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Mutual fund early redemption penalty at TD Ameritrade and other brokerages
I am reducing my mutual fund holdings at TD Ameritrade because there is a $49.99 fee if you sell within 180 days of purchase. I am not a short term trader, but still, 6 months are too long, in case something comes up and you need to sell. What is the minimum holding period for mutual funds without early redemption penalty at other major brokerages?
I believe that there is still no short term trading fee at WellsTrade. This assumes (a) that you consider WellsTrade a major brokerage, and (b) that you want to have anything to do with Wells Fargo.
Elsewhere, the minimum seems to be 60 days, e.g. at Fidelity and Vanguard. Note that both of these brokerages impose restrictions on the frequency of short term round trips you can make, e.g. Vanguard's policy. If you're just worried about the occasional short term trade, these won't affect you.
Note that TDAmeritrade has lots of different fee schedules for various types of accounts. For example, I had a TDA account attached to my HSA account. There, the TF commissions were about half what it costs in their "standard" account, and the short term trading period was either 60 or 90 days. This doesn't help you, but could help others who might be looking at these special accounts and just assume the 180 day restriction applied there as well.
Funny that TRP had a 90 day holding period with a 2% 'early trade' penalty and TDA has a 180-day holding period for a $50 'early sale' penalty.
I just dumped a TRP at Day 90 to avoid the 2% (which would've been a few hundred bucks) but still got hit with the $50 TD penalty. 180 days is asinine, imho.
@sea: You said, " I am not a short term trader, but still, 6 months are too long, in case something comes up and you need to sell. " That's hard for me to understand when dealing with mutual funds. They should be long-term investments, that's why brokerage firms charge fees to discourage short term trading. Regards, Ted
I block pop-ups so maybe there was a reminder on the sell order page. But it was indicated on the page when I bought it -- both the TD and TRP fees -- so I definitely was informed.
@sea: You said, " I am not a short term trader, but still, 6 months are too long, in case something comes up and you need to sell. " That's hard for me to understand when dealing with mutual funds. They should be long-term investments, that's why brokerage firms charge fees to discourage short term trading. Regards, Ted
Finally, I agree with @Ted. If you're selling out of an active MF within 6 months, then you have no business investing in it. Just buy a bunch of index ETFs or a target date fund.
Realistically 6 month holding period for mutual funds is relatively short. These are long term investment products unlike individual securities or ETFs. One needs to have sufficient cash set aside to pay medical bills, tuition, and other short term needs. Money market funds are yielding close to 2%.
Something I don't understand is why any investment (aside from cash equivalents) should be considered acceptable for short term needs:
"If you're selling out of an active MF within 6 months, then you have no business investing in it. Just buy a bunch of index ETFs or a target date fund" Active bad, passive good?
"These are long term investment products unlike individual securities or ETFs." It's okay to use any investment so long as it has low/no commissions?
We can dismiss the impact to the fund itself - that's taken care of by the fund's own redemption fee (which goes back into the fund to compensate it for trading costs/market movement). Here we're talking about brokerage fees, not fund redemption fees.
So the question is, from the investor (as opposed to fund) perspective, does it ever make sense to count on index ETFs or target date funds, or individual securities or any (active or index) ETFs, as a place to keep short term (under 6 month) money?
IMHO, the answer is no, with the possible exception of individual securities, if you're buying them because you (think you) see an obvious mispricing that you want to take advantage of and flip quickly.
Actively managed funds (whether open end or ETF) may be more unpredictable in the short term than indexes, but that doesn't mean one can count on an index fund not taking a dive in the next few months.
Target date funds, especially in the short run, are basically just hybrid funds (glide path significantly affects allocations only over years). With roughly zero correlation between stocks and bonds, sometimes the components will move in opposite directions, sometimes not. You don't know if this time, this month, they're both going to drop. https://www.ft.com/content/7914a096-48a9-11e8-8ee8-cae73aab7ccb
"in case something comes up and you need to sell" I read that as an unexpected, large expense (roof blew off, car suddenly died, etc.). If one's six month plus emergency fund isn't enough to handle the rare, unexpected expense, then sure, one will need to sell some longer term investment.
