To execute on asset allocation plan, I have to invest in TIPS in my 401(k) which is held in a brokerage account at Schwab. I am fairly well convinced that I do not have the attention span or interest to manage a portfolio of individual TIPS so I am considering plunging into one of the three low-cost funds: Vanguard Inflation Protected Securities Fund (VIPSX) (0.20% ER); iShares Barclays TIPS Fund (TIP) (0.20% ER); and SPDR Barclays Capital TIPS (IPE) (0.19% ER).
Schwab charges me $49.95 per transaction for mutual funds like VIPSX which are not part of their blessed inner circle and $12.95 for transactions in ETFs like TIP and IPE. Admiral funds are not available through Schwab, so I can't improve on the expense ratio by switching to VIAPX. Schwab, of course, has its own fund SWRSX with an expense ratio of 0.50%. For the initial purchase anyway, the savings on expense ratio for the lower costs funds would outweight the savings on transaction costs in purchasing Schwab's alternative.
Is it a toss-up among these funds, or is there a good reason to prefer one over the other?
TIPS Investment in 401(k): VIPSX, TIP, IPE?
No. This self-directed 401(k) operates with Schwab's regular brokerage fee schedule so there are no breaks on transaction fees.
I realize that going forward, I will probably be best off investing my monthly contributions in the NO FEE Schwab Fund, maybe moving it into one of the other funds once a year.
However, my question isn't about how to handle the future contributions, but whether there is any reason to prefer one of these three funds to hold the substantial funds I already have in the 401(k).
I realize that going forward, I will probably be best off investing my monthly contributions in the NO FEE Schwab Fund, maybe moving it into one of the other funds once a year.
However, my question isn't about how to handle the future contributions, but whether there is any reason to prefer one of these three funds to hold the substantial funds I already have in the 401(k).