VTSAX Load/Breakpoint Discount?(Noob Alert)
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VTSAX Load/Breakpoint Discount?(Noob Alert)
Hello all
My wife converted a 401k managed by Fidelity to Fidelity Rollover IRA a few days ago. It’s sitting in cash. We are waiting for additional funds to be moved to the Fidelity account from an Ameriprise IRA account that we are leaving(thanks for all the help to get us to this point!).
While waiting for the Ameriprise funds to appear, we went to allocate a portion of the existing Fidelity funds to VTSAX. On the “Trade Preview” page an “Please read IMPORTANT NOTICE” window popped up, explaining that “…Class A Shares may carry a front end sales fee, known as a a load…”. And “…You may be entitled to a Breakpoint Discount…”, or a waiving of the load, under certain circumstances. They also charge $100 for the purchase, which was a surprise to me.
I cancelled the trade, and am looking to The BH Community for info on this load, and avoiding it, if possible.
Thanks!
My wife converted a 401k managed by Fidelity to Fidelity Rollover IRA a few days ago. It’s sitting in cash. We are waiting for additional funds to be moved to the Fidelity account from an Ameriprise IRA account that we are leaving(thanks for all the help to get us to this point!).
While waiting for the Ameriprise funds to appear, we went to allocate a portion of the existing Fidelity funds to VTSAX. On the “Trade Preview” page an “Please read IMPORTANT NOTICE” window popped up, explaining that “…Class A Shares may carry a front end sales fee, known as a a load…”. And “…You may be entitled to a Breakpoint Discount…”, or a waiving of the load, under certain circumstances. They also charge $100 for the purchase, which was a surprise to me.
I cancelled the trade, and am looking to The BH Community for info on this load, and avoiding it, if possible.
Thanks!
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Buy VTI instead.
Early-retired ... portfolio AA 50/50 ... (46% tIRA, 33% RIRA, 16% taxable, 5% HSA) ... (16% SCHB, 16% VTI, 13% SCHF, 5% VITSX, 50% US Treasuries).
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Fidelity charges transaction fees for Vanguard mutual funds (and several other fund companies) in retail accounts. The generally-recommended alternative is to buy FSKAX (Fidelity Total Market Index Fund) or VTI (the ETF version of VTSAX). Since this is an IRA, you may also consider FZROX, the Fidelity Zero version of the total market index fund. It's okay to hold in a tax-deferred account, but not a taxable one (since it's not portable, and would have to be liquidated if you changed brokerages).Deadhead First wrote: ↑Mon Oct 07, 2024 10:50 am Hello all
My wife converted a 401k managed by Fidelity to Fidelity Rollover IRA a few days ago. It’s sitting in cash. We are waiting for additional funds to be moved to the Fidelity account from an Ameriprise IRA account that we are leaving(thanks for all the help to get us to this point!).
While waiting for the Ameriprise funds to appear, we went to allocate a portion of the existing Fidelity funds to VTSAX.
<snip>
They also charge $100 for the purchase, which was a surprise to me.
Wiki entry on Three Fund Portfolio
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
For tax advantaged accounts at Fidelity, we hold FZROX (FSKAX would be fine too).
For taxable, we hold VTI.
For taxable, we hold VTI.
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
mkc, you fixed your typo before I could correct it... good self-catch.
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Think of it as the "house brand" problem. Vanguard mutual funds are best purchased at Vanguard, and for a Fidelity account, you need to choose from Fidelity low cost index funds. Personally, I found those "harder" to find on the Fidelity website, you really need to search for funds and then sort by expense ratio. Or of course get advice here! The Wiki here has funds by vendor.
https://www.bogleheads.org/wiki/Three-fund_portfolio
https://www.bogleheads.org/wiki/Three-fund_portfolio
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Wow, quick answers. Thanks!
From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you're referring to Fidelity Index funds like FSKAX - total US stock market fund, then the expense ratio at Fidelity is actually a touch lower than VTSAX at Vanguard.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am Wow, quick answers. Thanks!
From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
If you wind up in an actively managed fund at Fidelity, then yes, the expense ratios are higher.
If I had money to invest at Fidelity, I'd be using 1 (or more) of the 3 Fidelity funds listed below.