I wouldn't expect a need like that to occur more than once every several years. It's not worth picking a brokerage on the possibility of incurring a $50 fee every few years. It seems better to focus on routine costs/fees, service, accessibility, etc.
I never said you can't expect an index fund to dive over a short period. That is obviously true; nobody here has a crystal ball. If he/she did, he/she would be relaxing on a private island with no worries in the world.
The point I'm making is that active managers need to be evaluated over a full market cycle.
The question appeared to be about the investor's financial situation, not about the investment's performance. How to sell out of any investment cheaply in an emergency. I agree with Ted's sentiment - that mutual funds (including target date funds and index funds) are not investments you should be considering if you might sell in the short term.
Sure, it's best to evaluate a fund over a full cycle before even buying it. However, if you've done that and like the fund, still don't buy it with the expectation that you might flip it "in case something comes up and you need to sell".
I read "need to sell" in the question as meaning "need to raise cash". I can see what I think is your interpretation: "need to sell because one can't stomach the three month dip". Still, index ETFs don't offer any better guarantee of avoiding that dip than do actively managed funds which you've fully researched and watched. Don't buy either if you might sell quickly.
Actually, for me it's not to raise cash or because of a market dip. Mainly some funds were not well thought through when I bought them, and I want to consolidate my portfolio by dumping the extra ones, the ones I didn't understand enough and the ones that are not doing well. Guess the 180 day rule will make me more sparing in buying a new mutual fund.
Actually, for me it's not to raise cash or because of a market dip. Mainly some funds were not well thought through when I bought them, and I want to consolidate my portfolio by dumping the extra ones, the ones I didn't understand enough and the ones that are not doing well. Guess the 180 day rule will make me more sparing in buying a new mutual fund.
OK, for the wanting to consolidate for not understanding the funds and wanting to consolidate. BAD IDEA, if you're selling solely for funds not doing well. This goes into why you should evaluate over a full cycle. Maybe your fund is expect to under-perform in a go-go market like we've experienced. That doesn't mean you need to dumb the fund... If you're doing doing that, then just go passive all day.
Thanks for explaining. Wow did I misread you! Regardless of whether you stay with TDA or move to a place with a shorter fee period, I hope you'll take a little more time and not jump in and out quickly. Buying high and selling low has been proven not to work well.
TRP had a 90 day holding period with a 2% 'early trade' penalty and TDA has a 180-day holding period for a $50 'early sale' penalty. I just dumped a TRP at Day 90 to avoid the 2% ... .
T. Rowe began imposing early redemption fees on select funds around the time of the frequent trading scandles involving Dick Strong and other insiders (late 90’s or early 2000s). T. Rowe was not involved. But there were rumors that some of their international funds were being successfully “gamed” by schrewd investors taking advantage of the time disparity between international markets and the U.S. Around that time, SEC began allowing fair value pricing on international funds (another topic) which Price also adapted.
Initially, only a handful of Price’s funds were affected. The list has grown over the years and now extends to some domestic funds as well. Occasionally I’ll forget to check and get tripped-up by one of these fees. To their credit, Price is endeavoring to achieve a fairer playing field for all. Investors who successfully game a fund on a regular basis can/do lower the returns for everyone else. Price rolls these fees back into the affected funds for the benefit of long-term holders.
Price uses “first in / first out” for computation. So you might add to a fund in August and than sell the same amount in September. No fee is applied as long as the amount sold doesn’t exceed the amount you’ve held in the fund for the required period. While 90 days and 2% seems to be the norm, a few funds, like real estate and high yield bond, have only 1% fees. And, one fund (noted below) has a 365-day holding period. This information is published in the Prospectus of each and every T. Rowe Price fund (whether affected or not). Here’s the list of affected funds as near as I can get.
