Buying Voo - Robinhood or Vanguard?

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mindgap
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Buying Voo - Robinhood or Vanguard?

Post by mindgap » Thu May 28, 2020 11:46 am

I'm about to put money into VOO on a regular basis (DCA, taxable account). Is there any advantage/disadvantage to buy VOO via Robinhood App or should I buy it directly at the source (Vanguard)? Robinhood does now fractional shares so that might be something which is cool since I could just buy in dollar amounts instead of buying full shares. Any thoughts on this?

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Re: Buying Voo - Robinhood or Vanguard?

Post by lakpr » Thu May 28, 2020 11:47 am

I would suggest you go with Fidelity. If you are interested in VOO (the ETF) and not the mutual fund (VTSAX), Fidelity is the behemoth and the ETF is also available for no additional transaction fees. Fidelity also allows purchase of fractional ETF shares now, a very recent development.

If you are interested in the mutual fund itself, though, then it's best to open a Vanguard account and buy it there.

Between the ETF and mutual fund, I prefer mutual fund. The buy and sell transactions on the ETF depend on the bid-ask spreads, and change throughout the day, but the mutual fund always settles at the end of the day closing price. I prefer MF because I do not want to feel like a chump if I find myself on the wrong side of that ETF buy-sell transaction compared to end-of-day closing price, and also because I want to be assured that whether I place the order at 9:00 AM or 3:58 PM I will be assured to have the transaction settle at EOD price.

With Vanguard, I believe once you meet the minimum investment, subsequent investments can be as little as $250 (I am unable to locate the exact dollar amount, but it's in the low hundreds)
Last edited by lakpr on Thu May 28, 2020 11:53 am, edited 2 times in total.

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Re: Buying Voo - Robinhood or Vanguard?

Post by retired@50 » Thu May 28, 2020 11:50 am

I would choose and use Vanguard over Robinhood.

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Re: Buying Voo - Robinhood or Vanguard?

Post by mindgap » Thu May 28, 2020 12:04 pm

lakpr wrote:
Thu May 28, 2020 11:47 am
I would suggest you go with Fidelity. If you are interested in VOO (the ETF) and not the mutual fund (VTSAX), Fidelity is the behemoth and the ETF is also available for no additional transaction fees. Fidelity also allows purchase of fractional ETF shares now, a very recent development.
Wait isn't VOO (S&P500) different from VTSAX (Total US Stock Market)? I like to focus more on the narrower focus of S&P500 in my taxable account. I already own VTSAX in my Roth IRA.

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Re: Buying Voo - Robinhood or Vanguard?

Post by lakpr » Thu May 28, 2020 12:05 pm

mindgap wrote:
Thu May 28, 2020 12:04 pm
lakpr wrote:
Thu May 28, 2020 11:47 am
I would suggest you go with Fidelity. If you are interested in VOO (the ETF) and not the mutual fund (VTSAX), Fidelity is the behemoth and the ETF is also available for no additional transaction fees. Fidelity also allows purchase of fractional ETF shares now, a very recent development.
Wait isn't VOO (S&P500) different from VTSAX (Total US Stock Market)? I like to focus more on the narrower focus of S&P500 in my taxable account. I already own VTSAX in my Roth IRA.
Ooops, you are right. sorry I should have typed VFIAX.

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Re: Buying Voo - Robinhood or Vanguard?

Post by retired@50 » Thu May 28, 2020 12:09 pm

lakpr wrote:
Thu May 28, 2020 11:47 am
With Vanguard, I believe once you meet the minimum investment, subsequent investments can be as little as $250 (I am unable to locate the exact dollar amount, but it's in the low hundreds)
After the initial investment of $3,000, subsequent investments can be $1 or more.

See link for VFIAX - Fees & Minimums tab. https://investor.vanguard.com/mutual-fu ... fees/vfiax

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Re: Buying Voo - Robinhood or Vanguard?

Post by nisiprius » Thu May 28, 2020 12:10 pm

I would avoid Robinhood.

