Now managing my own investments

Investing
#1

This week I had all my investments transferred to my Schwab account… couldn’t bare the 1% management fee I was paying someone else. I currently have a brokerage account with Schwab and just transferred my IRA, wife’s IRA and UGMA account’s for my son and niece.

My question is, do I sell everything in the IRA’s and purchase index funds following the 3-fund portfolio option you suggest? Also, are dividends paid out by the number of shares you have or does the duration you hold those shares matter? My IRA for example consists of only GWPFX which is .74% expense ratio and SWTSX is .03%. I’d like to retire in 14yrs (Currently 31) if that matters.

Thanks again for all you do!

#2

Hi Dustin,
Yes, you should get rid of the funds you don’t want in your IRA and buy better ones :wink: Luckily you won’t have to worry about taxes since it’s in an IRA!
Most companies pay dividends quarterly. The duration doesn’t matter… it’s based on the number of shares that you own at the time that the dividends are getting ready to be paid out.

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#3

Thanks @vivitron ! I appreciate it! :slight_smile:

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#4

Hi Vivi - I have a follow up questions. I have my Roth IRA and brokerage account with Schwab. I am buying VTI shares and then whatever money is left over I would buy SWTSX…I just dont want cash sitting there if it could be invested. Should I avoid SWTSX in my brokerage since its a mutual fund with cap gains distributions? I’ve read its better to have them in a ROTH. Also I’ve been buying VTI instead of SCHB because it has more holdings, but it seems like the performance is identical. Should I be buying SCHB instead of VTI since my accounts are with Schwab? Maybe @ShaneSideris has some insight?

Thanks for the help! :slight_smile:

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#5

I would double check and make sure you’re not paying extra fees to buy VTI under Schwab

#6

I just double checked with them and they said there are no commissions for ETF’s. I also looked at my previous trades and there wasn’t any fees.

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#7

No fees and you prefer VTI, then I don’t see a reason to buy SWTSX/SCHB

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#8

Hi Dustin,
As far as SCHB vs VTI, they have fairly similar benchmarks and the same expense ratio currently, so I would expect their performance to be in line with each other.

As far as avoiding mutual funds in a brokerage account and only using ETFs, the Personal Finance Club is actually knee deep in some research on that and will be releasing our findings soon (hopefully this month). You are correct that generally speaking, Mutual Funds are not as tax efficient as ETFs. But when comparing an index Mutual Fund to an index ETF over a long time horizon, does it make a material difference? My hunch is no. But, we are researching and will share our findings soon!

I hope that was helpful! Keep us posted if there is anything else!

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#9

Thanks for your quick response! Sounds good, so for the meantime I will stick with purchasing VTI and then whatever cash is left over I will buy SWTSX. I’m excited to see what your research shows!

Thanks again!!

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