1. US Stock Index - FSKAX. ER 0.015%
2. International Stock index - FTIHX. ER 0.06%
3. US Bond index - FXNAX. ER 0.025%
Regards,
Last edited by retired@50 on Mon Oct 07, 2024 11:54 am, edited 1 time in total.
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
I would imagine you could just buy the Vanguard ETF instead of the mutual fund (explained above) for no feeDeadhead First wrote: ↑Mon Oct 07, 2024 11:42 am Wow, quick answers. Thanks!
From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you want to hold the mutual fund form without a transaction the recommendation for the Fidelity alternatives of FZROX or FSKAX are good. The option to hold the ETF version, VTI, of VTSAX is certainly a reasonable alternative.
If you want to buy a Vanguard fund at a brokerage outside of Vanguard there is usually some type of transaction fee since Vanguard doesn't have a mechanism to pay the broker for servicing the fund shares (this keeps the expense ratio low). The $100 transaction fee from Fidelity is likely pretty much typical these days. While the $100 fee is certainly an annoyance, and many would consider it a showstopper, to buying Vanguard funds outside of Vanguard, it can really be inconsequential if you are making a large buy and hold purchase of a Vanguard fund.
Years ago when I wanted to simplify a couple of large IRA accounts I decided to use Vanguard Balanced (VBIAX) 100% for a automatic 60/40 blend of stocks and bonds at an expense ratio of 0.07% I gladly paid the transaction fee for being able to easily hold such a great fund with a bargain expense ratio in a Fidelity account. It made our account statements look absurdly simple.
If you find the $100 transaction fee to still be a roadblock I would do another alternative that lets you stick with Fidelity. I think Fidelity is the best brokerage for most investors (We also have accounts at Schwab and Vanguard).
If you want to buy a Vanguard fund at a brokerage outside of Vanguard there is usually some type of transaction fee since Vanguard doesn't have a mechanism to pay the broker for servicing the fund shares (this keeps the expense ratio low). The $100 transaction fee from Fidelity is likely pretty much typical these days. While the $100 fee is certainly an annoyance, and many would consider it a showstopper, to buying Vanguard funds outside of Vanguard, it can really be inconsequential if you are making a large buy and hold purchase of a Vanguard fund.
Years ago when I wanted to simplify a couple of large IRA accounts I decided to use Vanguard Balanced (VBIAX) 100% for a automatic 60/40 blend of stocks and bonds at an expense ratio of 0.07% I gladly paid the transaction fee for being able to easily hold such a great fund with a bargain expense ratio in a Fidelity account. It made our account statements look absurdly simple.
If you're buying over $100K of VTSAX at Fidelity and don't expect to make a bunch of additional purchases that would also incur a transaction fee I would pay the $100 fee to join the Jack Bogle team.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
If you find the $100 transaction fee to still be a roadblock I would do another alternative that lets you stick with Fidelity. I think Fidelity is the best brokerage for most investors (We also have accounts at Schwab and Vanguard).
Last edited by 123 on Mon Oct 07, 2024 12:07 pm, edited 1 time in total.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
The fidelity funds will also be very cheap.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am Wow, quick answers. Thanks!
From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
However as mentioned you can just buy the ETF from Vanguard: VTI
You don't need to move to vanguard
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
You may be confusing Exchange Traded Funds and Mutual Funds; regardless I don't think your research reflects the general consensus.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you want Vanguard funds at Fidelity, you need the ETF versions not the mutual fund versions (e.g., VTI rather than VTSAX). As Retired@ 50 said, you could just use the 3-Fund Portfolio component mutual funds that are offered by Fidelity, since that's the brokerage you chose (not Vanguard).Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
Fidelity Mutual Funds (mostly available only at Fidelity):
- Fidelity ZERO Total Market Index Fund (FZROX) or Fidelity Total Market Index Fund (FSKAX)
- Fidelity ZERO International Index Fund (FZILX) or Fidelity Total International Index Fund (FTIHX)
- Fidelity U.S. Bond Index Fund (FXNAX)
Vanguard ETFs (can buy these at any brokerage):
- Vanguard Total Stock ETF (VTI)
- Vanguard Total International Stock ETF (VXUS)
- Vanguard Total Bond Market ETF (BND)
1) Would recommend against this as there's no point in paying $100 for VTSAX when you can buy the same fund "for free" in VTI.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
2) In a tax-advantaged account you can use the Fidelity ZERO funds, which are cheaper than Vanguard's funds, but they're not portable so not suitable for a Taxable account. You said this was a Rollover IRA so just use the ZERO funds (and maybe BND instead of FXNAX).