My chief reason is that they are newcomers to the financial world and that there have been clear indications that they have not been as punctilious as established brokerages in understanding and following financial regulations. The most concrete evidence I can give of this was a debacle in December 2018 in which, for several days, they offered what they called "checking and savings accounts" paying a very high rate of interest, and claimed that the accounts, though not insured by FDIC, were "insured" by SIPC.

The problem is not necessarily with the accounts as such. The problems were:

1) they called them "savings and checking accounts," apparently unaware that these words have legal meanings and that what they were offering were not savings or checking accounts.

2) they said "Your cash in Robinhood is insured up to $250,000 by the Securities Investor Protection Corporation (SIPC)," but the SIPC, unlike FDIC, does not offer "insurance;" the letters stand for "Securities Investor Protection Corporation." Again, "insurance" has a legal meaning.

Now you may say that 1 and 2 are technicalities. But this one was not:

3) Most seriously, they said the accounts were protected by SIPC without, apparently, taking the time to verify this with the SIPC. The very next day the President and CEO of SIPC, Stephen Harbeck, said no, the accounts would not be protected by the SIPC and explained why not.

These three problems indicate a willingness to claim things that aren't so; whether through cluelessness, carelessness, or dishonesty, I don't know.

Other indications of untrustworthiness are that in 2019 it transpired that a software bug that went unfixed for months, had been allowing customers to use unlimited amounts of margin; and that they experienced major trading outages on busy says in March of 2020.

The techie motto, "move fast and break things," is not appropriate for people who are handling money. I think they're flaky. Use an ordinary brokerage.

If you are committed to using Vanguard ETFs (rather than mutual funds) any decent brokerage will do. Three decent brokerages I've personally used include Vanguard itself, Fidelity, and Schwab.
Last edited by nisiprius on Fri May 29, 2020 4:57 am, edited 1 time in total.
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Re: Buying Voo - Robinhood or Vanguard?

Post by cos » Thu May 28, 2020 12:19 pm

mindgap wrote:
Thu May 28, 2020 11:46 am
I'm about to put money into VOO on a regular basis (DCA, taxable account). Is there any advantage/disadvantage to buy VOO via Robinhood App or should I buy it directly at the source (Vanguard)? Robinhood does now fractional shares so that might be something which is cool since I could just buy in dollar amounts instead of buying full shares. Any thoughts on this?
If you like Robinhood, you might want to check out M1 Finance. It's a best-of-both-worlds middle ground between Robinhood's technology and Vanguard's focus while keeping the low costs and low fees of both. Fidelity is another good option in this regard.

Regardless of what you choose, I wouldn't recommend Robinhood. They strongly prioritize short-term trading over long-term investing, and their platform reflects that. M1 Finance, Fidelity, and Vanguard, on the other hand, all focus on long-term investing and provide loads of tools that make doing it effectively quite a bit easier.

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Re: Buying Voo - Robinhood or Vanguard?

Post by Robert20 » Thu May 28, 2020 12:24 pm

mindgap wrote:
Thu May 28, 2020 11:46 am
I'm about to put money into VOO on a regular basis (DCA, taxable account). Is there any advantage/disadvantage to buy VOO via Robinhood App or should I buy it directly at the source (Vanguard)? Robinhood does now fractional shares so that might be something which is cool since I could just buy in dollar amounts instead of buying full shares. Any thoughts on this?
NO robinhood or webull or other free brokerages. (u can consider m1finance also - but anyway for your situation fidelity is best)..

Use Fidelity ... one stop shop for all ur needs..

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Re: Buying Voo - Robinhood or Vanguard?

Post by whereskyle » Thu May 28, 2020 12:25 pm

mindgap wrote:
Thu May 28, 2020 11:46 am
I'm about to put money into VOO on a regular basis (DCA, taxable account). Is there any advantage/disadvantage to buy VOO via Robinhood App or should I buy it directly at the source (Vanguard)? Robinhood does now fractional shares so that might be something which is cool since I could just buy in dollar amounts instead of buying full shares. Any thoughts on this?
Use Fidelity. You can buy fractional shares, and the system is more reliable. Robinhood crashed repeatedly when volatility went up. Buyers (as you will be the next time there is a crash) missed out on firesale prices.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

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Re: Buying Voo - Robinhood or Vanguard?

