Fidelity to $0 Commissions

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bullmoose85
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Re: Fidelity to $0 Commissions

Post by bullmoose85 » Thu Oct 10, 2019 12:30 pm

I keep thinking, in this world of $0 commissions and very low cost index funds, how much longer can Edward Jones survive?

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MrBobcat
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Re: Fidelity to $0 Commissions

Post by MrBobcat » Thu Oct 10, 2019 12:40 pm

bullmoose85 wrote:
Thu Oct 10, 2019 12:30 pm
I keep thinking, in this world of $0 commissions and very low cost index funds, how much longer can Edward Jones survive?
As long as people are ignorant about investing there will be those who are willing to take advantage of them. Long term I don't think firms like EJ will fare well though.

Ferdinand2014
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Re: Fidelity to $0 Commissions

Post by Ferdinand2014 » Thu Oct 10, 2019 1:05 pm

Cash wrote:
Thu Oct 10, 2019 5:16 am
I thought this deserved its own thread like the others:
jpsfranks wrote:
Wed Oct 09, 2019 11:16 pm
Fidelity follows suit and eliminates trading commissions.

https://www.wsj.com/articles/fidelity-i ... 1570680060

I don't really see any announcement on Fidelity's site about it but if I queue up a market order for tomorrow I see a $0 estimated commission.
Confirmed by Fidelity’s hometown paper:

https://www.bostonglobe.com/business/20 ... story.html

EDIT: The press release: https://www.fidelity.com/bin-public/060 ... 101019.pdf
Next thread is when someone offers to pay you to trade.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

manuvns
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Re: Fidelity to $0 Commissions

Post by manuvns » Thu Oct 10, 2019 1:43 pm

With zero commission how will they allocate customers new IPO shares ? earlier it was based on certain number of trades and assets.

anon_investor
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Re: Fidelity to $0 Commissions

Post by anon_investor » Thu Oct 10, 2019 1:50 pm

protagonist wrote:
Thu Oct 10, 2019 12:26 pm
You get a deal due to the heartbeat trades that VG's share-class structure enables in VG mutual funds in taxable which is basically unobtainable anywhere else.

Anyway, if Fido lowered their commissions to zero, I can't imagine it will take Vanguard long to follow suit. That's the beauty of competition.
I love those heartbeat trades! I wouldn't hold VTSAX in taxable otherwise! I bet as soon as VG's patent on that dual MF/ETF structure expires, Fido and Schwab will start using it too.

I would love some commission free trades at Vanguard to sell a few individual stocks I have. I bet Vanguard does not offer unlimited free stock trades, and will maybe give the same offer that Flagship members get to everyone, 25 free a year then $2 each thereafter.

get_g0ing
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Re: Fidelity to $0 Commissions

Post by get_g0ing » Thu Oct 10, 2019 3:28 pm

Ferdinand2014 wrote:
Thu Oct 10, 2019 1:05 pm
Cash wrote:
Thu Oct 10, 2019 5:16 am
I thought this deserved its own thread like the others:
jpsfranks wrote:
Wed Oct 09, 2019 11:16 pm
Fidelity follows suit and eliminates trading commissions.

https://www.wsj.com/articles/fidelity-i ... 1570680060

I don't really see any announcement on Fidelity's site about it but if I queue up a market order for tomorrow I see a $0 estimated commission.
Confirmed by Fidelity’s hometown paper:

https://www.bostonglobe.com/business/20 ... story.html

EDIT: The press release: https://www.fidelity.com/bin-public/060 ... 101019.pdf
Next thread is when someone offers to pay you to trade.
LOL, can't wait for those :P

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SlowMovingInvestor
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Re: Fidelity to $0 Commissions

Post by SlowMovingInvestor » Thu Oct 10, 2019 4:08 pm

Ferdinand2014 wrote:
Thu Oct 10, 2019 1:05 pm
Next thread is when someone offers to pay you to trade.
Doesn't Ibroker already give you some credit if you provide liquidity to a market ?

anoop
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Re: Fidelity to $0 Commissions

Post by anoop » Thu Oct 10, 2019 4:24 pm

How times change! Technology has helped reduce over time, and now completely eliminate these fees. I have probably paid a few thousand dollars in stock trades over my life, starting with brokerages like TD Waterhouse, Quick & Reilly and then ending up at Fidelity where they used to be over $10 IIRC back then (ca 2000). And I'm sure I paid a ton in 401k fees along the way too to various banks.