Africa & Middle East Asia Opportunities Credit Opportunities Emerging Europe Emerging Markets Bond Emerging Markets Corporate Bond Emerging Markets Local Currency Bond Emerging Markets Stock Emerging Markets Value Stock Equity Index 500 European Stock Extended Equity Market Index Floating Rate Global Growth Stock Global High Income Bond Global Real Estate Global Stock High Yield Intermediate Tax-Free High Yield International Bond International Bond Fund (USD Hedged) International Concentrated Equity International Discovery International Equity Index International Stock International Value Equity Japan Latin America New Asia Overseas Stock QM Global Equity QM U.S. Small & Mid-Cap Core Equity QM U.S. Small-Cap Growth Equity Real Assets Real Estate Small-Cap Value Spectrum International *Tax-Efficient Equity (365 days) Tax-Free High Yield Total Equity Market Index U.S. Bond Enhanced Index U.S. High Yield
There has been a real inefficiency with TD Ameritrade in the handling of how they charge former Scottrade account holders. More specifically, with their transaction fee funds you get charged only $17 for exiting a position held less than 180 days. On non transaction fee funds it is the $49.99 which you referenced.
That is high for exiting a TF position. Many brokerages charge $0 (though they may still limit the number of short round trips you make).
"Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days. This fee does not apply to Fidelity funds, money market funds, FundsNetwork Transaction Fee funds, FundsNetwork load funds ..."
"Schwab’s short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource service (and certain other funds with no transaction fees) and held for 90 days or less." (OneSource is Schwab's name for NTF funds.)
"To discourage short-term trading, E*TRADE Securities will charge an Early Redemption Fee of $49.99 on redemptions or exchanges of no-load, no transaction fee funds that are held less than 90 days."
Even TD Ameritrade doesn't usually charge a short term redemption fee on TF funds. Sounds like you're getting the "short" end of the stick.
There has been a real inefficiency with TD Ameritrade in the handling of how they charge former Scottrade account holders. More specifically, with their transaction fee funds you get charged only $17 for exiting a position held less than 180 days. On non transaction fee funds it is the $49.99 which you referenced.
I wasn't aware of that, so thanks for the info. I was a Scottrade client. I got charged $49.99 once for a NTF fund held less than 180 days. When I sold that fund I was a little curious if the 180 days rule really applied to former Scottrade clients since Scottrade rule was 90 days.
@msf Yes I definitely need more thinking before initiating a mutual fund position. ☺️
Wrong and more wrong! Where do you get TD doesn’t usually charge a short term redemption fee on their TF funds. They charge $49.99 for TF funds held less than 180 days. As for many brokerages charging 0 for exiting a TF fund, they charge you on the entry such as Fidelity’s $49.95. TD grandfathered in for Scottrade account holders $17 for purchases of TF funds and so far at least have been charging $17 for exits. Scottrade charged some $66.00 for exits $17 plus $49. Basically, I am paying $34 total buying and selling a TF fund at TD. That is less than I am charged for the short term trading of a non transaction fee fund there (49.99) as well as trading a transaction fee fund elsewhere. Do you ever do any short term trading of mutual funds? Most likely not so how in blue blazes do you have any hands on experiences to even make such inane and inaccurate comments on the topic??
That is high for exiting a TF position. Many brokerages charge $0 (though they may still limit the number of short round trips you make).
"Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days. This fee does not apply to Fidelity funds, money market funds, FundsNetwork Transaction Fee funds, FundsNetwork load funds ..."
"Schwab’s short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource service (and certain other funds with no transaction fees) and held for 90 days or less." (OneSource is Schwab's name for NTF funds.)
"To discourage short-term trading, E*TRADE Securities will charge an Early Redemption Fee of $49.99 on redemptions or exchanges of no-load, no transaction fee funds that are held less than 90 days."
Even TD Ameritrade doesn't usually charge a short term redemption fee on TF funds. Sounds like you're getting the "short" end of the stick.
That is high for exiting a TF position. Many brokerages charge $0 (though they may still limit the number of short round trips you make).
"Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days. This fee does not apply to Fidelity funds, money market funds, FundsNetwork Transaction Fee funds, FundsNetwork load funds ..."
"Schwab’s short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource service (and certain other funds with no transaction fees) and held for 90 days or less." (OneSource is Schwab's name for NTF funds.)
"To discourage short-term trading, E*TRADE Securities will charge an Early Redemption Fee of $49.99 on redemptions or exchanges of no-load, no transaction fee funds that are held less than 90 days."
Even TD Ameritrade doesn't usually charge a short term redemption fee on TF funds. Sounds like you're getting the "short" end of the stick.
@Junkster, have you already written about why ST trading of mfunds is ever a good idea, rather than giving the manager(s) a year or three or four to work their approach ?
Compare that with Scottrade, that explicitly charged short term fees on all no load funds, NTF and TF:
Mutual Funds5 ... 5In addition to the commissions above, all no-load shares purchased from Scottrade and held 90 days or less will be charged a short-term redemption fee. Exceptions to this short-term redemption fee are the Rydex, Guggenheim, ProFunds and Direxion families of funds, which are intended for short-term traders. ...
I think we're talking about two different things here. Since the thread was about short term redemption fees, that's what I was addressing - fees added to whatever fee would be charged to sell the shares. Most brokerages don't add a short term fee when selling TF funds. That includes TDA.
Upon a third read, it looks like you may be saying that the total fee for you to sell a TF fund is $17. Not that it is adding a $17 short term redemption fee. So you are paying $17 (grandfathered TF fee) plus $0 short term fee. Which says that TDA is honoring its policy (that most brokerages share) of not adding a short term redemption fee to the sale of any non-NTF fund.
I stand by my statement that TDA doesn't charge a short term redemption fee on TF funds. It still charges a routine fee to sell TF funds, just like most brokerages aside from Fidelity and Schwab.
FWIW, when I buy TF funds at Fidelity, and I do buy a fair amount of them, most of the time I pay $5/transaction. My round trip costs are usually $5. Since I keep a toe hold in funds I like (especially when the fund is closed), I can always add to my minimal position for a $5 fee. Selling costs nothing at Fidelity, and as near as I can tell, Fidelity won't charge me a short term fee for those funds.
Wrong and more wrong! Where do you get TD doesn’t usually charge a short term redemption fee on their TF funds.
I got it from their schedule of commissions and fees. Any time I am charged something not explicitly stated in a fee schedule I insist that the charge be refunded:
Please note: No-transaction fee (NTF) funds (except ProFunds and Rydex) held 180 days or less are subject to a Short-Term Redemption fee, which is a flat fee of $49.99. This fee is in addition to any fees addressed in the fund's prospectus.
Compare that with Scottrade, that explicitly charged short term fees on all no load funds, NTF and TF:
Mutual Funds5 ... 5In addition to the commissions above, all no-load shares purchased from Scottrade and held 90 days or less will be charged a short-term redemption fee. Exceptions to this short-term redemption fee are the Rydex, Guggenheim, ProFunds and Direxion families of funds, which are intended for short-term traders. ...
From what you wrote, it sounds like you're paying $17 instead of $0 because TDA is still holding you to that old agreement. Cheaper to buy TF funds, but more expensive to sell. The standard (read: usual) TDA schedule is $49.99 to buy, $0 to sell.
If I've missed reading the fee for standard (not grandfathered) TDA customers, I'll gladly acknowledge my error. It's been a long day.
Yes, it must have been a long day. We are talking about transaction fee funds here. And your comment that TD doesn’t charge a short term redemption fee on TF funds. Then you go into a soliloquy on NTF funds showing TD’s schedule of fees for NTF funds. TD charges 49.99 to purchase a TF fund as well as 49.99 to sell if sold within 180 days. Because I am a former Scottrade customer I am charged $17 to buy and $17 to sell if sold within 180 days. I pay $34 per round trip. Among the larger brokerage firms with a large selection of funds ala Fidelity, Schwab, Vanguard, and TD, $34 is the lowest price for such round trips. At Scottrade I was charged $17 to purchase a TF fund and an onerous $66 to sell if sold within 90 days.
