One ETF at Schwab - no cost and low to no dividends

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VACat07
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One ETF at Schwab - no cost and low to no dividends

Post by VACat07 » Sat Feb 23, 2019 12:29 pm

(reposting - posted in wrong forum)

My son (14) has $3200 to invest from birthday/Christmas money savings over the years. He also will have a job this summer at the local pool (and yes, we will match any of his earnings and put it in a ROTH Ira for him). We have several accounts at Schwab and one is technically his account, but in our name. It currently holds two ETFs with money his grandmother gave him for the first couple years of his life to use for college or whatever (as she knew some of her grandkids would probably not go to college). There is $27 K in those ETFs (roughly split between Schwab US Large Cap Growth ETF and Schwab US Small Cap ETF)(14K basis) and no money has been added or will be added in the future. We want to put his $3200 in a different ETF just to keep it separate, and he will add his summer job earnings to it each summer. He can sell parts of it if he needs to, but we said if he waits until he graduates from college to take any out, we would pay all capital gains tax on it. So, assuming a 9-10 year time horizon, can anyone recommend 3 or 4 no cost and/or no to low dividend ETF at schwab that he should pick from. I want him to pick just one, but I'm just trying to narrow it down to 3 or 4 so he doesn't get overwhelmed trying to learn how to invest. I guess it doesn't have to be an ETF, it could be a mutual fund too, but it needs to be mainly stocks - not looking for bonds or anything like that. Thank you!

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Vulcan
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Re: One ETF at Schwab - no cost and low to no dividends

Post by Vulcan » Sat Feb 23, 2019 12:29 pm

VACat07 wrote:
Sat Feb 23, 2019 12:26 pm
So, assuming a 9-10 year time horizon, can anyone recommend 3 or 4 no cost and/or no to low dividend ETF at schwab that he should pick from. I want him to pick just one, but I'm just trying to narrow it down to 3 or 4 so he doesn't get overwhelmed trying to learn how to invest. I guess it doesn't have to be an ETF, it could be a mutual fund too, but it needs to be mainly stocks - not looking for bonds or anything like that. Thank you!
VTWAX (Vanguard Total World Stock Index Admiral Fund) at Vanguard.
It holds the entire world, US&Intl, Developed&Emerging, Large&Small, in a single convenient low cost package - and it's not even an ETF.

It should be the default stock market investment choice for anyone who doesn't think they know something the market doesn't.

[OT comment removed by admin LadyGeek]
Last edited by Vulcan on Sat Feb 23, 2019 12:32 pm, edited 1 time in total.
If you torture the data long enough, it will confess to anything. ~Ronald Coase

Topic Author
VACat07
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Re: One ETF at Schwab - no cost and low to no dividends

Post by VACat07 » Sat Feb 23, 2019 12:32 pm

Thank you - but aren't there fees associated with buying a Vanguard fund at Schwab? We are already at Schwab, so trying to keep everything there. Since he'll be buying more shares every summer with his earnings, we want no cost funds.

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Vulcan
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Re: One ETF at Schwab - no cost and low to no dividends

Post by Vulcan » Sat Feb 23, 2019 12:33 pm

VACat07 wrote:
Sat Feb 23, 2019 12:32 pm
Thank you - but aren't there fees associated with buying a Vanguard fund at Schwab? We are already at Schwab, so trying to keep everything there. Since he'll be buying more shares every summer with his earnings, we want no cost funds.
If you buy it at Vanguard, there are no costs.
You can only buy the ETF version (VT) at Schwab.
[OT comment removed by admin LadyGeek]
If you torture the data long enough, it will confess to anything. ~Ronald Coase

Mister A
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Re: One ETF at Schwab - no cost and low to no dividends

Post by Mister A » Sat Feb 23, 2019 12:38 pm

So I take it this has an educational component, and that you want him thinking "Bogleheadishly".

If he's currently 100% domestic and bonds are out, this sounds like a fine time to learn about international.