Post by mindgap » Thu May 28, 2020 12:27 pm

retired@50 wrote:
Thu May 28, 2020 12:09 pm
After the initial investment of $3,000, subsequent investments can be $1 or more.

See link for VFIAX - Fees & Minimums tab. https://investor.vanguard.com/mutual-fu ... fees/vfiax

Regards,
Will Vanguard exchange the VOO ETFs into VFIAX automatically when reaching a curtain threshold?

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Re: Buying Voo - Robinhood or Vanguard?

Post by mindgap » Thu May 28, 2020 12:29 pm

nisiprius wrote:
Thu May 28, 2020 12:10 pm
I would avoid Robinhood.

My chief reason is that they are newcomers to the financial world and that there have been clear indications that they have not been as punctilious as established brokerages in understanding and following financial regulations. The most concrete evidence I can give of this was a debacle in December 2018 in which, for several days, they offered what they called "checking and savings accounts" paying a very high rate of interest, and claimed that the accounts, though not insured by FDIC, were "insured" by SIPC.

The problem is not necessarily with the accounts as such. The problems were:

1) they called them "savings and checking accounts," apparently unaware that these words have legal meanings and that what they were offering were not savings or checking accounts.

2) they said "Your cash in Robinhood is insured up to $250,000 by the Securities Investor Protection Corporation (SIPC)," but the SIPC, unlike FDIC, does not offer "insurance;" the letters stand for "Securities Investor Protection Corporation." Again, "insurance" has a legal meaning.

Now you may say that 1 and 2 are technicalities. But this one was not:

3) Most seriously, they said the accounts were protected by SIPC without, apparently, taking the time to verify this with the SIPC. The very next day the President and CEO of SIPC, Stephen Harbeck, said no, the accounts would not be protected by the SIPC and explained why not.

These three problems indicate a willingness to claim things that aren't so; whether through cluelessness, carelessness, or dishonesty, I don't know.

Other indications of untrustworthiness are that in 2019 it transpired that a software bug that went unfixed for months, had been customers to use unlimited amounts of margin; that they experienced major trading outages on busy says in March of 2020.

The techie motto, "move fast and break things," is not appropriate for people who are handling money. I think they're flaky. Use an ordinary brokerage.

If you are committed to using Vanguard ETFs (rather than mutual funds) any decent brokerage will do. Three decent brokerages I've personally used include Vanguard itself, Fidelity, and Schwab.
All good points to stay away from Robinhood. Thank you for the long answer an that topic!

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Re: Buying Voo - Robinhood or Vanguard?

Post by Cheez-It Guy » Thu May 28, 2020 12:31 pm

mindgap wrote:
Thu May 28, 2020 12:27 pm
retired@50 wrote:
Thu May 28, 2020 12:09 pm
After the initial investment of $3,000, subsequent investments can be $1 or more.

See link for VFIAX - Fees & Minimums tab. https://investor.vanguard.com/mutual-fu ... fees/vfiax

Regards,
Will Vanguard exchange the VOO ETFs into VFIAX automatically when reaching a curtain threshold?
No, but you can do the opposite. Buy automatically in VFIAX and then periodically convert shares to VOO. Be aware that this is a one-way conversion. You can't then go back to VFAIX on the same shares. In any case, this can only be done if held at Vanguard.

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Re: Buying Voo - Robinhood or Vanguard?

Post by GreenLantern2814 » Thu May 28, 2020 10:46 pm

Wow. After reading the explanations here, I'm going to pull my investments from Robinhood and switch to something else (likely Fidelity since I already have a dormant account there).

Thank you all for the insights!

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Re: Buying Voo - Robinhood or Vanguard?

Post by jb1 » Fri May 29, 2020 6:44 am

Vanguard controls trillions of dollars and has been around for decades.. robonhood hasn’t, and advertises on Snapchat.

That’s enough of a reason for me to not use them

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Re: Buying Voo - Robinhood or Vanguard?

Post by CardioMD » Fri May 29, 2020 7:04 am

Fidelity, as others have mentioned, will serve your needs from now until retirement.

Robinhood,well I just can’t figure out why any responsible investor would use that platform.
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Re: Buying Voo - Robinhood or Vanguard?