As you can see, I edited my response while you were writing yours. I did try rereading your post until I could see what you were getting at.
I hope you'll read my last (updated) paragraph to see that one can pull off $5 round trips at Fidelity, with the proviso that one leaves a small amount in the TF fund for the next round trip. I have done this, but my round trips unlike yours last years.
@Junkster, have you already written about why ST trading of mfunds is ever a good idea, rather than giving the manager(s) a year or three or four to work their approach ?
Yes I wrote about it in a book long ago as well as a couple seminars, magazine articles. My account is seven figures to the better than had I simply put it in an S&P index fund or scattered my monies among a 1001 funds for diversification purposes. Because I only worked part time, low paying minimum wage type jobs, my total lifetime contributions through 2012 to my IRA beginning in April 1993 was limited to only $76,000. My taxable account only $2200 in 1985. What kind of nest egg would those total contributions have netted this 71 year old now had I simply let it ride in an index fund or followed conventional wisdom?
As you can see, I edited my response while you were writing yours. I did try rereading your post until I could see what you were getting at.
I hope you'll read my last (updated) paragraph to see that one can pull off $5 round trips at Fidelity, with the proviso that one leaves a small amount in the TF fund for the next round trip. I have done this, but my round trips unlike yours last years.
I think we have different views on short term trading fees vs what you call routine trading fees. All I know is that TD will charge its regular customers 49.99 to buy a TF fund and 49.99 to sell if sold within 180 days. That is among the most onerous in the business and why I was about to transfer my account to Fidelity where they charge you 49.95 to purchase a TF fund and 0 to sell. But when I found I was only paying 17 to buy and 17 to sell on my short term trades I gladly stayed with TD.
@Junkster, can you point toward the book and magazine articles? If you are up a mil over simple SP500 (is this only a few percent of total assets?) in this bull market (and why were you working at all??), this 71yo would like to study up. Will also send you all my moneys and beg you to take on, or guide.
I'll try briefly beating a dead horse one more time
TDA charges a "regular" (not grandfathered) customer $49.99 to by a TF fund, and $49.99 to sell that same fund, regardless of whether the sale is after 1 day, 180 days, or 10 years. (See, e.g. this 2012 Forbes article saying that that TDA charges fees on both buys and sells of TF funds.)
It's charging nothing extra to sell that TF fund in under 180 days. That's why I view it as charging no special short term trading fee on TF funds. You won't save money by waiting 180 days to sell.
I'll try briefly beating a dead horse one more time
TDA charges a "regular" (not grandfathered) customer $49.99 to by a TF fund, and $49.99 to sell that same fund, regardless of whether the sale is after 1 day, 180 days, or 10 years. (See, e.g. this 2012 Forbes article saying that that TDA charges fees on both buys and sells of TF funds.)
It's charging nothing extra to sell that TF fund in under 180 days. That's why I view it as charging no special short term trading fee on TF funds. You won't save money by waiting 180 days to sell.
Exactly, So basically $100 total to buy and sell a transaction fee fund. I simply said I was paying $17 to sell and $17 to buy and then you said I was getting the short end of the stick. I couldn’t understand your logic of how I was getting the short end of the stick.
@Junkster, can you point toward the book and magazine articles? If you are up a mil over simple SP500 (is this only a few percent of total assets?) in this bull market (and why were you working at all??), this 71yo would like to study up. Will also send you all my moneys and beg you to take on, or guide.
A few here are aware of the book etc. it was written long ago is outdated and I don’t recommend purchase. My point was what was I to do with only $76,000 in lifetime contributions to my IRA?Invest it in an S&P index fund? Instead I had to think outside of the box if I ever wanted to have a respectable nest egg for retirement.