3) You likely chose Fidelity as your brokerage over Vanguard for better customer service and a better web-site experience, so if that was your reasoning, I wouldn't change brokerages. If Vanguard has mutual funds that you simply must have and there is no Vanguard ETF version of that mutual fund, then that's a potential reason to also hold some assets at Vanguard (as well as Fidelity).
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MFs vs ETFs
Wiki topic on ETFs vs MFs
If you're dealing with a brokerage that allows fractional share transactions of ETFs, there's not a lot of difference. The biggest thing to me is that a mutual fund (MF) order can be placed at any time of day or night and will execute at close of business at the same NAV for everyone that placed orders. MFs are traded in dollars so every penny you wanted invested is deployed (nothing left sitting in the settlement fund). If your brokerage allows ETF transactions in dollars (rather than shares), there's no significant difference at all.
ETFs have a tiny, but non-zero, bid/ask spread. They should only be traded during Market Open (9a to 4p EDT). You should probably avoid trading during times of high price volatility (typically first and last hour of market open) since the price can change since you last calculated the number of shares you need for the approximate dollar purchase/sale you want to make and price changes between lookup and execution can make you buy more (or less) than you wanted. Buying shares, instead of dollars, likely means some residual is not deployed and ends up sitting in the settlement fund. None of these ETF traits are show-stoppers, and I deal with them all the time for individual stocks (fun money), but I don't see any need to deal with it for my MF investments (an ETF is just a packaged MF that trades like a stock). ETFs certainly are portable whereas MFs may or may not be transferrable to a different brokerage "in kind," which is a valuable attribute to some, but I'm not leaving Vanguard so a non-factor to me.
It's also my understanding that ETFs in a Taxable account are more tax-efficient if the underlying fund has any churn due to trading (rather than churn due to changes in the underlying index). Since the ETF is directly trading on an exchange between buyers and sellers, the ETF manager can be hands off, but a mutual fund manager has to match buy and sell orders to try and minimize capital gains distributions for those that did not sell any shares (I always get a capital gains distribution for my taxable mutual fund even if I sold nothing that year). This might be a pretty small efficiency as I've heard it said that VTSAX is pretty tax-efficient (but likely not as efficient as VTI).
Last edited by bonesly on Mon Oct 07, 2024 12:32 pm, edited 2 times in total.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
tibbitts wrote: ↑Mon Oct 07, 2024 12:21 pmYou may be confusing Exchange Traded Funds and Mutual Funds; regardless I don't think your research reflects the general consensus.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
OP (Deadhead First) --
Do you understand what an ETF is (Exchange Traded Fund)?
It's very similar to a mutual fund but trades like a stock (not just at the end of the day).
There are some ETFs that are just about the *same* as some mutual funds, including the ones you are intereted in.
RM
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
VTSAX (a Mutial Fund) and VTI (an ETF) are two different classes of the same fund: Vanguard Total Stock Market.
This is true of many Vanguard funds, but not all...
This is true of many Vanguard funds, but not all...
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
... I was told Fidelity’s expenses were slightly higher than Vanguard’s...
Vanguard used to be the lowest cost but they haven't been for years. The close equivalent at Fidelity of Vanguard total market is FSKAX, exp ratio .015%, lower than VSTAX, which is .04% and lower than the Vanguard ETF VTI, at .03.
Shouldn't have any reservations owning FSKAX.
Vanguard used to be the lowest cost but they haven't been for years. The close equivalent at Fidelity of Vanguard total market is FSKAX, exp ratio .015%, lower than VSTAX, which is .04% and lower than the Vanguard ETF VTI, at .03.
Shouldn't have any reservations owning FSKAX.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you want to use mutual funds instead of ETFs, then buy the house brand fund for the brokerage. At Vanguard, we own VTSAX. At Fidelity, we own FSKAX and FZROX. At Schwab, we own SWTSX.
Don't get hung up on brand, and don't pay a load or transaction fee to buy VTSAX at Fidelity.