Post by BruinBones » Fri May 29, 2020 7:10 am

GreenLantern2814 wrote:
Thu May 28, 2020 10:46 pm
Wow. After reading the explanations here, I'm going to pull my investments from Robinhood and switch to something else (likely Fidelity since I already have a dormant account there).
Check to see if Fidelity offers a transfer bonus. (Usually the brokerages, except Vanguard, offer a tiered bonus depending on how much you transfer into a new or existing account).

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Re: Buying Voo - Robinhood or Vanguard?

Post by anon_investor » Fri May 29, 2020 7:11 am

OP, if you plan just to dollar cost average and buy and hold, then i recommend just going to Vanguard and buying VFIAX. You can avoid bid ask spreads of ETFs and even schedule automatic investing. You can always convert VFIAX to VOO later (but not the other way around).

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Re: Buying Voo - Robinhood or Vanguard?

Post by AlohaJoe » Fri May 29, 2020 7:19 am

lakpr wrote:
Thu May 28, 2020 11:47 am
Fidelity is the behemoth and the ETF is also available for no additional transaction fees.
I'm not quite sure you mean by behemoth here but Schwab is substantially bigger than Fidelity. Like almost $1 trillion bigger.

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Re: Buying Voo - Robinhood or Vanguard?

Post by RTF » Fri May 29, 2020 7:30 am

Would someone mind explaining how people are getting hurt by the bid/ask spreads on these ETFs? ETFs like VOO, VTI, SPY are trading so frequently that I’ve never seen this to be an issue, especially using limit orders.

What can happen is the NAV settle at a higher price than it could be have been bought for earlier that day, and over paying when buying a MF. Does this matter over the long term? No, nor does this bid/ask spread issue that comes up with every ETF thread in my admittedly very limited experience.

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Re: Buying Voo - Robinhood or Vanguard?

Post by retired@50 » Fri May 29, 2020 8:51 am

RTF wrote:
Fri May 29, 2020 7:30 am
Would someone mind explaining how people are getting hurt by the bid/ask spreads on these ETFs? ETFs like VOO, VTI, SPY are trading so frequently that I’ve never seen this to be an issue, especially using limit orders.

What can happen is the NAV settle at a higher price than it could be have been bought for earlier that day, and over paying when buying a MF. Does this matter over the long term? No, nor does this bid/ask spread issue that comes up with every ETF thread in my admittedly very limited experience.
Occasionally, one pays a premium to NAV, or could pay a premium.

From the linked page:
An exchange-traded fund, or ETF, is a registered investment company. An ETF is a fund that holds a collection of assets and is traded on the market, one buys or sells from another shareholder on the stock exchange. ETFs have a creation/redemption procedure that generally makes the difference between price and NAV very small.
...
ETFs are like mutual funds in that they hold a collection of assets, usually stocks, bonds or other securities. Like closed-ended funds, ETFs trade on the market at a premium or discount from their net asset value (NAV).
See this wiki link for ETF info. https://www.bogleheads.org/wiki/Exchange-traded_fund

Regards,
This is one person's opinion. Nothing more.

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Re: Buying Voo - Robinhood or Vanguard?

Post by lostdog » Fri May 29, 2020 9:35 am

During the covid drop back in March, Robinhood crashed once or twice during that time. I'm sure you can find out more about it if you google it.

I would go with Vanguard, Schwab or Fidelity.
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Re: Buying Voo - Robinhood or Vanguard?

Post by nisiprius » Fri May 29, 2020 9:56 am

CardioMD wrote:
Fri May 29, 2020 7:04 am
Fidelity, as others have mentioned, will serve your needs from now until retirement.

Robinhood,well I just can’t figure out why any responsible investor would use that platform.
I don't disagree, given that word "responsible."

If we leave "responsible" out, the appeal is pretty obvious. It does everything in the ways and in the style that are comfortable for young people--everything with a smartphone app. It makes it easy for young people to buy and sell sparkly things that older brokerages make difficult:
When you sign up for a new account, you'll automatically start with a Robinhood Instant account, which is a margin account. This means you'll have access to instant deposits and extended-hours trading.
And options.