SCHF (Schwab large-cap developed) and SCHE (Schwab large-cap emerging) are the starting points, but he could do some reading about SCHC (Schwab small-cap developed) and EWX (SPDR small-cap emerging), as well, the small-cap counterparts. Might be an interesting exercise to learn a bit about the different indexes and tracking error.

Also worth noting that it looks like the family of low-cost SPDR index ETFs are coming to Schwab OneSource March 1st: https://www.aboutschwab.com/press/schwa ... -free-etfs

They are roughly cost-competitive with Schwab ETFs and are generally more equivalent to total market/all-cap than the Schwab offerings.

[ quoted post removed by admin LadyGeek]

I don't see where he said anything of the kind, and Schwab has perfectly good low-cost index-based ETFs at no fee that can be used just as well as Vanguard ETFs, even if it takes a little more doing to construct cap weight from Schwab's.
Last edited by Mister A on Sat Feb 23, 2019 12:44 pm, edited 1 time in total.

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Peter Foley
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Re: One ETF at Schwab - no cost and low to no dividends

Post by Peter Foley » Sat Feb 23, 2019 12:42 pm

You might look at SCHWAB US BROAD MARKET ETF.

UpperNwGuy
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Re: One ETF at Schwab - no cost and low to no dividends

Post by UpperNwGuy » Sat Feb 23, 2019 12:49 pm

Vanguard is good, but Schwab is also good if you stick to ETFs in taxable. If you're already at Schwab and are comfortable there, no reason to switch to Vanguard. I would recommend he choose amongst SCHB Multi Cap Core, SCHM Mid Cap Core, SCHV Large Cap Value (but check the dividends), and SCHX Large Cap Core.

dbr
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Re: One ETF at Schwab - no cost and low to no dividends

Post by dbr » Sat Feb 23, 2019 12:54 pm

I don't think you learn how to invest by opening an account and picking funds, even from a restricted list guided by someone else. Experience is often a good teacher, but I think experience in investing can also be a very misleading and incomplete teacher.

A more effective thing to do is to start reading on the whole understanding of how investing works, starting perhaps with https://www.bogleheads.org/wiki/Getting_started and especially with suggested reading. 14 is a little young make any of this relevant.

drk
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Re: One ETF at Schwab - no cost and low to no dividends

Post by drk » Sat Feb 23, 2019 12:55 pm

I would put this money into any of the following:

1. SCHC, to add a less-correlated asset to the current mix
2. SCHF, to add international exposure
3. SCHB, to move towards broad-market exposure (I don’t like holding Large Cap Growth)

Schwab has great options for your son.

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Re: One ETF at Schwab - no cost and low to no dividends

Post by LadyGeek » Sat Feb 23, 2019 12:59 pm

I removed several off-topic comments. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.
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aristotelian
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Re: One ETF at Schwab - no cost and low to no dividends

Post by aristotelian » Sat Feb 23, 2019 1:08 pm

SCHB or, if you can take some risk, SCHG for lower dividend.

drk
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Re: One ETF at Schwab - no cost and low to no dividends

Post by drk » Sat Feb 23, 2019 1:44 pm

aristotelian wrote:
Sat Feb 23, 2019 1:08 pm
SCHB or, if you can take some risk, SCHG for lower dividend.
SCHG is already one of the two holdings in the account.

Topic Author
VACat07
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Re: One ETF at Schwab - no cost and low to no dividends

Post by VACat07 » Sat Feb 23, 2019 1:52 pm

Thanks everyone. We'll take a look at the suggestions. And yes, I know the two current ETFs are not ideal, but I just came across this group about a month ago. It will take a while to re-position things to the 3 fund approach. We have a lot of gains in our taxable accounts, so it may take time. I'll check back later to see if any other suggestions are added. We figure everything of his will be sold during or after college (with us paying the taxes), and my son can start fresh at that point where ever he wants for investing-- including Vanguard.

yogesh
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Re: One ETF at Schwab - no cost and low to no dividends

Post by yogesh » Sat Feb 23, 2019 2:12 pm

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