Don't get hung up on brand, and don't pay a load or transaction fee to buy VTSAX at Fidelity.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
retired@50 wrote: ↑Mon Oct 07, 2024 11:46 am
If I had money to invest at Fidelity, I'd be using 1 (or more) of the 3 Fidelity funds listed below.
1. US Stock Index - FSKAX. ER 0.015%
2. International Stock index - FTIHX. ER 0.06%
3. US Bond index - FXNAX. ER 0.025%
This. Right. Here.
No need to overcomplicate.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Thanks all.
What an education one can get here!
I do seem to understand the similarities between ETF index funds and mutual fund index funds, but I was told ETFs can be unnecessarily complex, their expenses being similar.
I made a lot of assumptions about the costs of all the funds discussed without actually knowing the costs of the funds discussed. I should probably start there. Do a little due diligence before “parking” such a large and important sum. Can it be as simple as just looking up the expense ratio? What else do I need to look for to determine all expenses?
My previous Ameriprise broker seemed to be an expert at hiding fees. I may actually suffer from FSFS(Fee Search Fatigue Syndrome).
What an education one can get here!
I do seem to understand the similarities between ETF index funds and mutual fund index funds, but I was told ETFs can be unnecessarily complex, their expenses being similar.
I made a lot of assumptions about the costs of all the funds discussed without actually knowing the costs of the funds discussed. I should probably start there. Do a little due diligence before “parking” such a large and important sum. Can it be as simple as just looking up the expense ratio? What else do I need to look for to determine all expenses?
My previous Ameriprise broker seemed to be an expert at hiding fees. I may actually suffer from FSFS(Fee Search Fatigue Syndrome).
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Yes.Deadhead First wrote: ↑Mon Oct 07, 2024 1:45 pm Can it be as simple as just looking up the expense ratio? What else do I need to look for to determine all expenses?
For the mutual funds that are discussed here, the expense ratio is the only cost of investing if bought at the brokerage that issues them. Also, don't sweat a few hundredths of a percent difference in ER.
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Look for NTF (no transaction fee) and no-load funds in addition to low expense ratios.Deadhead First wrote: ↑Mon Oct 07, 2024 1:45 pm
I made a lot of assumptions about the costs of all the funds discussed without actually knowing the costs of the funds discussed. I should probably start there. Do a little due diligence before “parking” such a large and important sum. Can it be as simple as just looking up the expense ratio? What else do I need to look for to determine all expenses?
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
None of those options are true. VTI is VTSAX as the ETF share class and is cheaper and free to trade at Fidelity. Fidelity's total US stock market FSKAX and FZROX are cheaper than VTI or VTSAX and perform just as well. There is no premium to be with Fidelity vs Vanguard and you can purchase cheaper funds in addition to every single Vanguard ETF fund.Deadhead First wrote: ↑Mon Oct 07, 2024 11:42 am Wow, quick answers. Thanks!
From all the research I did so far(again, Noob Alert), it seemed like Vanguard funds were the best funds to get, and Fidelity was the best broker to buy them through.
I think I have 3 options at this point: 1)pay the premium to buy Vanguard through Fidelity; 2)pay the premium to invest in the Fidelity fund(I haven’t looked yet, but I was told Fidelity’s expenses were slightly higher than Vanguard’s) through the existing Fidelity account; 3)while it’s still cash, move it all to a Vanguard account. Any major difference between these options? I would hate to see my Jack Bogle Bobblehead shed a tear if I choose option 2.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
I would just pick Vanguard.
¯\_(ツ)_/¯
¯\_(ツ)_/¯
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Thank you to all the responders. There is lots of great info here.
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you are used to and like the Fidelity interface, you might as well stay at Fidelity and use Fidelity funds.
If you are new to Fidelity or don’t like Fidelity’s interface, a legitimate option is to move to Vanguard and use Vanguard funds.
Note that the ER differences between Vanguard and Fidelity large index funds are inconsequential.
ETF’s trade differently than mutual funds. You should read up on how to trade ETF’s before buying any, if you go that route.
If you are new to Fidelity or don’t like Fidelity’s interface, a legitimate option is to move to Vanguard and use Vanguard funds.
Note that the ER differences between Vanguard and Fidelity large index funds are inconsequential.
ETF’s trade differently than mutual funds. You should read up on how to trade ETF’s before buying any, if you go that route.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
I think I will stay at Fidelity. I’ve heard that their website and customer service is better.