And cryptocurrency.

And all the stuff their friends are talking about.

They have a ton of learning material so that a newcomer can jump in quickly without having to look anywhere else to figure out "What is an iron condor?" "What is a cryptocurrency?" "Who is Karl Marx?"

No, I'm not joking:
Who is Karl Marx?
Karl Marx is to communism what Elvis is to rock and roll. Marx’s theories earned him the name “Father of Communism,” just as Elvis’s music won him the title “King of Rock and Roll.”
The article on "What is a Treasury Bond?" does not include Robinhood under How do I buy Treasury bonds? so you probably can't buy them at Robinhood. In fact I don't think you can buy individual bonds at Robinhood at all.

But I betcha Vanguard won't explain "Karl Marx" to you.
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Re: Buying Voo - Robinhood or Vanguard?

Post by mindgap » Fri May 29, 2020 10:36 am

Just saw that I can buy VFIAX at Fidelity. Minimum is $2500. $500 less than Vanguard.

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Re: Buying Voo - Robinhood or Vanguard?

Post by anon_investor » Fri May 29, 2020 10:38 am

mindgap wrote:
Fri May 29, 2020 10:36 am
Just saw that I can buy VFIAX at Fidelity. Minimum is $2500. $500 less than Vanguard.
But they will charge you a $75 comission each time you buy VFIAX. At Vanguard the minimum is $3k, but there is never any commission to sell or buy.

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Re: Buying Voo - Robinhood or Vanguard?

Post by mervinj7 » Fri May 29, 2020 11:11 am

retired@50 wrote:
Fri May 29, 2020 8:51 am
RTF wrote:
Fri May 29, 2020 7:30 am
Would someone mind explaining how people are getting hurt by the bid/ask spreads on these ETFs? ETFs like VOO, VTI, SPY are trading so frequently that I’ve never seen this to be an issue, especially using limit orders.
Occasionally, one pays a premium to NAV, or could pay a premium.
I think the issue of spreads depends on the ETF in question.
Looking at the info page for VOO, the rolling bid/ask spread over the last month has been -0.01%. In my opinion, that can be ignored. If one's opinion is that it can't be ignored, then one can't also ignore the 0.01% ER difference between VOO and it's mutual fund equivalent VFIAX. Note, ER is a recurring cost unlike spreads that are transactional in nature.

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Re: Buying Voo - Robinhood or Vanguard?

Post by alfaspider » Fri May 29, 2020 11:14 am

The argument for Robinhood has been largely taken away now that major brokerage offer commission free trades. As others have stated, they've played fast and loose in some respects and I'm not sure how much I'd trust them.

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Re: Buying Voo - Robinhood or Vanguard?

Post by Cheez-It Guy » Fri May 29, 2020 11:20 am

AlohaJoe wrote:
Fri May 29, 2020 7:19 am
lakpr wrote:
Thu May 28, 2020 11:47 am
Fidelity is the behemoth and the ETF is also available for no additional transaction fees.
I'm not quite sure you mean by behemoth here but Schwab is substantially bigger than Fidelity. Like almost $1 trillion bigger.
And Vanguard is bigger than Fidelity and Schwab combined. . .

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Re: Buying Voo - Robinhood or Vanguard?

Post by lakpr » Fri May 29, 2020 11:32 am

Cheez-It Guy wrote:
Fri May 29, 2020 11:20 am
AlohaJoe wrote:
Fri May 29, 2020 7:19 am
lakpr wrote:
Thu May 28, 2020 11:47 am
Fidelity is the behemoth and the ETF is also available for no additional transaction fees.
I'm not quite sure you mean by behemoth here but Schwab is substantially bigger than Fidelity. Like almost $1 trillion bigger.
And Vanguard is bigger than Fidelity and Schwab combined. . .
Replying late. Not disputing any of what you gentlemen wrote, but I meant that Fidelity is much bigger than Robinhood. I would have suggested Vanguard too but the OP also implied buying fractional ETF shares is a requirement. I believe that's still not possible at Vanguard.

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Re: Buying Voo - Robinhood or Vanguard?

