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Start with as little as a hundred dollars. Sounds attractive, but..... "In order to do this thing, you must already own shares in the destination-fund."
I vaguely recall that T. Rowe Price used to allow one to bootstrap a TRP fund by setting up automatic investments for a new position. Apparently no longer. The message I get when I try to do this for a TRP fund position I closed out is:
Fund must be re-opened with new account minimums before an Automatic Buy can be established. Fund can be re-opened by making a one-time Mutual Fund Buy.
I don't know of any brokerage that allows you to circumvent minimums by using their automatic investment program.
Schwab: " Once you have made your initial investment in a fund, additional shares may be purchased through AIP in amounts of at least $100. "
Fidelity: "Purchase additional shares of mutual funds you already own"
E*Trade: "You can use Automatic Investing to add to existing mutual fund positions."
A pattern I'm noticing here is that these programs seem to be limited not merely to existing positions but to existing mutual fund positions.
(Vanguard seems to be even more restrictive, the message I get from VBS is: "Automatic transactions may only be set up on Vanguard mutual funds, including your settlement fund.")
I don't understand what all the excitement (and disappointment) is about. You have always been able to set up automatic buys for a min of $100 at TRP so long as you have first invested $1000 in a TRP fund. What's new about all this? You have always been able to do this.
The disappointment is that one used to be able to start investing in T. Rowe Price funds without having to meet the minimum fund requirement if you used an automatic investment plan (AIP).
Essentially, you agree to let the fund tap your bank account at regular intervals — usually monthly — until you reach the fund's normal minimum investment.
Many funds [would] let you start an AIP with just $50. Most T. Rowe Price funds, for example, [would] let you start a $50-a-month AIP
....And @Simon: my whole intention in opening the TRP brokerage was to use it for single stocks. I already like my stable of TRP funds. I don't really want to add to any, either, because they are all T-IRAs, and there's retirement income here at my house, but no EARNED income to report. (So, contributions would be non-deductible.) TRP won't even let me start the monthly $100 and assign it to the brokerage's "sweep" account: PRTXX. Not unless I already had the minimum $2,500 in there. (And why would I choose to grow THAT one, unless doing so in order to buy a bigger chunk of a single stock, eh? I can do that at my own discretion. MM funds pay virtually nothing.)
Trading stocks are free these days at large brokerages including Fidelity, Schwab and Vanguard. In my experience Fidelity is preferred since their online trading is most robust and reliable.
Good to hear that T. Rowe Price is getting competitive on their brokerage offering. Also many of their mutual funds (investor shares) are on no-transaction fee platform at Fidelity and Vanguard. The institutional shares, however, require transaction fee.
All I see at Fidelity are 133 T. Rowe Price funds, where the only ones with transaction fees are the more expensive advisor class shares, e.g. PASSX. No institutional class shares. What am I missing?
Vanguard have both the institutional and investor shares, but the institutional shares require transactional fees. For certain investors such as Voyager with greater than $1M, Vanguard would offer 20 free trades on Tranaction-fee mutual funds per year. T. Rowe Price institutional shares require $1M whereas Pimco institutional shares require $25K.
I am pretty sure the institutional part of Fidelity will offer the TRP institutional shares.
Fidelity's website responds differently when one attempts to buy each of these. For the Vanguard fund, it tells you the minimum Fidelity requires for a purchase: $2,500. Only when you attempt to preview the buy does it instruct you to speak with a Fidelity rep.
With PRAMX, the site doesn't tell you the min. That is often an indication that the fund isn't carried at all by Fidelity. One can still preview a buy order and get the same message about needing to speak with a Fidelity rep.
The expense ratio saving in TRP institutional shares is not as large as one find in Vanguard funds, Investor share, Admiral shares, and the Institutional share.
For small investors $1M is no small feast to invested in a single fund. The actively managed TRP ETFs have lower expense ratio than the equivalent open-end mutual funds and there is no investment minimum. For now there are only three TRP ETFs.
After the Strong Capital Management (and other related) scandals in the late 90s the SEC pressured fund houses to crack down on frequent trading abuses. These “skimming” operations were often orchestrated in concert by large groups (ie an employees’ investment plan). But smaller investors as well were impacted by generally more stringent curbs imposed on frequent buying and selling. I don’t find Price’s or others’ curbs particularly onerous; however, a way around the limitations would appear to exist in substituting ETFs for traditional funds.
