New @ Vanguard: Auto ETF Purchases!

[kork13]

I was messing with my auto-investments tonight, and came across this little tidbit worth sharing. I'm not sure when they started to roll it out, but a new feature has popped up on Vanguard -- you can setup automatic investments of ETFs!

Previously the only way to purchase ETFs with them was to manually create purchase orders every time. For folks (as I) that just want to setup auto-investments & not worry about it, the manual approach was annoying & unfeasible ... So I've stuck to Vanguard's mutual funds instead for my recurring weekly investments. But now being able to schedule recurring ETF purchases (and specified as a dollar amount too, not by a number of shares!), it makes the DCA approach totally feasible.

I may not immediately switch over to ETFs .... but I know there are some minor advantages to ETF vs. MF, so I'll at least start educating myself more on them & potentially start a shift in that direction if it really does seem advantageous.

[disneysteve]

LOL. I literally just heard this on the Afford Amything podcast right before I saw it here. This is great news. Doesn’t affect me at this point but it’s great for people still in the accumulation phase.

[Jluke]

I assume this means fractional shares can now be purchased?

[disneysteve]

I may not immediately switch over to ETFs .... but I know there are some minor advantages to ETF vs. MF, so I'll at least start educating myself more on them & potentially start a shift in that direction if it really does seem advantageous.

I would switch over right away. ETFs have definite advantages. They carry lower ERs compared to the comparable MF. They are much more tax efficient, which is especially important in taxable accounts. They trade in real time like stocks unlike MFs which only trade at the end of the day.

If I was starting out today, I would go with all ETFs. They weren't really around when I started my investing life so our portfolio is primarily filled with MFs though I've added some ETFs in recent years.

[kork13]

I assume this means fractional shares can now be purchased?

That's my assumption, based on the page asking for a dollar amount instead of a number of shares.... Which is fantastic.

[kork13]

I would switch over right away. ETFs have definite advantages. They carry lower ERs compared to the comparable MF. They are much more tax efficient, which is especially important in taxable accounts. They trade in real time like stocks unlike MFs which only trade at the end of the day.

If I was starting out today, I would go with all ETFs. They weren't really around when I started my investing life so our portfolio is primarily filled with MFs though I've added some ETFs in recent years.

That's probably true. When I have some free time to really look into it, I expect that I probably will switch... Though I've mostly been using their admiral-class MFs though, so I think the ER difference is pretty slim, if any. The tax efficiency is more attractive to me -- I'm talking about over $300k in taxable accounts, so better tax efficiency could be meaningful.

[Jluke]

• Dollar-based orders have a $1 minimum.
• Dollar-based trading is exclusive to Vanguard ETFs.
• Vanguard ETFs are traded commission-free, like most stock & ETF trades through Vanguard Brokerage Services.
• Dollar-based orders are restricted to market orders which execute immediately (or the next market day if you place an order when the market is closed).
• SpecID (specific identification) is not available as a cost basis method for dollar-based sell orders.

the last bullet is what I was afraid of for my taxable account. I have that set to SpecID in case I ever want to do tax loss harvesting.

[kork13]

• SpecID (specific identification) is not available as a cost basis method for dollar-based sell orders.

the last bullet is what I was afraid of for my taxable account. I have that set to SpecID in case I ever want to do tax loss harvesting.

Sounds like that only applies when you're trying to sell with a dollar-defined sell order. If you go to tax loss harvest, you can just sell by specifying number of shares, by lot, instead. Even if the shares are purchased on a by-dollar basis, you can still sell on a by-share basis.

[Jluke]

Sounds like that only applies when you're trying to sell with a dollar-defined sell order. If you go to tax loss harvest, you can just sell by specifying number of shares, by lot, instead. Even if the shares are purchased on a by-dollar basis, you can still sell on a by-share basis.

good catch - I completely missed that detail at the end “for dollar-based sell orders” and was thinking I couldn’t have SpecID on the buy or sell side. I haven’t sold anything through vanguard platform so I was only thinking of the buy side.

[Like2Plan]

Darn. That sounds pretty good. That puts me in a quandary because I have been strongly considering leaving vanguard. The latest irritant (I believe goes into effect July 1st): "Account closure and transfer fee: A $100 processing fee may be charged for account closure or transfer of account assets to another firm.^*

Link for further details: https://www.bogleheads.org/forum/vie...ewpost=7859902

I think what annoyed me the most about this is I have not received any info about this from Vanguard. Apparently, this list of fees was sent to someone who has a lot of assets at VG and wouldn't be impacted by them anyway.

(I get the feeling that VG is trying to get rid of the lowly riffraff like me who don't have mega balances.)

[disneysteve]

I think what annoyed me the most about this is I have not received any info about this from Vanguard. Apparently, this list of fees was sent to someone who has a lot of assets at VG and wouldn't be impacted by them anyway.

You should have gotten an email. Maybe it went to your spam folder. I got mine though it was a couple
of days after I saw it mentioned on the ER forum so they probably went out in waves.

none of the changes impact us at all so it was a non issue to me.

[kork13]

Yeah, the fee for account closure/transfer irked me when I got the email. I've considered switching to Fidelity for a while, and this nearly drove me to do so immediately. However, recognizing that it wouldn't impact me if I did nothing, I eventually grudgingly decided not to worry about it. But it feels kinda like shutting the door on going elsewhere ... Or at least, without having them bite you on the way out.

[disneysteve]

Yeah, the fee for account closure/transfer irked me when I got the email. I've considered switching to Fidelity for a while, and this nearly drove me to do so immediately. However, recognizing that it wouldn't impact me if I did nothing, I eventually grudgingly decided not to worry about it. But it feels kinda like shutting the door on going elsewhere ... Or at least, without having them bite you on the way out.

Lots of companies charge an exit fee. You can often get around it by speaking to the company you are moving to. They will often cover it for you, especially if you're moving a decent amount. Sometimes they even advertise a new customer bonus with those exit fees in mind.

Unless VG suddenly goes drastically down hill, which I don't ever see happening, I'm not going anywhere. I love their products, their service, and their website (and app). I see no reason to ever leave.

[kork13]

Lots of companies charge an exit fee. You can often get around it by speaking to the company you are moving to. They will often cover it for you, especially if you're moving a decent amount. Sometimes they even advertise a new customer bonus with those exit fees in mind.

Unless VG suddenly goes drastically down hill, which I don't ever see happening, I'm not going anywhere. I love their products, their service, and their website (and app). I see no reason to ever leave.

It just feels really scummy to charge people for the privilege of getting their own money. It's not like executing an automated account transfer between brokers is costing them a fistful of money or manpower. Sure, the fee isn't at all uncommon ... but don't we all frequently rail about how crappy most financial services firms are, specifically highlighting the random fees they charge? Vanguard obviously isn't suddenly charging insane fees or radically escalating their ER costs... But they've definitely been slowly adding a variety of "industry-typical" fees over the past few years. Just feels kinda slippery-slope-esque to me. So the "well everybody else does it" argument doesn't really sit well with me, particularly in the financial services industry.

[Like2Plan]

Lots of companies charge an exit fee.

Which made Vanguard unique....