Post by vtjon02 » Fri May 29, 2020 11:33 am

For periodic purchases I'm quite a fan of M1. Fractional shares, great customer service, streamlined interface and app. They've also been very responsive to suggestions. I submitted an idea through email, got an email back from the CEO a day later, and it was on the site a few weeks later.

I use it to buy low cost Vanguard etfs approximating a global equity ETF like VT (but I have it tilted a bit more toward emerging markets). Since markets are so volatile I have M1 make two regular transfers and purchases per week. You could of course do once per month or whatever your preference is but I like that I am repeatedly buying into the market in a systematic and automated way that will automatically rebalance through purchases. All for free.

They also integrate well with Turbotax.

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Re: Buying Voo - Robinhood or Vanguard?

Post by sojersey » Fri May 29, 2020 11:39 am

I have long wrestled with this question.

For me, my first job gave me my 401k in Fidelity and they have served me well as "good enough" and competitive to the other big firms for me to just stay put. Customer service is also really good.

I think for my money it comes down to… all these firms need to cover expenses some how. Robinhood does it by trying to turn their trade data into arbitrage, so they are watching everything you do very closely. The others probably are as well, but they've been around for years and at the end of the day I trust the big guys a lot more over time to steward rising amounts of wealth in a way that a disruptor (as happy as I am for them to exist from a competitive standpoint) still has a lot to prove.

I'm not sure whether Robinhood actually makes money or not yet, or is living on VC capital… but I have yet to see a big reason to switch. All the big firms offer comparable funds with no transaction fees on them, and if you're starting off intending to get Vanguard funds I don't see why you wouldn't just go to Vanguard from the start (short of not having the minimum level investment perhaps)

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Re: Buying Voo - Robinhood or Vanguard?

Post by 1789 » Fri May 29, 2020 11:42 am

Robinhood??? Their platform was broken in March due to high trading activity. You better pick a well known brokerage house to keep your money.
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Re: Buying Voo - Robinhood or Vanguard?

Post by FelixTheCat » Fri May 29, 2020 12:12 pm

+1 for Fidelity. I buy ETFs at Fidelity and they are zero commission for Vanguard funds.
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Re: Buying Voo - Robinhood or Vanguard?

Post by dru808 » Fri May 29, 2020 12:19 pm

Nothing wrong with robinhood, I’d go with vanguard if you have 3k initially to invest, just buy vfinx and you don’t have to worry about buying fractional ETFs, and you can open a retirement account at a later date and have everything under one roof. any of the brokerages that offer all accounts would be fine and better than robinhood. M1 also gets a vote from me, fractionals, dynamic rebalancing, all accounts excluding 401k’s.
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Re: Buying Voo - Robinhood or Vanguard?

Post by retired@50 » Fri May 29, 2020 12:35 pm

mervinj7 wrote:
Fri May 29, 2020 11:11 am
retired@50 wrote:
Fri May 29, 2020 8:51 am
RTF wrote:
Fri May 29, 2020 7:30 am
Would someone mind explaining how people are getting hurt by the bid/ask spreads on these ETFs? ETFs like VOO, VTI, SPY are trading so frequently that I’ve never seen this to be an issue, especially using limit orders.
Occasionally, one pays a premium to NAV, or could pay a premium.
I think the issue of spreads depends on the ETF in question.
Looking at the info page for VOO, the rolling bid/ask spread over the last month has been -0.01%. In my opinion, that can be ignored. If one's opinion is that it can't be ignored, then one can't also ignore the 0.01% ER difference between VOO and it's mutual fund equivalent VFIAX. Note, ER is a recurring cost unlike spreads that are transactional in nature.
I agree that the spread is small on a popular ETF like VOO. However, the spread is in addition to any discount/premium to NAV as I understand the ETF buy/sell process. See wiki link that discusses costs related to the transactions. When the premium/discount to NAV occurs, this is what brings the Authorized Participants into the process.

https://www.bogleheads.org/wiki/Exchang ... fund#Costs

Regards,
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retired@50
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Re: Buying Voo - Robinhood or Vanguard?

Post by retired@50 » Fri May 29, 2020 12:37 pm

dru808 wrote:
Fri May 29, 2020 12:19 pm
Nothing wrong with robinhood,
Do you still believe this after reading the nisiprius post above? :shock:

I even learned a new word: punctilious.