Ferdinand2014
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Re: Fidelity to $0 Commissions

Post by Ferdinand2014 » Thu Oct 10, 2019 4:38 pm

Jeremy Siegel states that the cost of stock transaction prices from commissions, expense ratios and other fees coming down over time is one possible reason that P/E ratio's might be sustained at a higher average:


"Charles Jones of Columbia University has documented the decline in stock trading costs over the last century. These costs include both the fees paid to brokers and the bid-asked spread, or the difference between the buying and selling price for stocks. His analysis shows that the average one-way cost to either buy or sell a stock has dropped from over 1 percent of value traded as late as 1975 (before the deregulation of brokerage fees) to under 0.18 percent in 2002, and even lower today. The fall in transaction costs implies that the price of obtaining and maintaining a diversified portfolio of common stocks, which is necessary to replicate index returns, could have easily cost investors from 1 to 2 percent per year over much of the nineteenth and early twentieth centuries. Because of these costs, investors in earlier years were less diversified and assumed more risk than implied by stock indexes. Alternatively, if investors attempted to buy all the stocks to replicate a broad-based index, their real returns could have been as low as 5 percent per year after deducting transaction costs. If the required real return on equity for investors is only 5 percent, then a P/E ratio of 20, corresponding to an earnings yield of 5 percent, will produce that return for today’s investors."

Siegel, Jeremy J.. Stocks for the Long Run 5/E: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies (p. 170). McGraw-Hill Education. Kindle Edition.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

mongstradamus
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Re: Fidelity to $0 Commissions

Post by mongstradamus » Thu Oct 10, 2019 4:53 pm

NicB wrote:
Thu Oct 10, 2019 9:11 am
I'm curious -- how many Fidelity customers here are planning to switch from Fidelity TSM ETFs/MFs into VTI now?

I was one of those who traded all of my SPTM in my TDA HSA for VTI :D but don't know if I'll do the same in Fidelity...
I am personally sticking with Fidelity mutual funds, Its just much easier for me when i want to deposit money into my ira or brokerage account, I can just drop say 1000 dollars in an not have to worry about buying shares and having the rest sit in mma. I do have a very basic portfolio though that just consists of two funds, total US market fund and long term treasury, both index funds.

Spirit Rider
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Re: Fidelity to $0 Commissions

Post by Spirit Rider » Thu Oct 10, 2019 6:57 pm

protagonist wrote:
Thu Oct 10, 2019 12:26 pm
pyld76 wrote:
Thu Oct 10, 2019 9:32 am
You want to hold mutual funds in taxable rather than ETFs. You get a deal due to the heartbeat trades that VG's share-class structure enables in VG mutual funds in taxable which is basically unobtainable anywhere else.
I can't comment on this, or on how much it would mean financially to the typical investor in index funds (like most Bogleheads). I have no knowledge about it. Maybe others here would care to comment.
First, @pyld76 is a little misinformed.

ALL ETFs are able use heartbeat trades to minimize capital gains and thus minimize capital gains distributions.

What Vanguard does differently is use a patented method expiring in 2023 that uses an ETF as a share class of mutual funds. This effectively allows the ETF share classs to use heartbeat trades to minimize the mutual fund's capital gains distributions.

Even this benefit is grossly overstated by Vanguard supporters. E.g. Last time I checked, Fidelity Total Stock Market has averaged only 0.5% capital gains distributions/year over the last ten years. For most people that represents only a 0.5% * 15% = 0.0075% tax drag.

effigy98
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Re: Fidelity to $0 Commissions

Post by effigy98 » Thu Oct 10, 2019 8:11 pm

I wonder how many were selling stuff like IAU (was free trades at Fid) for GLDM to lower expense ratios...

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2pedals
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Re: Fidelity to $0 Commissions

Post by 2pedals » Thu Oct 10, 2019 8:32 pm

diy60 wrote:
Thu Oct 10, 2019 7:17 am
UpperNwGuy wrote:
Thu Oct 10, 2019 5:32 am
I guess this means we can quit posting in that other thread that asks when we will be moving our accounts out of Fidelity because of the commissions.
+1, you just made my day.