While the fee advantages seem significant, I’m wondering if a retiree in his mid-seventies would find it worth the trouble in converting over to ETFs what has proven a prudent and profitable diversified approach - using roughly 12-15 long-held mutual funds from fiduciaries long acquainted with. Changing from one investment method to another would seem always to entail some risk of error.
hank said , " I don’t find Price’s or others’ curbs particularly onerous; however, a way around the limitations would appear to exist in substituting ETFs for traditional funds." Along comes a tax on each & every trade ! Hope I'm not around to see that & my trades are minimal. Stay safe, Derf
After the Strong Capital Management (and other related) scandals in the late 90s the SEC pressured fund houses to crack down on frequent trading abuses. These “skimming” operations were often orchestrated in concert by large groups (ie an employees’ investment plan). But smaller investors as well were impacted by generally more stringent curbs imposed on frequent buying and selling. I don’t find Price’s or others’ curbs particularly onerous; however, a way around the limitations would appear to exist in substituting ETFs for traditional funds.
While the fee advantages seem significant, I’m wondering if a retiree in his mid-seventies would find it worth the trouble in converting over t ETFs what has proven a prudent and profitable diversified approach - using roughly 12-15 long-held mutual funds from fiduciaries long acquainted with. Changing from one investment method to another would seem always to entail some risk of error.
Comments
Schwab: " Once you have made your initial investment in a fund, additional shares may be purchased through AIP in amounts of at least $100. "
Fidelity: "Purchase additional shares of mutual funds you already own"
E*Trade: "You can use Automatic Investing to add to existing mutual fund positions."
A pattern I'm noticing here is that these programs seem to be limited not merely to existing positions but to existing mutual fund positions.
(Vanguard seems to be even more restrictive, the message I get from VBS is: "Automatic transactions may only be set up on Vanguard mutual funds, including your settlement fund.")
That was back in 2009. Then, as now, the minimum to open a T. Rowe Price fund was $2,500 (the lower $1,000 minimum applies only to IRAs).
https://www.troweprice.com/personal-investing/help/fees-and-minimums.html
https://robinhood.com/us/en/support/articles/recurring-investments/
https://www.troweprice.com/personal-investing/accounts/brokerage/index.html
Fidelity screener results for T. Rowe Price funds.
I am pretty sure the institutional part of Fidelity will offer the TRP institutional shares.
Here's Vanguard's list of TRP tickers offered:
https://personal.vanguard.com/us/funds/other/bytype?FundFamilyId=6107
I picked the first institutional class ticker on that list, PRAMX, and looked it up on M* (legacy page). At least according to M*, Fidelity Institutional doesn't sell it.
http://financials.morningstar.com/fund/purchase-info.html?t=PRAMX
In contrast, M* says that Fidelity Institutional (but not Fidelity Retail) does sell Vanguard Admiral class shares, e.g. VEIRX:
http://financials.morningstar.com/fund/purchase-info.html?t=VEIRX
Fidelity's website responds differently when one attempts to buy each of these. For the Vanguard fund, it tells you the minimum Fidelity requires for a purchase: $2,500. Only when you attempt to preview the buy does it instruct you to speak with a Fidelity rep.
With PRAMX, the site doesn't tell you the min. That is often an indication that the fund isn't carried at all by Fidelity. One can still preview a buy order and get the same message about needing to speak with a Fidelity rep.
For small investors $1M is no small feast to invested in a single fund. The actively managed TRP ETFs have lower expense ratio than the equivalent open-end mutual funds and there is no investment minimum. For now there are only three TRP ETFs.
Above is list of TRPrice ETFs: TCHP, TDVG, TGRW & TEQI.
While the fee advantages seem significant, I’m wondering if a retiree in his mid-seventies would find it worth the trouble in converting over to ETFs what has proven a prudent and profitable diversified approach - using roughly 12-15 long-held mutual funds from fiduciaries long acquainted with. Changing from one investment method to another would seem always to entail some risk of error.
Along comes a tax on each & every trade ! Hope I'm not around to see that & my trades are minimal.
Stay safe, Derf