Any clarity on the differences/advantages between FSKAX and FZROX ? They seem to be recommended interchangeably on this thread.
Thanks
Any clarity on the differences/advantages between FSKAX and FZROX ? They seem to be recommended interchangeably on this thread.
Thanks
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
The general "problem," if you can call it that, is that with FZROX, it's exclusive to Fidelity, so if you ever want to leave Fidelity, you'll be selling it.Deadhead First wrote: ↑Tue Oct 08, 2024 8:29 am I think I will stay at Fidelity. I’ve heard that their website and customer service is better.
Any clarity on the differences/advantages between FSKAX and FZROX ? They seem to be recommended interchangeably on this thread.
Thanks
Inside an IRA or a Roth IRA, holding FZROX would be fine, because there are no tax consequences to selling FZROX in those account types. In a taxable account there would likely be tax consequences.
Bottom line, don't hold FZROX in a taxable account - which will help you retain some flexibility for future decisions.
If you want the utmost in flexibility, then use ETFs like ITOT or VTI. ETFs can be moved from broker to broker without selling.
Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Are there any advantages to the ZERO Fund version over FSKAX?
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
No major ones.Deadhead First wrote: ↑Tue Oct 08, 2024 9:14 am Are there any advantages to the ZERO Fund version over FSKAX?
The lower expense ratio is a small advantage. A very small one IMO.
Another small one is you get use upper case letters when typing out the fund name. Some people really like to shout
Either fund is a great way to reach your desired asset allocation in the US Stock Market.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If any advantages exist, they are likely too small to matter in the long run, and could reverse at some point, nobody knows for certain.Deadhead First wrote: ↑Tue Oct 08, 2024 9:14 am Are there any advantages to the ZERO Fund version over FSKAX?
FZROX has a relatively short history (6 years), but it appears to have a very slight performance edge over FSKAX over that 6 year period.
I don't know if the differences in the two indexes being used are material or meaningful, but FSKAX holds a higher number of funds, for whatever that's worth. FZROX follows a "Fidelity created" index from what I understand.
In the grand scheme of things, I really don't see this limited choice among these two funds being related to anyone's success or failure in retirement saving.
Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
No Vanguard funds have sales loads. They are called "no-load funds." I don't think any of Fidelity's own funds have loads, but I'm not certain. Very few if any index funds have sales loads. You will know if a fund has a sales load, both because you'll see it in the description, and also because it is an explicit, visible fee you will see at the point when you actually try to buy it. The time when you typically see a sales load is when you are a) buying an "actively managed" mutual fund b) through an advisor.
Morningstar.com is pretty good source of information on mutual funds and ETFs. I use them all the time. They show whether every mutual fund is "front load" or "no load." ETFs do not have loads. A typical load might be 5.75%, meaning that if you take $10,000 and buy it through an advisor, the advisor pockets $575 and you only get $9,425 worth of the fund. Loads are evil; don't buy load funds.
For providers of broad market index funds, think of Vanguard versus Fidelity versus IShares as being like Eveready versus Duracell versus Energizer batteries... like Exxon versus Shell versus Chevron gas... they are essentially identical, and you should more or less ignore any strong statement based on brand loyalty.
ETFs like VTI have three or four ticker symbols, rarely ending in X. Mutual funds have five letters, always ending in X. "Which is better, ETFs or mutual funds" is a favorite topic of endless, spirited inconclusive debate here, but think of that as being like "which is better, Pepsi in bottles versus Pepsi in cans?"
If I had an account at Fidelity and wanted a low-cost total market index fund, I would not choose VTSAX because of the transaction fee Fidelity charges. For me it would be a choice between VTI, FSKAX, and FZROX. They are so close to equally "good" that the differences just don't matter financially.
If my strongest feeling was that I wanted Vanguard, I'd go with VTI, even though I prefer mutual funds. If my strongest feeling was that I wanted a mutual fund, I'd go with FSKAX, even though it's not from Vanguard.
FZROX is weird; the fund is fine but the full story behind it is complicated. It has a zero expense ratio, which is a fantastic marketing and talking point. But it doesn't track a standard index, and you can't hold it at any brokerage but Fidelity. That means that it's fine in a tax-advantaged account, because if you wanted to leave Fidelity you could exchange it for VTI or FSKAX with no tax consequences. But in a taxable account, I personally would not use FZROX because stuff happens and I might want to leave Fidelity someday (already did it once!).