But now we'll probably see a brand new thread "When $0 Commission doesn't mean free" speculating to all kinds of backroom shenanigans and evils.
I just saw a Fidelity Zero commercial, must be a scam <sarc>

pyld76
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Re: Fidelity to $0 Commissions

Post by pyld76 » Thu Oct 10, 2019 9:39 pm

Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
protagonist wrote:
Thu Oct 10, 2019 12:26 pm
pyld76 wrote:
Thu Oct 10, 2019 9:32 am
You want to hold mutual funds in taxable rather than ETFs. You get a deal due to the heartbeat trades that VG's share-class structure enables in VG mutual funds in taxable which is basically unobtainable anywhere else.
I can't comment on this, or on how much it would mean financially to the typical investor in index funds (like most Bogleheads). I have no knowledge about it. Maybe others here would care to comment.
First, @pyld76 is a little misinformed.
Not by any correct or reasonably sane definition of “misinformed.”
Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
ALL ETFs are able use heartbeat trades to minimize capital gains and thus minimize capital gains distributions.

What Vanguard does differently is use a patented method expiring in 2023 that uses an ETF as a share class of mutual funds. This effectively allows the ETF share classs to use heartbeat trades to minimize the mutual fund's capital gains distributions.
And, as a result, if you want to hold mutual funds (rather that ETFs) in a taxable account, you get a deal from holding VG funds which you aren’t getting anywhere else. This an undisputed fact.
Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
Even this benefit is grossly overstated by Vanguard supporters. E.g. Last time I checked, Fidelity Total Stock Market has averaged only 0.5% capital gains distributions/year over the last ten years. For most people that represents only a 0.5% * 15% = 0.0075% tax drag.
Can you tell us which index mutual funds held in taxable accounts besides Vanguard’s return no capital gains for, let’s say a decade at a time?

Spirit Rider
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Re: Fidelity to $0 Commissions

Post by Spirit Rider » Thu Oct 10, 2019 10:12 pm

pyld76 wrote:
Thu Oct 10, 2019 9:39 pm
Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
Even this benefit is grossly overstated by Vanguard supporters. E.g. Last time I checked, Fidelity Total Stock Market has averaged only 0.5% capital gains distributions/year over the last ten years. For most people that represents only a 0.5% * 15% = 0.0075% tax drag.
Can you tell us which index mutual funds held in taxable accounts besides Vanguard’s return no capital gains for, let’s say a decade at a time?
I never said there were mutual funds other than Vanguard with no capital gains. Only that this benefit is grossly overstated. I suggest you read my post again, this time for comprehension.

Startled Cat
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Re: Fidelity to $0 Commissions

Post by Startled Cat » Thu Oct 10, 2019 11:13 pm

boglemon wrote:
Thu Oct 10, 2019 11:13 am
Have I read this wrong? According to their most recent 606, they do participate in PFOF:
FBS, through its affiliated broker-dealer NFS, received a credit on average of $0.0030 per share for each order routed by it to NASDAQExecution Services, LLC that added liquidity and which subsequently executed. FBS was charged fees on average of $0.0019 per share foreach order that removed liquidity from NASDAQ Execution Services, LLC.
And so on for equities and options.
Not an expert on this stuff, but I believe those are considered standard fees and rebates for taking or adding liquidity on a trading venue, not payment for order flow. Payment for order flow would mean getting paid to route marketable orders to market makers so the market makers could trade against them, but instead they are charged a fee for marketable orders (which "remove liquidity").

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AerialWombat
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Re: Fidelity to $0 Commissions

Post by AerialWombat » Fri Oct 11, 2019 12:36 am

Ferdinand2014 wrote:
Thu Oct 10, 2019 1:05 pm
Next thread is when someone offers to pay you to trade.
WeTrade? :shock:

That’s a scary thought, actually.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

Strayshot
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Re: Fidelity to $0 Commissions

Post by Strayshot » Fri Oct 11, 2019 4:37 am

Ferdinand2014 wrote:
Thu Oct 10, 2019 1:05 pm
Next thread is when someone offers to pay you to trade.
This already exists, they are called options.

frugaltigris
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Re: Fidelity to $0 Commissions

