understand. I would hope that the electronic transfers might be rapid, but will there be any charges for transfers to another fund family? Have you checked?
Every author and experts warns that it is difficult to maintain a timely and disciplined rebalancing schedule, just for an individual to maintain the asset allocation. I have not done this, but I imagine this warning is therefor a reason. ................I am concerned that if I need too many steps like fund transfers between companies, I may lose sight of the goal. I wonder whether a bit less cost-efficient and smaller mutual fund or etf might be a prudent choice over meticulous cost-control, if that has the potential of messing up disciplined rebalancing. I wish there was an easy and quick (one step) reallocation process. I am hoping we will get some comments from experienced indexers.



For what it's worth, I think when I transfer from Schwab to VG, I will probably put my IRA money into the target retirement funds (which gradually shift asset allocation and rebalance daily to those allocations I think), even though I could save a few basis points if I put them in individual index funds (using admiral shares) and did the rebalancing myself.
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Re: Schwab vs Vanguard

Postby Rolyatroba » Wed May 15, 2013 9:14 pm

koparar1 wrote:I understand. I would hope that the electronic transfers might be rapid, but will there be any charges for transfers to another fund family? Have you checked?
Every author and experts warns that it is difficult to maintain a timely and disciplined rebalancing schedule, just for an individual to maintain the asset allocation. I have not done this, but I imagine this warning is therefor a reason. ................I am concerned that if I need too many steps like fund transfers between companies, I may lose sight of the goal. I wonder whether a bit less cost-efficient and smaller mutual fund or etf might be a prudent choice over meticulous cost-control, if that has the potential of messing up disciplined rebalancing. I wish there was an easy and quick (one step) reallocation process. I am hoping we will get some comments from experienced indexers.

Assuming this was a reply to my post, to be sure I haven't fully thought out the mechanics, but in practice I'd want to minimize the need for transfers. So I'd probably put some extra funds in the VG account, part of which to be placed in one of the larger slices of my AA. This way, if I need to move funds in or out of the "niche" funds I obtained the VG account for in the first place, it wouldn't require a Schwab/VG transfer to enable the rebalance effort.

For example, if I need 20% in the total US stock market, I move half of that to VG in addition to the funds for the asset-class tilts, to be put into VTI. So, when I need to rebalance in our out of the funds I came to VG for (the asset-class tilts I needed), I can use VTI to absorb that (say half of my total US stock market funds are at Schwab, in SWTSX, and half at VG, in VTI).

I may never need an electronic funds transfer in that scenario.
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Re: Schwab vs Vanguard

Postby 123 » Thu May 16, 2013 4:04 pm

I've had IRA and taxable accounts at Schwab for over 25 years and have always been happy with them. In olden days I used mutual funds and decided I could live with their transaction fees for the convenience of having everything in one account. I've been mostly Vanguard ETFs for a number of years now. Our family accounts easily now total to 7 figures and the trading fees and commissions for me are under $100 most years, I just don't do that many trades. Schwab just gives me more options about what to hold in my account. I like their website and find the online research they have is more then sufficient for my needs. Their branch offices are a plus and their staff is always knowledgeable, regardless of if you walk in or reach their call centers by phone.

In spite of the excellence of their website and the availability of very thorough account information online I find the Schwab account statements voluminous and hideous. I think they keep them that way to encourage people to go paperless. But I'm sort of old school and believe that the paper trail is essential for my family to readily know where things are once I'm no longer around. (If on-line access were established for them it's doubtful they'd keep track of it and have the access credentials handy when they needed them.) Since I primarily use the website the statements are not a deal-breaker for me.

I have some accounts at Fidelity and I feel they're very competitive with what Schwab does, the difference may just be personal preference. My wife has an inherited IRA which we moved to Vanguard because it just seemed like it was the best place to put it where it could be on auto-pilot for dividend reinvestment and RMDs, part of my reason for segregating it off was so my wife would always remember that its a "different animal", especially if I'm not around.

If you're limiting yourself to Vanguard mutual funds and ETFs I'm sure Vanguard (or VBS) would be adequate. I just think that there's just a whole lot more options and convenience at Schwab or Fidelity at hardly any comparative additional cost. It all comes down to your buy/sell activity pattern and what the best fit is for you.
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