So, let's get to the real question. VTI versus FSKAX versus FZROX: how much is that in dollars? Here is how a $10,000 investment in those three fund would have performed since FZROX first became available in 2018:
Source
Yes, there are three lines on the chart, but the performance is so close that they are almost exactly on top of each other.
I urge you to notice the similarity. Don't focus on the tiny difference, which in my opinion is likely mostly luck. Even if you believe the differences are real and will persist, it should be clear that they will not make the difference between success or failure in any retirement savings plan.
They all more than doubled your money. You're talking about $40 differences in a $23,000 totals. Properly organizing your grocery coupons is more important than choosing the "best" total market fund.
Morningstar.com is pretty good source of information on mutual funds and ETFs. I use them all the time. They show whether every mutual fund is "front load" or "no load." ETFs do not have loads. A typical load might be 5.75%, meaning that if you take $10,000 and buy it through an advisor, the advisor pockets $575 and you only get $9,425 worth of the fund. Loads are evil; don't buy load funds.
For providers of broad market index funds, think of Vanguard versus Fidelity versus IShares as being like Eveready versus Duracell versus Energizer batteries... like Exxon versus Shell versus Chevron gas... they are essentially identical, and you should more or less ignore any strong statement based on brand loyalty.
ETFs like VTI have three or four ticker symbols, rarely ending in X. Mutual funds have five letters, always ending in X. "Which is better, ETFs or mutual funds" is a favorite topic of endless, spirited inconclusive debate here, but think of that as being like "which is better, Pepsi in bottles versus Pepsi in cans?"
If I had an account at Fidelity and wanted a low-cost total market index fund, I would not choose VTSAX because of the transaction fee Fidelity charges. For me it would be a choice between VTI, FSKAX, and FZROX. They are so close to equally "good" that the differences just don't matter financially.
If my strongest feeling was that I wanted Vanguard, I'd go with VTI, even though I prefer mutual funds. If my strongest feeling was that I wanted a mutual fund, I'd go with FSKAX, even though it's not from Vanguard.
FZROX is weird; the fund is fine but the full story behind it is complicated. It has a zero expense ratio, which is a fantastic marketing and talking point. But it doesn't track a standard index, and you can't hold it at any brokerage but Fidelity. That means that it's fine in a tax-advantaged account, because if you wanted to leave Fidelity you could exchange it for VTI or FSKAX with no tax consequences. But in a taxable account, I personally would not use FZROX because stuff happens and I might want to leave Fidelity someday (already did it once!).
So, let's get to the real question. VTI versus FSKAX versus FZROX: how much is that in dollars? Here is how a $10,000 investment in those three fund would have performed since FZROX first became available in 2018:
Source
Yes, there are three lines on the chart, but the performance is so close that they are almost exactly on top of each other.
I urge you to notice the similarity. Don't focus on the tiny difference, which in my opinion is likely mostly luck. Even if you believe the differences are real and will persist, it should be clear that they will not make the difference between success or failure in any retirement savings plan.
They all more than doubled your money. You're talking about $40 differences in a $23,000 totals. Properly organizing your grocery coupons is more important than choosing the "best" total market fund.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
So, so, much good information!
Thanks all
Thanks all
- ruralavalon
- Posts: 27241
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Or buy Fidelity Total Market Index (FSKAX) ER 0.015%.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you want VTSAX at Fidelity buy VTI [Vanguard Total Stock Market Index Fund ETF] it's VTSAX's ETF share class. If you do not like ETFs than Fidelity's Total Market Index Fund FSKAX or Fidelity's ZERO Total Market Index Fund FZROX are both great options.Deadhead First wrote: ↑Mon Oct 07, 2024 10:50 am Hello all
My wife converted a 401k managed by Fidelity to Fidelity Rollover IRA a few days ago. It’s sitting in cash. We are waiting for additional funds to be moved to the Fidelity account from an Ameriprise IRA account that we are leaving(thanks for all the help to get us to this point!).