Post by frugaltigris » Fri Oct 11, 2019 7:55 am

Spirit Rider wrote:
Thu Oct 10, 2019 10:12 pm
pyld76 wrote:
Thu Oct 10, 2019 9:39 pm
Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
Even this benefit is grossly overstated by Vanguard supporters. E.g. Last time I checked, Fidelity Total Stock Market has averaged only 0.5% capital gains distributions/year over the last ten years. For most people that represents only a 0.5% * 15% = 0.0075% tax drag.
Can you tell us which index mutual funds held in taxable accounts besides Vanguard’s return no capital gains for, let’s say a decade at a time?
I never said there were mutual funds other than Vanguard with no capital gains. Only that this benefit is grossly overstated. I suggest you read my post again, this time for comprehension.
I think the tax drag is 0.075% in above case, not 0.0075%. For every $1 M it will be $750 per year. Is that significant enough? Is it worth opening a new account in Vanguard? Answers will vary with individuals. But I do agree that tax-efficiency of index funds of Vanguard in contrast to those of Fidelity is overstated. Some days back there was a discussion in which it turned out that Fidelity index funds are in fact more tax efficient that Ishares ETFs if one calculates net gain after tax and liquidation.

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whodidntante
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Re: Fidelity to $0 Commissions

Post by whodidntante » Fri Oct 11, 2019 8:03 am

bullmoose85 wrote:
Thu Oct 10, 2019 12:30 pm
I keep thinking, in this world of $0 commissions and very low cost index funds, how much longer can Edward Jones survive?
I wonder why their entire business model didn't implode years ago. I guess their customers have a different mindset than I do.

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jhfenton
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Re: Fidelity to $0 Commissions

Post by jhfenton » Fri Oct 11, 2019 11:59 am

pyld76 wrote:
Thu Oct 10, 2019 9:32 am
Well, this will leave me with a money market fund at VG and nothing else.

VG now only has three real advantages:

1. Principle. If you believe strongly enough in Vanguard being the proximate cause of the cost of investing dropping enough to give them your business as a result, rather than take advantage of that effect elsewhere, then you'll probably stay at VG.

2. Money market fund. Fido is still at a 30 or so bps disadvantage, minimum, to VG.

3. You want to hold mutual funds in taxable rather than ETFs. You get a deal due to the heartbeat trades that VG's share-class structure enables in VG mutual funds in taxable which is basically unobtainable anywhere else.

I've moved everything but my taxable stuffs to Fido, due to the superior customer service, a website that works, better EFT timings, free wires, etc (and a policy disagreement with VG on shareholder stewardship). I left the taxable stuff at VG only due to #2. If I spent the 30 minutes to set up auto rolling treasuries at Fido to manage medium term cash, I'll probably convert my entire account to ETFs and head on out the door from VG entirely.
4. Vanguard also has other mutual funds that are not available to buy elsewhere (or at least not commission-free). The two I own are VOHIX/Vanguard Ohio Long-Term Tax Exempt and VGEBX/Vanguard Emerging Markets Bond Admiral Shares. Both are active bond funds with no ETF counterpart, and neither has a compelling ETF counterpart. (And neither is among the 110 available commission-free at E*Trade.)

5. Vanguard is very flexible at trading between ETFs and mutual funds within retirement accounts. You can do buys before sells. I ran into roadblocks trying to do that at TD Ameritrade when we had our accounts there. You can even sell ETFs at T+2 and immediately invest the proceeds into Vanguard mutual funds at T+1. Vanguard just floats the difference in settlement timing. I don't trade a lot, but it's nice to have the flexibility.

Edited to add: I just tried in my HSA at Fidelity too, and the system will not let me place an order for an ETF with no available cash, even though I have ~$50K available in a Fidelity mutual fund, enough to cover the order 10x over. At Vanguard I can buy the ETF and then sell exactly the amount of the mutual fund needed to cover the trade. That flexibility and convenience far outweighs any minor complaints I've had with Vanguard's customer service. (And I've had generally good experiences with Vanguard's customer service.)
Last edited by jhfenton on Fri Oct 11, 2019 12:13 pm, edited 1 time in total.

pyld76
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Re: Fidelity to $0 Commissions

