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There is a maximum fee of $10 (instead of $49.95) when purchasing many transaction fee funds via the Schwab Automatic Investment Plan. Can investors cancel participation in Schwab's plan after making a single fund purchase? Fidelity allows investors to do this in their corresponding plan.
All you got to do is try it. What is the chance you can't cancel anytime...about zero?
Vanguard explicitly states that in order to get its $3 fee for automatic investments, you must make at least two periodic investments. Though I have never tested this, experience has shown that Vanguard is fastidious in enforcing its rules. And it wasn't worth $6 for me to see for sure.
Dollar-cost-averaging purchases: $100 (minimum 2 transactions, $3 per transaction)
Like @Observant1, I don't have any existing positions in TF funds at Schwab that I could test adding shares to via automatic investment. I keep my TF funds at Fidelity because Fidelity has offered this feature for many years. It's been one of their selling points for OEF (as opposed to ETF) investors.
If Schwab allows one-time automatic investments (even at $10), that reduces Schwab's competitive disadvantage.
Again, all you got to do is try it. I just entered one and was able to edit or cancel(=Unenroll) it. If I could cancel it after 2 minutes, of course, you can cancel it after the first buy. case closed. I left VG over 25 years ago after I entered a buy order for a VG index fund at 9 AM and wanted to change it at 10 AM and could not do it, even with a rep help. That was enough for me to transfer my money for a better customer experience and service.
No eligible mutual funds in this account There aren't any eligible mutual funds in this account for automatic investing.
It seems that not every fund qualifies for automatic investing at Schwab (or at Fidelity, either).
Also, according to the price sheet, you may pay $10 to sell shares as well. The wording on that sheet isn't great. But looking at your own wording ("unenroll"), it may be that once a position is "enrolled", that $10 sell fee applies to all shares in the enrolled fund.
Your Vanguard anectdote supports my statement that Vanguard is fastidious about enforcing its rules. So when Vanguard says that two purchases are required, it's not going to let you cancel early. And that is an existence proof that if a brokerage says two purchases are required, it may really, really mean it.
(These days, and for several decades, it has been possible to cancel orders, even for VG funds, on Vanguard's brokerage platform. The "no cancel" restriction only applied to its legacy fund platform.)
I have some questions regarding Schwab's Automatic Investment Plan (AIP). When I login to my account and click on the icon next to "Automatic Investment Plan", the text states in part: "Based on instructions you provide, a specific dollar amount is automatically deducted from your checking/savings account to purchase additional fund shares. Investments into your existing mutual fund position can be scheduled to occur once or twice a month, monthly or quarterly."
As an example, let's say I already have $10,000 invested in Parnassus Core Equity Institutional (PRILX). PRILX has a Schwab transaction fee of $49.95 and there are no additional fees.
1) Can Schwab Value Advantage Money Investor Shares (SWVXX) be used to purchase additional PRILX shares?
2) If I enroll PRILX in the AIP with a monthly or quarterly frequency, can automatic investing be cancelled after making a single purchase? If so, are there any associated fees or penalties for cancellation?
3) The following webpage states in part: "For applicable mutual funds, a transaction fee of 8.5% of principle with a maximum fee of $10 will apply to Automatic Investment Plan purchases." https://client.schwab.com/app/trade/aip/#/home
Will I be charged $10 for each PRILX AIP purchase?
1) To utilize funds from SWVXX, you would first need to place a sell order to liquidate the amount needed for the Automatic Investment Plan (AIP) purchase of additional PRILX shares.
2) AIP participation can be cancelled anytime by unenrolling. There are no fees or penalties associated with the cancellation.
3) Purchases via the Automatic Investment Plan would incur the transaction fee stated of 8.5% of principal, up to $10, per transaction.
As expected, nothing new. You must sell MM in order to buy a mutual fund. I already verified you can unenroll any time. Every new purchase of non participating funds have a fee. Using the auto feature reduces it to $10. Selling shares is always free.
You didn't ask an important question. This is how I trade. Suppose I own $500K in THOPX. I want to sell everything and buy $495K in PIMIX and pay a fee of $49.95. I just enter both on the same date, let's say at 10 AM. I always want to be invested. Both would happen on the same day.
