Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 150$

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
ronin561
Posts: 37
Joined: Tue Sep 29, 2020 5:02 am

Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 150$

Post by ronin561 »

So, I refinanced my house to 30yr lower rate. I did the math on how much extra principal to pay it off in 15yrs. Instead of adding extra payments I want to invest that amount (150$) in a taxable account instead and see where I am in 10-12yrs If i hit my retire early goal I may sell and move or decide to stay put. Or I may decide the mortgage is cheap enough to just pay the min and keep the invested funds and add it to my total net worth calc.

My main funds are with Vanguard. I want to have this new house money separate from retirement funds so I can keep track of it. I thought about making a 2nd brokerage at vanguard but the minimums for vtsax/vtiax means It will take awhile before I can buy the funds.

I am trying to figure out tax efficiency and would prefer to have this as automated as possible (not a dealbreaker) but I do want the whole amount Invested each month, not leaving cash on the table.

I currently have an established account with TD Ameritrade I don't really do anything with, which I guess will eventually turn into a Schwab account. I can setup automated monthly buys of SWTSX/SWISX. I was going to do this but then I remembered all mutual funds aren't as tax efficient as Vanguards. I know that patent expires soon. Will that mean the rest will follow suit when they can? I dunno.

Or I can open a new account with Fidelity and log in once a month to manually buy the 150$ amount using their fractional shares to buy VTI/VXUS.

So if I went with Fidelity I would lose the automation but get my preferred funds in tax efficient ETFS. Or am I overthinking the tax inefficiency of the Shwab mutual funds. The tax cost ratio of the Shwab funds is double that of Vanguards although I do not really understand that number I just skimmed the description yesterday.

My works retirement plan is with Fidelity so I don't know if that would be beneficial down the road to have a Fidelity account anyway.

Any advice is appreciated. Thx.
AlohaJoe
Posts: 6609
Joined: Mon Nov 26, 2007 1:00 pm
Location: Saigon, Vietnam

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by AlohaJoe »

I don't see a compelling reason to ever buy mutual funds in a taxable account again, when ETFs are superior in every way. Just see the threads about how people are stuck at a brokerage for life because they can't move the mutual funds somewhere else.

I think you should skip TD and Fidelity and just use M1, which does exactly what you want.
Topic Author
ronin561
Posts: 37
Joined: Tue Sep 29, 2020 5:02 am

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by ronin561 »

Appreciate the suggestion but not interested in M1. Sticking with one of the big 3. TY though!
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by livesoft »

You are way way way way way way way overthinking this. All your choices are fine. Underthink and pick one.
Wiki This signature message sponsored by sscritic: Learn to fish.
backpacker61
Posts: 1608
Joined: Wed May 20, 2020 6:36 am

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by backpacker61 »

ronin561 wrote: Fri Jul 30, 2021 3:34 am My main funds are with Vanguard. I want to have this new house money separate from retirement funds so I can keep track of it. I thought about making a 2nd brokerage at vanguard but the minimums for vtsax/vtiax means It will take awhile before I can buy the funds.
I think you're creating a lot of unnecessary bother for yourself. It's pretty convenient to have most of your savings consolidated at just one or two brokerages, and get the tax information added to the 1099's you're already getting from your main provider anyway.

You could differentiate it by buying VTI or VOO at Vanguard instead of VTSAX. Or SPY. Or just add it into the VTSAX you're already holding.

As you get older, you'll want to simplify your holdings generally anyway, and you can make it easier for your future self by not proliferating a bunch of minor accounts now. I just went through the exercise (over a period of some years) of transferring out of and closing out accounts of directly-held mutual funds at providers like Neuberger Berman, Third Avenue, Wintergreen, Franklin Templeton, etc. What a mess.

Accounts you aren't actively using, I would consolidate into your main providers and close them out.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
Topic Author
ronin561
Posts: 37
Joined: Tue Sep 29, 2020 5:02 am

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by ronin561 »

livesoft wrote: Fri Jul 30, 2021 5:19 am You are way way way way way way way overthinking this. All your choices are fine. Underthink and pick one.
You are most probably right.
Topic Author
ronin561
Posts: 37
Joined: Tue Sep 29, 2020 5:02 am

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by ronin561 »

backpacker61 wrote: Fri Jul 30, 2021 5:59 am
ronin561 wrote: Fri Jul 30, 2021 3:34 am My main funds are with Vanguard. I want to have this new house money separate from retirement funds so I can keep track of it. I thought about making a 2nd brokerage at vanguard but the minimums for vtsax/vtiax means It will take awhile before I can buy the funds.
I think you're creating a lot of unnecessary bother for yourself. It's pretty convenient to have most of your savings consolidated at just one or two brokerages, and get the tax information added to the 1099's you're already getting from your main provider anyway.

You could differentiate it by buying VTI or VOO at Vanguard instead of VTSAX. Or SPY. Or just add it into the VTSAX you're already holding.

As you get older, you'll want to simplify your holdings generally anyway, and you can make it easier for your future self by not proliferating a bunch of minor accounts now. I just went through the exercise (over a period of some years) of transferring out of and closing out accounts of directly-held mutual funds at providers like Neuberger Berman, Third Avenue, Wintergreen, Franklin Templeton, etc. What a mess.

Accounts you aren't actively using, I would consolidate into your main providers and close them out.
Everything is consolidated already at Vanguard. This is the only thing I want separate. I could buy VTI/VXUS in my vanguard but at 150$ a month I do not want to leave cash on table or waiting to 2 months to buy a share of VTI every couple months. Which is why at the moment I think I am leaning to Fidelity for the Fractional Vanguard ETFs. Thank you for the advice.
Bluemnatra
Posts: 492
Joined: Fri Jun 11, 2021 3:37 pm

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by Bluemnatra »

"The greatest enemy of a good plan is the dream of a perfect plan"

I struggle with this myself. And I found myself in a similar situation. Tax efficiency of ETF vs the simplicity of automation with mutual funds. I chose the latter. Yes ETF's are more tax efficient in that they don't throw off capital gains. However, in my research and calculations the difference was not significant enough in my opinion to warrant the use of ETF's. While right now I am greatly interested in finance I do understand that life changes and other things come up that will inevitably occupy more of our time, thus I went the route of automating all my investments as I believe in the long run will provide me with better results than the tax efficiency of ETF's. That is just my opinion and the decision I made for my particular situation. I am with Fidelity by the way and even though I can buy fractional shares of ETF's I didn't want to introduce the extra steps to make the purchases. To each his own...
"The greatest enemy of a good plan is the dream of a perfect plan"
hnd
Posts: 1071
Joined: Mon Jun 22, 2020 11:43 am

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by hnd »

I use FFNOX at fidelity for our "extra principal" payment. it is less efficient than an etf play but i can set and forget it which is important. i make manual deposits for our HSA and buy AOA with it which is an allocation etf.
UpperNwGuy
Posts: 9446
Joined: Sun Oct 08, 2017 7:16 pm

Re: Auto-buy mutual funds in existing TD acct or open new account to manually buy Fidelity fractional shares VTI/VXUS 15

Post by UpperNwGuy »

ronin561 wrote: Fri Jul 30, 2021 3:34 am Or I can open a new account with Fidelity and log in once a month to manually buy the 150$ amount using their fractional shares to buy VTI/VXUS.
^^^ Do this and chill. Stop overthinking.
Post Reply