Post by pyld76 » Fri Oct 11, 2019 12:03 pm

Spirit Rider wrote:
Thu Oct 10, 2019 10:12 pm
pyld76 wrote:
Thu Oct 10, 2019 9:39 pm
Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
Even this benefit is grossly overstated by Vanguard supporters. E.g. Last time I checked, Fidelity Total Stock Market has averaged only 0.5% capital gains distributions/year over the last ten years. For most people that represents only a 0.5% * 15% = 0.0075% tax drag.
Can you tell us which index mutual funds held in taxable accounts besides Vanguard’s return no capital gains for, let’s say a decade at a time?
I never said there were mutual funds other than Vanguard with no capital gains. Only that this benefit is grossly overstated. I suggest you read my post again, this time for comprehension.
Still zero of substance and, dare I I say, an uniformed statement about my post.

Again: one can obtain a tax benefit holding a VG mutual fund that can’t be obtained anywhere else. Those suggesting anything else are the dictionary definition of uninformed.

DonIce
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Re: Fidelity to $0 Commissions

Post by DonIce » Fri Oct 11, 2019 12:19 pm

pyld76 wrote:
Fri Oct 11, 2019 12:03 pm
Again: one can obtain a tax benefit holding a VG mutual fund that can’t be obtained anywhere else. Those suggesting anything else are the dictionary definition of uninformed.
It can be obtained in many places by holding an ETF instead of a mutual fund...

Furthermore, the patent expires in a few years and other companies will certainly implement similar methods once they're legally able to do so.

frugaltigris
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Re: Fidelity to $0 Commissions

Post by frugaltigris » Fri Oct 11, 2019 1:34 pm

pyld76 wrote:
Fri Oct 11, 2019 12:03 pm
Spirit Rider wrote:
Thu Oct 10, 2019 10:12 pm
pyld76 wrote:
Thu Oct 10, 2019 9:39 pm
Spirit Rider wrote:
Thu Oct 10, 2019 6:57 pm
Even this benefit is grossly overstated by Vanguard supporters. E.g. Last time I checked, Fidelity Total Stock Market has averaged only 0.5% capital gains distributions/year over the last ten years. For most people that represents only a 0.5% * 15% = 0.0075% tax drag.
Can you tell us which index mutual funds held in taxable accounts besides Vanguard’s return no capital gains for, let’s say a decade at a time?
I never said there were mutual funds other than Vanguard with no capital gains. Only that this benefit is grossly overstated. I suggest you read my post again, this time for comprehension.
Still zero of substance and, dare I I say, an uniformed statement about my post.

Again: one can obtain a tax benefit holding a VG mutual fund that can’t be obtained anywhere else. Those suggesting anything else are the dictionary definition of uninformed.
I don't think Spirit Rider was disputing that Vanguard funds are not better in tax efficiency. The question is how much, and whether it is worth it? As I mentioned for the above discussion the Fidelity fund has a cap gain of $750 per $ 1M in contrast to the VG fund. Is it worth it? May be for some, may be not for some.

frugaltigris
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Re: Fidelity to $0 Commissions

Post by frugaltigris » Fri Oct 11, 2019 1:36 pm

DonIce wrote:
Fri Oct 11, 2019 12:19 pm
pyld76 wrote:
Fri Oct 11, 2019 12:03 pm
Again: one can obtain a tax benefit holding a VG mutual fund that can’t be obtained anywhere else. Those suggesting anything else are the dictionary definition of uninformed.
It can be obtained in many places by holding an ETF instead of a mutual fund...

Furthermore, the patent expires in a few years and other companies will certainly implement similar methods once they're legally able to do so.
I agree. I think Fidelity is waiting for patent to expire and introduce its own ETFs corresponding to their index funds. Till then Vanguard has a slight advantage.

frugaltigris
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Re: Fidelity to $0 Commissions

Post by frugaltigris » Fri Oct 11, 2019 1:38 pm

jhfenton wrote:
Fri Oct 11, 2019 11:59 am
pyld76 wrote:
Thu Oct 10, 2019 9:32 am
Well, this will leave me with a money market fund at VG and nothing else.

VG now only has three real advantages:

1. Principle. If you believe strongly enough in Vanguard being the proximate cause of the cost of investing dropping enough to give them your business as a result, rather than take advantage of that effect elsewhere, then you'll probably stay at VG.