Now, suppose I want to use the Auto feature for $10 and save almost $40. Can I do the following? Enroll PIMIX to buy $495K, let's say next Tuesday. Next Tuesday, I manually sell $500K of THOPX. Is the PIMIX trade going to happen, or must I sell THOPX the day before on Monday? I tried the above at Fidelity and I had to sell the prior date, which means I'm one day outside the market. It's a no-go for me because if I miss just 0.1%, it can cost me a $1000. At Schwab most times these fees are waived, and I never used the auto feature, but I want to know the answer.
I'm going to test the auto feature on the same date of the sell this coming Monday. My prediction is that the buy will not happen.
It's a no-go for me because if I miss just 0.1%, it can cost me a $1000.
Is it outside the realm of possibilities that the fund you are buying could go down the day after you purchased it? If the fund went down just 0.1%, you could save a grand!
You conducted a simulation. I was hoping someone who actually purchased additional shares via Schwab's AIP would respond. Based on your results, one could assume subsequent purchases can be cancelled.
"You didn't ask an important question." This may be very important to you but is irrelevant to me.
I'm not familiar with all of Schwab's different rules/restrictions being a relatively new customer and didn't want to make any assumptions regarding Schwab's AIP¹.
¹ Note: Schwab's online AIP information was thoroughly reviewed.
You conducted a simulation. I was hoping someone who actually purchased additional shares via Schwab's AIP would respond. Based on your results, one could assume subsequent purchases can be cancelled.
"You didn't ask an important question." This may be very important to you but is irrelevant to me.
I'm not familiar with all of Schwab's different rules/restrictions being a relatively new customer and didn't want to make any assumptions regarding Schwab's AIP¹.
¹ Note: Schwab's online AIP information was thoroughly reviewed.
Please reread my previous post, it was not a simulation... "I just entered one and was able to edit or cancel(=Unenroll) it. If I could cancel it after 2 minutes, of course, you can cancel it after the first buy."
The above also means that if I left it untouched, the trade would execute until I unenrolled it. Fidelity works pretty similar/same. You create an Auto trade. You can cancel it any time, after 2 minutes or after the first trade or the second+ trade. Fidelity charges $5 per trade last time I checked, Schwab $10.
Did you enroll a mutual fund in the AIP and actually purchase additional shares? Did you then unenroll the mutual fund to cancel subsequent fund purchases? If not, it was just a simulation...
Did you enroll a mutual fund in the AIP and actually purchase additional shares? Did you then unenroll the mutual fund to cancel subsequent fund purchases? If not, it was just a simulation...
I don't need to use the auto purchase 7 times to know it would happen the eighth time. I also don't need to use the auto purchase a few times and unenrolled to know it works because I created one and unenrolled it. It's just basic trading practices and generic IT services.
"I don't need to use the auto purchase 7 times to know it would happen the eighth time."
I thought you never used Schwab's AIP. You previously stated: "At Schwab most times these fees are waived, and I never used the auto feature, but I want to know the answer."
"It's just basic trading practices and generic IT services."
"Basic trading practices" may vary among different brokerage firms. Making at least two periodic investments is a requirement to participate in Vanguard's automatic investment program as @msf previously mentioned.
1) To utilize funds from SWVXX, you would first need to place a sell order to liquidate the amount needed for the Automatic Investment Plan (AIP) purchase of additional PRILX shares.
2) AIP participation can be cancelled anytime by unenrolling. There are no fees or penalties associated with the cancellation.
3) Purchases via the Automatic Investment Plan would incur the transaction fee stated of 8.5% of principal, up to $10, per transaction.
Can't get easier than the above. Do you need to create 2 periods? no, see above. Does it matter if I did already? no, see above.
If you have more questions, I will gladly answer. Wait, can you cancel it anytime? Yes, you can; see above.
You can cancel any time you like but you can never leave
Anyone remember old mail order record clubs? My vague recollection is that you could cancel any time you wanted (even right after getting those dozen records for a penny). But you were still contractually obligated to purchase the 4 additional records you agreed to buy as a condition of your initial "membership".
This thread seems to have run its course for usefulness. It's a real pleasure interacting with folks who are self-effacing, make cogent arguments, and are receptive to others' thoughts/ideas!
"run it's course"? You keep asking the same thing. You reminds me hundreds of clients I used to help who could not find the enter key on their keyboard.