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This is one person's opinion. Nothing more.

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ruralavalon
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Re: Buying Voo - Robinhood or Vanguard?

Post by ruralavalon » Fri May 29, 2020 12:53 pm

mindgap wrote:
Thu May 28, 2020 11:46 am
I'm about to put money into VOO on a regular basis (DCA, taxable account). Is there any advantage/disadvantage to buy VOO via Robinhood App or should I buy it directly at the source (Vanguard)? Robinhood does now fractional shares so that might be something which is cool since I could just buy in dollar amounts instead of buying full shares. Any thoughts on this?
I would pick Vanguard. Vanguard has a good app too.

I see no reason to buy Vanguard S&P 500 ETF (VOO) at Robinhood.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

rgs92
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Re: Buying Voo - Robinhood or Vanguard?

Post by rgs92 » Fri May 29, 2020 12:59 pm

I don't understand the need to buy fractional shares of an ETF since you can always put any amount into an index fund at Fidelity/Vanguard/Schwab or similar. It only seems useful if you wanted to buy individual stocks (or narrow-focused ETFs), and that's not the question here (and not advised here anyway).

dukeblue219
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Re: Buying Voo - Robinhood or Vanguard?

Post by dukeblue219 » Fri May 29, 2020 1:01 pm

rgs92 wrote:
Fri May 29, 2020 12:59 pm
I don't understand the need to buy fractional shares of an ETF since you can always put any amount into an index fund at Fidelity/Vanguard/Schwab or similar. It only seems useful if you wanted to buy individual stocks, and that's not the question here (and not advised here anyway).
Lots of people find mutual funds less appealing (just as many feel the reverse). Vanguard funds carry transaction fees at most other brokerages while the ETFs don't. Fund transactions usually happen after the next day's close while ETF transactions are instantaneous. That sort of thing.

mervinj7
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Re: Buying Voo - Robinhood or Vanguard?

Post by mervinj7 » Fri May 29, 2020 1:08 pm

rgs92 wrote:
Fri May 29, 2020 12:59 pm
I don't understand the need to buy fractional shares of an ETF since you can always put any amount into an index fund at Fidelity/Vanguard/Schwab or similar. It only seems useful if you wanted to buy individual stocks (or narrow-focused ETFs), and that's not the question here (and not advised here anyway).
Fractional ETFs have been useful for TLH. For example, VTI is my primary equity holding within my brokerage account but I use ITOT as its TLH partner.

1. Sell all 11 shares of VTI at Market ($138.75*11=1526.25)
2. Buy $1526.25 worth of ITOT at Market using Fractional Shares feature of Fidelity app.

Sometimes, a few cents may still be left over but overall I like it. I don't use Fidelity index funds in my taxable since I don't like the capital gains distributions. I also like ETFs for slightly better flexibility when moving brokerages for bonuses or relationship pricing on mortgages.

Piehole
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Re: Buying Voo - Robinhood or Vanguard?

Post by Piehole » Fri May 29, 2020 1:13 pm

I would avoid Robinhood. They remind me of Zecco, anyone remember them?
Zecco was one of the first brokerages to offer free trades about 10 years ago, and have long since gone out of business.
"Everything we want, is on the other side of fear" - George Addair

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bluquark
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Re: Buying Voo - Robinhood or Vanguard?

Post by bluquark » Fri May 29, 2020 1:17 pm

There is no reason to use Vanguard brokerage to buy Vanguard ETFs. There are good reasons to use them if you use Vanguard mutual funds (fees, selection, autoinvestment, option for tax-free conversion to ETF later), so it comes back to the ETF vs mutual fund question that you will find many past threads on. Note that mutual funds are more convenient than ETFs at autoinvesting fractional amounts, and since that's one of your priorities I would seriously consider VTSAX instead of VOO.

If you have already decided on ETFs, then I would recommend TD Ameritrade as an excellent all-around brokerage, or M1 Finance as a (new, unproven) brokerage specialized for building custom "autoinvest to fixed percentage AA" portfolios which are popular with Bogleheads.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB

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