2. Money market fund. Fido is still at a 30 or so bps disadvantage, minimum, to VG.

3. You want to hold mutual funds in taxable rather than ETFs. You get a deal due to the heartbeat trades that VG's share-class structure enables in VG mutual funds in taxable which is basically unobtainable anywhere else.

I've moved everything but my taxable stuffs to Fido, due to the superior customer service, a website that works, better EFT timings, free wires, etc (and a policy disagreement with VG on shareholder stewardship). I left the taxable stuff at VG only due to #2. If I spent the 30 minutes to set up auto rolling treasuries at Fido to manage medium term cash, I'll probably convert my entire account to ETFs and head on out the door from VG entirely.
4. Vanguard also has other mutual funds that are not available to buy elsewhere (or at least not commission-free). The two I own are VOHIX/Vanguard Ohio Long-Term Tax Exempt and VGEBX/Vanguard Emerging Markets Bond Admiral Shares. Both are active bond funds with no ETF counterpart, and neither has a compelling ETF counterpart. (And neither is among the 110 available commission-free at E*Trade.)

5. Vanguard is very flexible at trading between ETFs and mutual funds within retirement accounts. You can do buys before sells. I ran into roadblocks trying to do that at TD Ameritrade when we had our accounts there. You can even sell ETFs at T+2 and immediately invest the proceeds into Vanguard mutual funds at T+1. Vanguard just floats the difference in settlement timing. I don't trade a lot, but it's nice to have the flexibility.

Edited to add: I just tried in my HSA at Fidelity too, and the system will not let me place an order for an ETF with no available cash, even though I have ~$50K available in a Fidelity mutual fund, enough to cover the order 10x over. At Vanguard I can buy the ETF and then sell exactly the amount of the mutual fund needed to cover the trade. That flexibility and convenience far outweighs any minor complaints I've had with Vanguard's customer service. (And I've had generally good experiences with Vanguard's customer service.)
Is this true also for brokerage account in VG?

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jhfenton
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Re: Fidelity to $0 Commissions

Post by jhfenton » Fri Oct 11, 2019 1:49 pm

frugaltigris wrote:
Fri Oct 11, 2019 1:38 pm
jhfenton wrote:
Fri Oct 11, 2019 11:59 am
5. Vanguard is very flexible at trading between ETFs and mutual funds within retirement accounts. You can do buys before sells. I ran into roadblocks trying to do that at TD Ameritrade when we had our accounts there. You can even sell ETFs at T+2 and immediately invest the proceeds into Vanguard mutual funds at T+1. Vanguard just floats the difference in settlement timing. I don't trade a lot, but it's nice to have the flexibility.

Edited to add: I just tried in my HSA at Fidelity too, and the system will not let me place an order for an ETF with no available cash, even though I have ~$50K available in a Fidelity mutual fund, enough to cover the order 10x over. At Vanguard I can buy the ETF and then sell exactly the amount of the mutual fund needed to cover the trade. That flexibility and convenience far outweighs any minor complaints I've had with Vanguard's customer service. (And I've had generally good experiences with Vanguard's customer service.)
Is this true also for brokerage account in VG?
No. At Vanguard, I can buy an ETF and then sell the necessary amount of the mutual fund to cover the purchase. I do it all the time when I rebalance. Most of my equity investments are ETFs. All of our bond investments are Vanguard mutual funds.

Fidelity won't let me do it. Apparently, there is no way to rebalance from a mutual fund to an ETF at Fidelity without selling the mutual fund and waiting overnight. (You can directly exchange from one Fidelity mutual fund to another Fidelity mutual fund. I currently have only FPADX/Fidelity Emerging Markets Index and FXNAX/Fidelity US Bond Index in my HSA. So I could rebalance between them if desired.)

The only restriction at Vanguard is that the uncovered purchase be "reasonable" in relation to the size of the account. I could place an uncovered $100,000 ETF order in a $300,000 (or $150,000) account. I could not place a $100,000 ETF order in an $80,000 account. (I'm not sure exactly where the cut-off is.)

Direwolf14
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Re: Fidelity to $0 Commissions

Post by Direwolf14 » Sat Oct 12, 2019 7:56 am

jhfenton wrote:
Fri Oct 11, 2019 1:49 pm
No. At Vanguard, I can buy an ETF and then sell the necessary amount of the mutual fund to cover the purchase. I do it all the time when I rebalance. Most of my equity investments are ETFs. All of our bond investments are Vanguard mutual funds.