>> My account is seven figures to the better than had I simply put it in an S&P index fund or scattered my monies among a 1001 funds for diversification purposes
so you made an extra million over $76k from outside-the-box decisionmaking
Comments
Elsewhere, the minimum seems to be 60 days, e.g. at Fidelity and Vanguard. Note that both of these brokerages impose restrictions on the frequency of short term round trips you can make, e.g. Vanguard's policy. If you're just worried about the occasional short term trade, these won't affect you.
Note that TDAmeritrade has lots of different fee schedules for various types of accounts. For example, I had a TDA account attached to my HSA account. There, the TF commissions were about half what it costs in their "standard" account, and the short term trading period was either 60 or 90 days. This doesn't help you, but could help others who might be looking at these special accounts and just assume the 180 day restriction applied there as well.
Funny that TRP had a 90 day holding period with a 2% 'early trade' penalty and TDA has a 180-day holding period for a $50 'early sale' penalty.
I just dumped a TRP at Day 90 to avoid the 2% (which would've been a few hundred bucks) but still got hit with the $50 TD penalty. 180 days is asinine, imho.
Regards,
Ted
Derf
I block pop-ups so maybe there was a reminder on the sell order page. But it was indicated on the page when I bought it -- both the TD and TRP fees -- so I definitely was informed.
"If you're selling out of an active MF within 6 months, then you have no business investing in it. Just buy a bunch of index ETFs or a target date fund"
Active bad, passive good?
"These are long term investment products unlike individual securities or ETFs."
It's okay to use any investment so long as it has low/no commissions?
We can dismiss the impact to the fund itself - that's taken care of by the fund's own redemption fee (which goes back into the fund to compensate it for trading costs/market movement). Here we're talking about brokerage fees, not fund redemption fees.
So the question is, from the investor (as opposed to fund) perspective, does it ever make sense to count on index ETFs or target date funds, or individual securities or any (active or index) ETFs, as a place to keep short term (under 6 month) money?
IMHO, the answer is no, with the possible exception of individual securities, if you're buying them because you (think you) see an obvious mispricing that you want to take advantage of and flip quickly.
Actively managed funds (whether open end or ETF) may be more unpredictable in the short term than indexes, but that doesn't mean one can count on an index fund not taking a dive in the next few months.
Target date funds, especially in the short run, are basically just hybrid funds (glide path significantly affects allocations only over years). With roughly zero correlation between stocks and bonds, sometimes the components will move in opposite directions, sometimes not. You don't know if this time, this month, they're both going to drop.
https://www.ft.com/content/7914a096-48a9-11e8-8ee8-cae73aab7ccb
"in case something comes up and you need to sell"
I read that as an unexpected, large expense (roof blew off, car suddenly died, etc.). If one's six month plus emergency fund isn't enough to handle the rare, unexpected expense, then sure, one will need to sell some longer term investment.
I wouldn't expect a need like that to occur more than once every several years. It's not worth picking a brokerage on the possibility of incurring a $50 fee every few years. It seems better to focus on routine costs/fees, service, accessibility, etc.
The point I'm making is that active managers need to be evaluated over a full market cycle.
Sure, it's best to evaluate a fund over a full cycle before even buying it. However, if you've done that and like the fund, still don't buy it with the expectation that you might flip it "in case something comes up and you need to sell".
I read "need to sell" in the question as meaning "need to raise cash". I can see what I think is your interpretation: "need to sell because one can't stomach the three month dip". Still, index ETFs don't offer any better guarantee of avoiding that dip than do actively managed funds which you've fully researched and watched. Don't buy either if you might sell quickly.
Initially, only a handful of Price’s funds were affected. The list has grown over the years and now extends to some domestic funds as well. Occasionally I’ll forget to check and get tripped-up by one of these fees. To their credit, Price is endeavoring to achieve a fairer playing field for all. Investors who successfully game a fund on a regular basis can/do lower the returns for everyone else. Price rolls these fees back into the affected funds for the benefit of long-term holders.
