Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Schwab is supposed to charge 8.5% on small purchases (until that exceeds the flat fee amount). If you say that you want to buy $400 not including the fee, it adds $34 to your total. But if you say that you want to buy $434 including the fee, it charges $36.89 (8.5% of $434).
The charge I saw was on a fund for which Schwab was supposed to be waiving my fees. So discovering this was accidental.
I let Schwab know that they hadn't gotten my household waivers in place correctly (waiting on that correction). I also notified them about this quirk.
For really small amounts there's a workaround. Purchases under $100 are not charged a fee. So that $400 purchase could be made in five transactions w/o fee.
Or with a $10 fee, first buy $99 worth and then use automatic investing ($10 fee) for the remainder. Except that automatic investing doesn't work on "increased transaction funds" like Vanguard.
Different brokerage platforms seem to have their own quirky idiosyncrasies. I own two TF funds in a Fidelity account. Recurring transactions (only $5) were initiated today to avoid paying a $49.95 TF. The earliest allowable transaction date was Dec. 9 — three business days after the current day. IIRC, Fidelity previously allowed recurring transactions to start on the next business day.
Comments
I let Schwab know that they hadn't gotten my household waivers in place correctly (waiting on that correction). I also notified them about this quirk.
For really small amounts there's a workaround. Purchases under $100 are not charged a fee. So that $400 purchase could be made in five transactions w/o fee.
Or with a $10 fee, first buy $99 worth and then use automatic investing ($10 fee) for the remainder. Except that automatic investing doesn't work on "increased transaction funds" like Vanguard.
I own two TF funds in a Fidelity account.
Recurring transactions (only $5) were initiated today to avoid paying a $49.95 TF.
The earliest allowable transaction date was Dec. 9 — three business days after the current day.
IIRC, Fidelity previously allowed recurring transactions to start on the next business day.
He/she simply calculated fee on the total amount, whether with or without fee.
Correct procedure for "with fee" is as follows:
Total amount $434, amount without fee X, solve X + 0.085X = 434, so X = 434/1.085 = $400.
Or, the programmer knew what he/she did - i.e. docked customers $2.89 for the convenience of using with the "fee option".