I am interested in opening a brokerage account either with Vanguard or Fidelity. I like the low fees in Fidelity target date index funds but my question is where do they make up for the fees?
Thanks and have an awesome day!
These days, a lot of the major investment banks are actually competing to have more funds invested. Vanguard was really running away with things for a while.
Some believe that Fidelity’s largest “zero fee” fund FZROX is actually a loss leader, just to bring customers into the Fidelity family where they’ll spend real money on other products.
In addition, they all make a good bit of money by silently investing your uninvested cash balances—a form of float—in safe investments while it sits in your own account returning zero. This is reflected in their profit statements.
Thank you!!! So in your opinion where would you open a brokerage account?
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I don’t think you’ll go wrong with Fidelity or Vanguard, you’ll have access to a great set of funds with no fees to trade them either way.
That said, Jenni and I have accounts with Vanguard.
Are you opening up a ROTH IRA, a Traditional IRA or an self directed account?
I use Ally Invest for my self direct account- where I buy individual stocks. Currently own 48 stocks w/ % total gain is 15.74%. Ally is ok it’s tied to my Ally Savings, otherwise I would use Fidelity. Fidelity has the best mobile app experience and has excellent customer service.
I have a Roth IRA thru Fidelity - FXAIX - % total gain is +29.41% (0.02 fees) - quarterly dividends reinvested. I like this one. Fees are low and it tracks the S&P 500.
I have an HSA plan thru Fidelity - FZROX - % total gain is +9.69% (zero fees) - annual dividends paid in December and is reflected in the share price. If I had known, I’d probably buy VTSAX or FXAIX.
I have my Rollover IRA thru Vanguard - VTSAX- 87% / VTIAX- 8% / VBTLX- 5% - % total return is 11.7%, I really like VTSAX since I get quarterly dividends reinvested and % return is 13%.