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Waiving transaction fees on TF funds by setting up periodic transactions

beebee
edited April 2013 in Fund Discussions
I paid two $45 transaction fees to buy TGBAX and WAEMX through a brokerage account I have with USAA. Because of the transaction fee ($45 /transaction) I have not touched either investment since the original contribution. I would like to take the dividends I generate from TGBAX and dollar cost average into WAEMX on a monthly basis. I view both funds as long term holdings.

By setting up at least 6 periodic transactions (in my case, monthly) my brokerage house will sell shares of TGBAX and buy shares of WAEMX without causing me to have to cough up $90 each month in transaction fees to accomplish the sell and the buy of these two funds.

I consider this a great way to lower my costs while still accomplishing my desire to own additional shares (on a D.C.A. basis) of the Wasatch fund.

Anyone have similar cost savings experiences to share?

Comments

  • msf
    edited April 2013
    Fidelity will charge investors $5/purchase ($0/sale) if they purchase additional shares via its Automatic Investment Program - but unlike other places, they'll let you cancel the scheduled investments after a single investment. So this lets you do one time purchases into TF funds for a nominal fee.

    Vanguard doesn't waive fees entirely either, but charges $3 per dollar-cost-averaging transaction. (On its fee page, look under mutual funds.) Unlike Fidelity, it requires you to make at least two purchases.

    American Century appears to waive purchase fees entirely on transaction fee funds if you purchase them automatically (min $100) on a monthly, quarterly, semiannual, or annual basis. (See the last FAQ in the brokerage section).

    I've done the first, read many posts about the second; the AC info is strictly from their website. Aside from Fidelity, I believe the type of automatic investment (rebalancing) you described would be more expensive than stated above, because of the sell transaction. I've only commented on the "buy" side.
  • AndyJ
    edited April 2013
    As recently as a few months ago, the Vanguard brokerage still required that you call them to set up dca buys into non-V, TF mutual funds (after the initial purchase, of course). Fido lets you do everything online.
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