Fidelity won't let me do it. Apparently, there is no way to rebalance from a mutual fund to an ETF at Fidelity without selling the mutual fund and waiting overnight. (You can directly exchange from one Fidelity mutual fund to another Fidelity mutual fund. I currently have only FPADX/Fidelity Emerging Markets Index and FXNAX/Fidelity US Bond Index in my HSA. So I could rebalance between them if desired.)

The only restriction at Vanguard is that the uncovered purchase be "reasonable" in relation to the size of the account. I could place an uncovered $100,000 ETF order in a $300,000 (or $150,000) account. I could not place a $100,000 ETF order in an $80,000 account. (I'm not sure exactly where the cut-off is.)
You could always enable margin at Fidelity to perform this function. No margin interest should be charged since the mutual fund settlement is prior to the ETF settlement. It is unique that Vanguard allows this type of trading in cash accounts, although I'm pretty sure it only works when both mutual fund and ETF are Vanguard products.

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Re: Fidelity to $0 Commissions

Post by cheesepep » Sat Oct 12, 2019 8:30 am

Schwab has on their webpage that they offer higher MMA rates than Fidelity and Chase You Invest. Could be meaningful for people who have large cash positions. Overall, Fidelity is better because it is automatically moved.

I find that with $0 commissions that I am trading more frequently, but with less shares per trade. Before, I would always buy stocks in lots of 100 so as to reduce to the fee as a percentage of trading. However, with $0 commission, I can buy 30 shares instead of 100 shares and see where the market is heading. If going down, I can buy another 30 shares. Rinse and repeat.

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Re: Fidelity to $0 Commissions

Post by indexfundfan » Sat Oct 12, 2019 10:34 am

cheesepep wrote:
Sat Oct 12, 2019 8:30 am
Schwab has on their webpage that they offer higher MMA rates than Fidelity and Chase You Invest. Could be meaningful for people who have large cash positions. Overall, Fidelity is better because it is automatically moved.
I use FZDXX at Fidelity which has a higher yield than what Schwab is offering. It is not a sweep and requires manual purchase but it does auto-liquidate to meet debits. You do need $100k to start but after that, it does not seem to have a minimum balance requirement.
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jhfenton
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Re: Fidelity to $0 Commissions

Post by jhfenton » Sat Oct 12, 2019 4:37 pm

Direwolf14 wrote:
Sat Oct 12, 2019 7:56 am
jhfenton wrote:
Fri Oct 11, 2019 1:49 pm
No. At Vanguard, I can buy an ETF and then sell the necessary amount of the mutual fund to cover the purchase. I do it all the time when I rebalance. Most of my equity investments are ETFs. All of our bond investments are Vanguard mutual funds.

Fidelity won't let me do it. Apparently, there is no way to rebalance from a mutual fund to an ETF at Fidelity without selling the mutual fund and waiting overnight. (You can directly exchange from one Fidelity mutual fund to another Fidelity mutual fund. I currently have only FPADX/Fidelity Emerging Markets Index and FXNAX/Fidelity US Bond Index in my HSA. So I could rebalance between them if desired.)

The only restriction at Vanguard is that the uncovered purchase be "reasonable" in relation to the size of the account. I could place an uncovered $100,000 ETF order in a $300,000 (or $150,000) account. I could not place a $100,000 ETF order in an $80,000 account. (I'm not sure exactly where the cut-off is.)
You could always enable margin at Fidelity to perform this function. No margin interest should be charged since the mutual fund settlement is prior to the ETF settlement. It is unique that Vanguard allows this type of trading in cash accounts, although I'm pretty sure it only works when both mutual fund and ETF are Vanguard products.
I believe it only works when the mutual funds are Vanguard products, but I've never owned any non-Vanguard mutual funds at Vanguard to be able to test it. It doesn't matter who the ETF sponsor is, though. I do own a non-Vanguard ETF, and I regularly buy first, fund second. They allow buying stocks too, although I don't currently own any individual stocks.

I'm not sure if Fidelity allows limited margin in HSAs, but that is a good idea. I'll have to check. It would give me the flexibility to use ETFs in addition to Fidelity mutual funds. (Although, since it's a relatively small account, I'm fine keeping it in one or two cheap Fidelity index funds.)

