any advice for a guy thinking of pulling all his money (around 80k) from etrade and going to vanguard?
here is my thinking:
been investing for 7 years and never bought anything but indexes. not interested or skilled enough to follow individual stocks. planning on holding indexes in us stock, foreign stock, and bonds.
my major motivation is being able to buy non-etrade indexes w/out a $25 fee per purchase. i know etrade offers etrade indexes for all these categories but i am afraid their fee structure will change and it seems only etrade will be able to act as custodian.
i expect etrade will hit me w/ a $40 per account closing fee. wish vanguard had a "switch to us and we'll reimburse" offer. on the other hand if etrade would waive the fees i'd stick with them.
then there is the unknown. what i haven't considered. anyone want to chime in that has done this?
I have a big chunk of money at Vanguard and they seem to cover most of the asset classes pretty good.
I also have money at Wells Fargo -- I meet the $25K minimum for 100 free trades/year so that lets me buy other indexes/funds not available at Vanguard.
Since this is only a future possibility, why not wait until it happens, if this is your only concern?
I think that there are other issues, e.g. quality of service (E*Trade has a lousy reputation), but having decided to invest there, the question remains why switch before something happens?
It looks like E*Trade would charge $20 for a non-NTF transaction (less than you were fearing).
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06010000 Usually, brokerages don't charge account closeout fees. What they charge is a fee to transfer out the assets (which you probably can't do, since E*Trade funds probably can't be held elsewhere), and a fee to terminate IRA custodial agreements. So I'm not sure where the $40 fee comes from. I don't see any IRA termination fee listed in their IRA fee schedule:
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06000000#View Note that because the E*Trade funds can't be held elsewhere, you'll be liquidating (selling) them. If you own them in a taxable account, you'll owe taxes, even if you move the money to a similar index account elsewhere. (On the other hand, if you have a loss, it is debatable whether you'd be able to take the loss if you invest in the same type of index account within
30 days - see "wash sales" - reasonable people differ on this point.)
E*Trade will charge you, at worst, $13/purchase of an ETF. You can invest in Vanguard indexes through their ETFs, and wind up saving money in the long run (e.g. the investor shares of Vanguard Total Stock Market cost 19 basis points/year; the ETF shares only 7 - so you'll make up the cost of a $10,000 purchase in about a year, or the cost of each $1,000 purchase in 10 years).
I'm no lover of E*Trade, so I wouldn't have picked them in the first place. My point is that you felt differently. Having selected them, what has changed? Especially since you say that if it weren't for cost, you'd stay with them.
I don't know what you haven't considered. But I left ETrade also some years ago (even though it was the first online brokerage I had used), because of issues having to do with electronic fund transfers and IRA accounts. For me, Fidelity did it better.
And I, too, contacted them a number of times to try to get them to change certain policies -- to no avail.
And I pulled out considerably more than you are.
Just be sure to check on the length of time the transfer will take, so that you are not surprised.
--ron
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I have an account at Etrade and I only pay $5 a trade. I was with a different company and Etrade bought them but kept the cheap rate. I agree Vanguard or Fidelity are better plaes to have index funds.
Alternatives to moving are to keep index funds and never trade them or move into a more agressive plan where the increased returns pay the extra commission. I have a portfolio there which follows one of the top mutual fund newsletters and it provides a "better than index funds" return on an ongoing basis. You might have one or two trades a month.
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