What the hell are you talking about? After reading this thread, it's obvious that I didn't "keep asking the same thing." I initially asked one question regarding whether or not subsequent Schwab AIP purchases could be cancelled. As mentioned previously, I didn't want to make any assumptions regarding Schwab's AIP. I contacted Schwab and confirmed AIP information found¹ on their website. Your condescending subsequent reply stated that you didn't need to use auto purchase 7 times to know it would work the 8th time when in reality you hadn't used this feature even once! When this glaring inconsistency was mentioned, you just ignored it and quoted Schwab's responses. Now you accuse me of being computer illiterate! Typical @FD1000 behavior when questioned... If you have nothing useful/pertinent to add to a conversation Fund Daddy, why don't you just keep your big mouth shut?
¹ I didn't find any information regarding cancelling AIP purchases.
Typical, you are rude. All you have to do is follow the Schwab rep info. It was very clear. Again, I don't need to unroll the auto-purchase after the first, second, and beyond to know it works because it works anytime, which I verified.
I'm typically not a rude person. However, if someone deliberately misrepresents what I said or did, posts condescending remarks after the issue in the OP is resolved (further remarks were not required), and is extremely obstinate regarding the entire matter, then I may become "rude" as you put it. Speaking of being rude, you may find it beneficial to conduct a thorough self-examination.
Good news happened today. I entered an auto purchase a couple of days ago for today (Mon). Today, I also entered a fund sell order at 1% higher before 10 AM. I saw both at 10 AM. Both were bond fund trades. Both were executed after hours. Then, I unrolled the auto-purchase.
I did the following around 11 ET. New instructions entered prior to 11:59 p.m. EST can be established for the next business day. Created another auto-purchase for tomorrow. I could enter a sell order until tomorrow before the market closes (usually, 4 PM). I unrollled the auto-purchase.
What we just learned? At Schwab, you can create an auto-purchase the previous day. This is fantastic. I can easily and cheaply make a trade the next day and unrolled it. As you can see, the sell order was just 1% higher.
At Fidelity it's called "Recurring Investment". * I could only create for Dec the 5, that's 3 days ahead. This is why I hardly ever use it because every day counts when I want to trade. * Last time I created Recurring Investment, I entred a sell order on the same day. I saw both in the morning, but the Recurring Investment was cancelled after hours. If you have a Recurring Investment on Dec 5th, you must sell on Dec 4th to have cash on the 5th in order for it to execute. * This is a common practice at Fidelity. Suppose I sell all the shares of a bond fund and it's about $500K. You can't enter a buy order until the next day. You have to call a rep and then he/she will enter only 90% = $450K on the same date. At Schwab, I enter, sell all shares around $500K. Then enter a buy for $495K, no need for any rep for that.
More differences. At Schwab, I can set up auto-purchase for weekly, every other week, twice per month, monthly, every 3 months, every 6 months, annually At Fidelity, weekly, every 2 weeks, monthly
Fidelity: " If the cash buying power needed for your automatic investment is not available, your scheduled purchase will be skipped. If funds are not available and the purchase is skipped, the associated plan will not be canceled. All orders placed through recurring investments will be executed as cash orders, even if approved for margin trading. Recurring investment plans that are funding from the core may be edited or deleted before 9 pm EST the business day before investment date. If the plan is being funding from a bank, the plan may be edited or deleted before 9 pm EST two business days before the investment date."
Bottom line: Fidelity is more restrictive, and in my case I must call a rep which is time-consuming. I stopped doing that because several reps told me I couldn't, and then I insisted on bringing a supervisor on the line, and he said I was right. And why only 90%? every Fidelity rep told me it's a SEC rule. When I pressed them, they admitted it's Fidelity's make-up rules.
Comments
Like @Observant1, I don't have any existing positions in TF funds at Schwab that I could test adding shares to via automatic investment. I keep my TF funds at Fidelity because Fidelity has offered this feature for many years. It's been one of their selling points for OEF (as opposed to ETF) investors.
If Schwab allows one-time automatic investments (even at $10), that reduces Schwab's competitive disadvantage.
"Charles Schwab Pricing Guide for Individual Investors"
https://www.schwab.com/legal/schwab-pricing-guide-for-individual-investors
I left VG over 25 years ago after I entered a buy order for a VG index fund at 9 AM and wanted to change it at 10 AM and could not do it, even with a rep help. That was enough for me to transfer my money for a better customer experience and service.
Also, according to the price sheet, you may pay $10 to sell shares as well. The wording on that sheet isn't great. But looking at your own wording ("unenroll"), it may be that once a position is "enrolled", that $10 sell fee applies to all shares in the enrolled fund.