Price uses “first in / first out” for computation. So you might add to a fund in August and than sell the same amount in September. No fee is applied as long as the amount sold doesn’t exceed the amount you’ve held in the fund for the required period. While 90 days and 2% seems to be the norm, a few funds, like real estate and high yield bond, have only 1% fees. And, one fund (noted below) has a 365-day holding period. This information is published in the Prospectus of each and every T. Rowe Price fund (whether affected or not). Here’s the list of affected funds as near as I can get.
Africa & Middle East
Asia Opportunities
Credit Opportunities
Emerging Europe
Emerging Markets Bond
Emerging Markets Corporate Bond
Emerging Markets Local Currency Bond
Emerging Markets Stock
Emerging Markets Value Stock
Equity Index 500
European Stock
Extended Equity Market Index
Floating Rate
Global Growth Stock
Global High Income Bond
Global Real Estate
Global Stock
High Yield
Intermediate Tax-Free High Yield
International Bond
International Bond Fund (USD Hedged)
International Concentrated Equity
International Discovery
International Equity Index
International Stock
International Value Equity
Japan
Latin America
New Asia
Overseas Stock
QM Global Equity
QM U.S. Small & Mid-Cap Core Equity
QM U.S. Small-Cap Growth Equity
Real Assets
Real Estate
Small-Cap Value
Spectrum International
*Tax-Efficient Equity (365 days)
Tax-Free High Yield
Total Equity Market Index
U.S. Bond Enhanced Index
U.S. High Yield
"Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days. This fee does not apply to Fidelity funds, money market funds, FundsNetwork Transaction Fee funds, FundsNetwork load funds ..."
"Schwab’s short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource service (and certain other funds with no transaction fees) and held for 90 days or less." (OneSource is Schwab's name for NTF funds.)
"To discourage short-term trading, E*TRADE Securities will charge an Early Redemption Fee of $49.99 on redemptions or exchanges of no-load, no transaction fee funds that are held less than 90 days."
Even TD Ameritrade doesn't usually charge a short term redemption fee on TF funds. Sounds like you're getting the "short" end of the stick.
"No-transaction-fee (NTF) funds (except ProFunds and Rydex) held 180 days or less are subject to a Short-Term Redemption fee of $49.99."
https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA4075.pdf
@msf Yes I definitely need more thinking before initiating a mutual fund position. ☺️
I think we're talking about two different things here. Since the thread was about short term redemption fees, that's what I was addressing - fees added to whatever fee would be charged to sell the shares. Most brokerages don't add a short term fee when selling TF funds. That includes TDA.
Upon a third read, it looks like you may be saying that the total fee for you to sell a TF fund is $17. Not that it is adding a $17 short term redemption fee. So you are paying $17 (grandfathered TF fee) plus $0 short term fee. Which says that TDA is honoring its policy (that most brokerages share) of not adding a short term redemption fee to the sale of any non-NTF fund.
I stand by my statement that TDA doesn't charge a short term redemption fee on TF funds. It still charges a routine fee to sell TF funds, just like most brokerages aside from Fidelity and Schwab.
FWIW, when I buy TF funds at Fidelity, and I do buy a fair amount of them, most of the time I pay $5/transaction. My round trip costs are usually $5. Since I keep a toe hold in funds I like (especially when the fund is closed), I can always add to my minimal position for a $5 fee. Selling costs nothing at Fidelity, and as near as I can tell, Fidelity won't charge me a short term fee for those funds.
I hope you'll read my last (updated) paragraph to see that one can pull off $5 round trips at Fidelity, with the proviso that one leaves a small amount in the TF fund for the next round trip. I have done this, but my round trips unlike yours last years.
TDA charges a "regular" (not grandfathered) customer $49.99 to by a TF fund, and $49.99 to sell that same fund, regardless of whether the sale is after 1 day, 180 days, or 10 years. (See, e.g. this 2012 Forbes article saying that that TDA charges fees on both buys and sells of TF funds.)
It's charging nothing extra to sell that TF fund in under 180 days. That's why I view it as charging no special short term trading fee on TF funds. You won't save money by waiting 180 days to sell.
so you made an extra million over $76k from outside-the-box decisionmaking