Latest posts by Wanderer (see all)
- The Yield Shield: Putting it all Together - April 16, 2018
- The Yield Shield: Dividend Stocks - April 2, 2018
- Friday Reader Case: How Should I Position My Portfolio For Retirement? - March 30, 2018
Hello again and welcome back to the Millennial Revolution Investment Workshop! New readers, please click here to start from the beginning.
Hi everyone! Wow, we are quickly coming up to the end of our 1-year Investment Workshop experiment. My, how time flies. Today we’ll be doing not just one but two big things: Our last buy of the year AND…completely switching over our brokerage account! Nothing too major.
For those who don’t know, we’ve been using TD Ameritrade as our American trading platform because of their fairly extensive list of commission-free ETFs. We liked this setup since it allowed us to trade the low-cost Vanguard ETFs we were using to build our investment portfolio for free, plus it would give us the option of switching to other ETFs later if we so chose.
Well, long story short, a few weeks ago they screwed us over by changing their commission-free ETF list. Vanguard (and in fact ANY low-cost index ETFs) were removed from that list, meaning that transactions now cost $6.95 per trade! And what did they replace those low-cost index ETFs with? High-fee actively traded funds which I’ve written about over and over again which are designed to silently steal your money away while giving you statistically WORSE performance!
Now, I’m no detective here, but if I were to guess, I’d venture to say that they were hoping to use the lure of commission-free trading to steer their customers into worse-performing high-cost ETFs. Crap like this happens all the time in the finance industry, unfortunately. Companies are constantly tempted to put their own interests ahead of their clients and hoping that nobody will notice and call them out on it.
Well, we noticed. And we’re calling them out on it. And that’s why we no longer recommend TD Ameritrade to readers of the Millennial-Revolution.com.
So what do we do instead?
Well, you’ve all sent me lots of good suggestions, and I’ve been spending a few weeks reviewing them all and figuring out which one would be the best for all you guys/gals. Here’s the criteria I used to evaluate all of them.
$0 Per-Trade Commissions
This is important to anyone in the accumulation phase of their portfolio. Because you’ll typically be making a lot of small transactions every month, you really REALLY don’t want to be charged a per-trade commission each time. Even something as small as $6.95 can really add up, since trading for $6.95 x 3 ETFs x 2 times a month = $41.70 in trading fees! On our investment schedule of $1000 added to the portfolio a month, 4.17% gets eaten up immediately by fees! Try making an investment gain with THAT ball and chain dragging you down!
So $0 trade commissions were extremely important for us.
$0 Monthly Account Fees
Ugh. Nothing irritates me more than paying someone just to store MY money for me. That is MY money, motherfucker. You don’t get to have any.
Able to Handle 401(k)/Roth IRA/etc Accounts
While the Investment Workshop only covers investing in an individual account, many of our readers have retirement accounts as well, so the broker should be able to handle these.
And The Winner Is…
Well, to be honest, Condition #1 knocked out most of the big brokerages I looked at like Fidelity, eTrade, etc). This matches up with the last time I did this analysis a year ago. Back then, only 3 companies made the cut: Vanguard, TD Ameritrade, and relative newcomer RobinHood. Now, TD Ameritrade is out, leaving only Vanguard and RobinHood.
Condition #2 (no monthly account fees) actually almost knocked out Vanguard, since Vanguard charges a $20 account maintenance fee for balances under $10, 000. However, in a last-minute save by Vanguard, you can get around this fee by signing up for e-delivery of your statements.
And finally Condition #3: Support for 401(k)/Roth IRA/etc accounts. Unfortunately here’s where RobinHood falls short. Yes it has $0 trading, and yes it has no maintenance fees, but as of right now it only supports taxable investment accounts. I think they’re just too new.
So that leaves us with the winner: Vanguard!
One Last Trade…
The TD Ameritrade change officially takes effect on November 20, so for today it’s still fine to do one last buy in that account. But after that, STOP TRADING because after that every trade will cost you money and we don’t want that.
After that, we’re going to want to transfer all our assets over to Vanguard. So first, let’s do our last buy for the workshop, and after that, let’s talk about how to initiate that transfer.
For our Canadian portfolio, we start by putting our ETFs into the Rebalancer…
This is what our current portfolio looks like…
This is what we want it to look like…
And this is how far each asset is from target…
So in order to rebalance, we need to do this…
And after rebalancing, our portfolio will look like this…
And on the American side, we start by putting our portfolio into the Rebalancer…
This is what our current portfolio allocation looks like…
And this is what we want it to look like…
So in order to rebalance, we need to do the following…
And after we do that, this is what our portfolio will look like…
So Now On To Transferring…
Here’s the thing: Vanguard costs nothing to transfer a portfolio (as is their style), but TD Ameritrade does. Specifically a full-account transfer costs $75. I don’t like that. Neither should you.
That being said, I think I have a way to exploit a loophole to transfer every dollar out of that portfolio for free.
So here’s where I need help. I need an American reader with a TD Ameritrade account to work with me over the next few weeks to test out my transfer flow. If I screw up and you end up getting charged a single cent, I will reimburse you any fees you get dinged for myself. And once I have a flow that I know works for sure, we will write about it right here in the Investment Workshop with pretty screenshots and shit.
So let’s hear it. Anyone willing to help out? Shout out in the comments!
How much does it cost to participate in the Investment Workshop? NOTHING. Because that's how we roll. All we ask is that you sign-up using the following affiliate links to keep it free forever:
Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.
Want to learn how to replicate our retirement portfolio? Check out our FREE Investment Workshop!
Join our Chautauqua family in Greece:
Want a once-in-a-lifetime experience with a group of exceptional people who get you? Click here to learn more. UPDATE: Chautauqua is 100% SOLD OUT! Click here to sign up for the waiting list! Click here to sign up for next year's mailing list!