Your Vanguard anectdote supports my statement that Vanguard is fastidious about enforcing its rules. So when Vanguard says that two purchases are required, it's not going to let you cancel early. And that is an existence proof that if a brokerage says two purchases are required, it may really, really mean it.
(These days, and for several decades, it has been possible to cancel orders, even for VG funds, on Vanguard's brokerage platform. The "no cancel" restriction only applied to its legacy fund platform.)
Posting info here for future reference.
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My Post
I have some questions regarding Schwab's Automatic Investment Plan (AIP).
When I login to my account and click on the icon next to "Automatic Investment Plan", the text states in part:
"Based on instructions you provide, a specific dollar amount is automatically deducted from your checking/savings account to purchase additional fund shares. Investments into your existing mutual fund position can be scheduled to occur once or twice a month, monthly or quarterly."
As an example, let's say I already have $10,000 invested in Parnassus Core Equity Institutional (PRILX).
PRILX has a Schwab transaction fee of $49.95 and there are no additional fees.
1) Can Schwab Value Advantage Money Investor Shares (SWVXX) be used to purchase additional PRILX shares?
2) If I enroll PRILX in the AIP with a monthly or quarterly frequency, can automatic investing be cancelled after making a single purchase? If so, are there any associated fees or penalties for cancellation?
3) The following webpage states in part: "For applicable mutual funds, a transaction fee of 8.5% of principle with a maximum fee of $10 will apply to Automatic Investment Plan purchases."
https://client.schwab.com/app/trade/aip/#/home
Will I be charged $10 for each PRILX AIP purchase?
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Schwab's responses (edited)
1) To utilize funds from SWVXX, you would first need to place a sell order to liquidate the amount needed
for the Automatic Investment Plan (AIP) purchase of additional PRILX shares.
2) AIP participation can be cancelled anytime by unenrolling.
There are no fees or penalties associated with the cancellation.
3) Purchases via the Automatic Investment Plan would incur the transaction fee stated of 8.5% of principal, up to $10, per transaction.
You must sell MM in order to buy a mutual fund.
I already verified you can unenroll any time.
Every new purchase of non participating funds have a fee. Using the auto feature reduces it to $10.
Selling shares is always free.
You didn't ask an important question.
This is how I trade. Suppose I own $500K in THOPX.
I want to sell everything and buy $495K in PIMIX and pay a fee of $49.95.
I just enter both on the same date, let's say at 10 AM. I always want to be invested. Both would happen on the same day.
Now, suppose I want to use the Auto feature for $10 and save almost $40. Can I do the following? Enroll PIMIX to buy $495K, let's say next Tuesday. Next Tuesday, I manually sell $500K of THOPX. Is the PIMIX trade going to happen, or must I sell THOPX the day before on Monday?
I tried the above at Fidelity and I had to sell the prior date, which means I'm one day outside the market. It's a no-go for me because if I miss just 0.1%, it can cost me a $1000.
At Schwab most times these fees are waived, and I never used the auto feature, but I want to know the answer.
I'm going to test the auto feature on the same date of the sell this coming Monday. My prediction is that the buy will not happen.
You conducted a simulation.
I was hoping someone who actually purchased additional shares via Schwab's AIP would respond.
Based on your results, one could assume subsequent purchases can be cancelled.
"You didn't ask an important question."
This may be very important to you but is irrelevant to me.
I'm not familiar with all of Schwab's different rules/restrictions being a relatively new customer
and didn't want to make any assumptions regarding Schwab's AIP¹.
¹ Note: Schwab's online AIP information was thoroughly reviewed.
"I just entered one and was able to edit or cancel(=Unenroll) it. If I could cancel it after 2 minutes, of course, you can cancel it after the first buy."
The above also means that if I left it untouched, the trade would execute until I unenrolled it.
Fidelity works pretty similar/same. You create an Auto trade. You can cancel it any time, after 2 minutes or after the first trade or the second+ trade. Fidelity charges $5 per trade last time I checked, Schwab $10.
Did you then unenroll the mutual fund to cancel subsequent fund purchases?
If not, it was just a simulation...
I also don't need to use the auto purchase a few times and unenrolled to know it works because I created one and unenrolled it.
It's just basic trading practices and generic IT services.
I thought you never used Schwab's AIP.
You previously stated: "At Schwab most times these fees are waived,
and I never used the auto feature, but I want to know the answer."
"It's just basic trading practices and generic IT services."
"Basic trading practices" may vary among different brokerage firms.