While waiting for the Ameriprise funds to appear, we went to allocate a portion of the existing Fidelity funds to VTSAX. On the “Trade Preview” page an “Please read IMPORTANT NOTICE” window popped up, explaining that “…Class A Shares may carry a front end sales fee, known as a a load…”. And “…You may be entitled to a Breakpoint Discount…”, or a waiving of the load, under certain circumstances. They also charge $100 for the purchase, which was a surprise to me.
I cancelled the trade, and am looking to The BH Community for info on this load, and avoiding it, if possible.
Thanks!
The expanse rations for all these funds are:
0.04% VTSAX
0.03% VTI
0.015% FSKAX
0.00% FZROK
- ruralavalon
- Posts: 27241
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
Just don't pretend that the tiny differences in expense ratios makes any material difference in performance. See the illustration by nisiprius, above.3000 wrote: ↑Tue Oct 08, 2024 10:19 pmIf you want VTSAX at Fidelity buy VTI [Vanguard Total Stock Market Index Fund ETF] it's VTSAX's ETF share class. If you do not like ETFs than Fidelity's Total Market Index Fund FSKAX or Fidelity's ZERO Total Market Index Fund FZROX are both great options.Deadhead First wrote: ↑Mon Oct 07, 2024 10:50 am Hello all
My wife converted a 401k managed by Fidelity to Fidelity Rollover IRA a few days ago. It’s sitting in cash. We are waiting for additional funds to be moved to the Fidelity account from an Ameriprise IRA account that we are leaving(thanks for all the help to get us to this point!).
While waiting for the Ameriprise funds to appear, we went to allocate a portion of the existing Fidelity funds to VTSAX. On the “Trade Preview” page an “Please read IMPORTANT NOTICE” window popped up, explaining that “…Class A Shares may carry a front end sales fee, known as a a load…”. And “…You may be entitled to a Breakpoint Discount…”, or a waiving of the load, under certain circumstances. They also charge $100 for the purchase, which was a surprise to me.
I cancelled the trade, and am looking to The BH Community for info on this load, and avoiding it, if possible.
Thanks!
The expanse rations for all these funds are:
0.04% VTSAX
0.03% VTI
0.015% FSKAX
0.00% FZROK
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
If you have some problem with someone stating what the cost of an investment is just say so instead of claiming I’m doing something I’m not. I suggested OP go with VTI because they wanted to use VTSAX at Fidelity which incurs a trading fee. I did not ignore Vanguard’s offerings and say to use Fidelity’s because their expanse rations were lower than VTSAX and VTI nor did I claim OP or anyone else would do better with Fidelity’s options because of their funds’ lower costs.ruralavalon wrote: ↑Wed Oct 09, 2024 2:25 pmJust don't pretend that the tiny differences in expense ratios makes any material difference in performance. See the illustration by nisiprius, above.3000 wrote: ↑Tue Oct 08, 2024 10:19 pmIf you want VTSAX at Fidelity buy VTI [Vanguard Total Stock Market Index Fund ETF] it's VTSAX's ETF share class. If you do not like ETFs than Fidelity's Total Market Index Fund FSKAX or Fidelity's ZERO Total Market Index Fund FZROX are both great options.Deadhead First wrote: ↑Mon Oct 07, 2024 10:50 am Hello all
My wife converted a 401k managed by Fidelity to Fidelity Rollover IRA a few days ago. It’s sitting in cash. We are waiting for additional funds to be moved to the Fidelity account from an Ameriprise IRA account that we are leaving(thanks for all the help to get us to this point!).
While waiting for the Ameriprise funds to appear, we went to allocate a portion of the existing Fidelity funds to VTSAX. On the “Trade Preview” page an “Please read IMPORTANT NOTICE” window popped up, explaining that “…Class A Shares may carry a front end sales fee, known as a a load…”. And “…You may be entitled to a Breakpoint Discount…”, or a waiving of the load, under certain circumstances. They also charge $100 for the purchase, which was a surprise to me.
I cancelled the trade, and am looking to The BH Community for info on this load, and avoiding it, if possible.
Thanks!
The expanse rations for all these funds are:
0.04% VTSAX
0.03% VTI
0.015% FSKAX
0.00% FZROK
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Re: VTSAX Load/Breakpoint Discount?(Noob Alert)
I don't get the impression that the post above yours was necessarily directed at you, or accusing you of anything. Seemed more likely to be directed at the self-described "Noob" OP as a caveat that small absolute differences in ER are largely irrelevant.