I really value this flexibility at Vanguard, though. I'm surprised that more people don't seem to consider it important.

Edit: Fidelity does not seem to allow Limited Margin on HSAs. The list of eligible account types includes only IRAs. My HSA doesn't even show up on the Enroll in Limited Margin Trading page, just a warning that the system is unable to provide information for some accounts. That's not unusual. HSAs are fairly new to them, and they simply don't have some things set up for HSAs that they could/should. HSAs don't even have all of the sweep options that IRAs do.

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nedsaid
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Re: Fidelity to $0 Commissions

Post by nedsaid » Sat Oct 12, 2019 9:52 pm

UpperNwGuy wrote:
Thu Oct 10, 2019 5:32 am
I guess this means we can quit posting in that other thread that asks when we will be moving our accounts out of Fidelity because of the commissions.
Well, no. We will have to start a new thread that asks when we will be moving our accounts back to Fidelity because of the commissions. :wink:
A fool and his money are good for business.

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sperry8
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Re: Fidelity to $0 Commissions

Post by sperry8 » Sun Oct 13, 2019 12:07 am

anon_investor wrote:
Thu Oct 10, 2019 10:02 am
Haha, how many people switched from Fidelity to get free commissions elsewhere?
Haha, I did.. and got $2,500 cash from Schwab to do it! :moneybag :sharebeer
https://www.schwab.com/public/schwab/nn ... eward.html
lazyday wrote:
Thu Oct 10, 2019 11:05 am
Cash wrote:
Thu Oct 10, 2019 10:35 am
Here is the press release. Interesting how they emphasize that they do not sell order flow:

https://www.fidelity.com/bin-public/060 ... 101019.pdf
Unless I can get a good bonus, I see no reason to willingly pick any broker other than Fidelity or Vanguard.
lazyday, you can get a bonus of up to $2,500... see link above. Free cash.
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Cash
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Re: Fidelity to $0 Commissions

Post by Cash » Tue Oct 15, 2019 5:39 am

indexfundfan wrote:
Sat Oct 12, 2019 10:34 am
cheesepep wrote:
Sat Oct 12, 2019 8:30 am
Schwab has on their webpage that they offer higher MMA rates than Fidelity and Chase You Invest. Could be meaningful for people who have large cash positions. Overall, Fidelity is better because it is automatically moved.
I use FZDXX at Fidelity which has a higher yield than what Schwab is offering. It is not a sweep and requires manual purchase but it does auto-liquidate to meet debits. You do need $100k to start but after that, it does not seem to have a minimum balance requirement.
This is what I do as well. Works nicely.

overthought
Posts: 263
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Fidelity goes commission-free

Post by overthought » Tue Nov 12, 2019 5:19 pm

Logged into Fidelity today and my dashboard greeted me with:
Introducing commission-free trades
Every online US stock or ETF trade you make. Every day. Commission-free.

Learn more

Sell orders are subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal).
See also: https://www.fidelity.com/why-fidelity/pricing-fees

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LadyGeek
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Re: Fidelity to $0 Commissions

Post by LadyGeek » Tue Nov 12, 2019 5:34 pm

^^^ I merged overthought's post into the on-going discussion.
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StandingRock
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Re: Fidelity to $0 Commissions

Post by StandingRock » Tue Nov 12, 2019 5:55 pm

pyld76 wrote:
Thu Oct 10, 2019 9:32 am
Well, this will leave me with a money market fund at VG and nothing else.

VG now only has three real advantages:

1. Principle. If you believe strongly enough in Vanguard being the proximate cause of the cost of investing dropping enough to give them your business as a result, rather than take advantage of that effect elsewhere, then you'll probably stay at VG.

I can't leave a cent at Vanguard due to principle. Any company that will treat a customer like trash, constantly [messing up --admin LadyGeek] and then lying, doesn't deserve my business.

MrMosby
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Re: Fidelity to $0 Commissions

Post by MrMosby » Tue Dec 03, 2019 4:45 pm

StandingRock wrote:
Tue Nov 12, 2019 5:55 pm
I can't leave a cent at Vanguard due to principle. Any company that will treat a customer like trash, constantly [messing up --admin LadyGeek] and then lying, doesn't deserve my business.
Can you elaborate further?

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