Making at least two periodic investments is a requirement to participate
in Vanguard's automatic investment program as @msf previously mentioned.
Do you need to create 2 periods? no, see above.
Does it matter if I did already? no, see above.
If you have more questions, I will gladly answer.
Wait, can you cancel it anytime? Yes, you can; see above.
Anyone remember old mail order record clubs? My vague recollection is that you could cancel any time you wanted (even right after getting those dozen records for a penny). But you were still contractually obligated to purchase the 4 additional records you agreed to buy as a condition of your initial "membership".
It's a real pleasure interacting with folks who are self-effacing,
make cogent arguments, and are receptive to others' thoughts/ideas!
You keep asking the same thing. You reminds me hundreds of clients I used to help who could not find the enter key on their keyboard.
After reading this thread, it's obvious that I didn't "keep asking the same thing."
I initially asked one question regarding whether or not subsequent Schwab AIP purchases could be cancelled.
As mentioned previously, I didn't want to make any assumptions regarding Schwab's AIP.
I contacted Schwab and confirmed AIP information found¹ on their website.
Your condescending subsequent reply stated that you didn't need to use auto purchase 7 times
to know it would work the 8th time when in reality you hadn't used this feature even once!
When this glaring inconsistency was mentioned, you just ignored it and quoted Schwab's responses.
Now you accuse me of being computer illiterate!
Typical @FD1000 behavior when questioned...
If you have nothing useful/pertinent to add to a conversation Fund Daddy,
why don't you just keep your big mouth shut?
¹ I didn't find any information regarding cancelling AIP purchases.
All you have to do is follow the Schwab rep info. It was very clear. Again, I don't need to unroll the auto-purchase after the first, second, and beyond to know it works because it works anytime, which I verified.
I'm typically not a rude person.
However, if someone deliberately misrepresents what I said or did,
posts condescending remarks after the issue in the OP is resolved (further remarks were not required),
and is extremely obstinate regarding the entire matter, then I may become "rude" as you put it.
Speaking of being rude, you may find it beneficial to conduct a thorough self-examination.
I entered an auto purchase a couple of days ago for today (Mon).
Today, I also entered a fund sell order at 1% higher before 10 AM.
I saw both at 10 AM.
Both were bond fund trades. Both were executed after hours.
Then, I unrolled the auto-purchase.
I did the following around 11 ET. New instructions entered prior to 11:59 p.m. EST can be established for the next business day.
Created another auto-purchase for tomorrow. I could enter a sell order until tomorrow before the market closes (usually, 4 PM).
I unrollled the auto-purchase.
What we just learned?
At Schwab, you can create an auto-purchase the previous day. This is fantastic. I can easily and cheaply make a trade the next day and unrolled it.
As you can see, the sell order was just 1% higher.
At Fidelity it's called "Recurring Investment".
* I could only create for Dec the 5, that's 3 days ahead. This is why I hardly ever use it because every day counts when I want to trade.
* Last time I created Recurring Investment, I entred a sell order on the same day. I saw both in the morning, but the Recurring Investment was cancelled after hours.
If you have a Recurring Investment on Dec 5th, you must sell on Dec 4th to have cash on the 5th in order for it to execute.
* This is a common practice at Fidelity. Suppose I sell all the shares of a bond fund and it's about $500K. You can't enter a buy order until the next day. You have to call a rep and then he/she will enter only 90% = $450K on the same date.
At Schwab, I enter, sell all shares around $500K. Then enter a buy for $495K, no need for any rep for that.
More differences.
At Schwab, I can set up auto-purchase for weekly, every other week, twice per month, monthly, every 3 months, every 6 months, annually
At Fidelity, weekly, every 2 weeks, monthly
Fidelity: " If the cash buying power needed for your automatic investment is not available, your scheduled purchase will be skipped. If funds are not available and the purchase is skipped, the associated plan will not be canceled. All orders placed through recurring investments will be executed as cash orders, even if approved for margin trading.
Recurring investment plans that are funding from the core may be edited or deleted before 9 pm EST the business day before investment date. If the plan is being funding from a bank, the plan may be edited or deleted before 9 pm EST two business days before the investment date."
Bottom line: Fidelity is more restrictive, and in my case I must call a rep which is time-consuming. I stopped doing that because several reps told me I couldn't, and then I insisted on bringing a supervisor on the line, and he said I was right. And why only 90%? every Fidelity rep told me it's a SEC rule. When I pressed them, they admitted it's Fidelity's make-up rules.