Are Charles Schwab Index Funds the Cheapest?

Updated : Sep 01, 2019 in Articles

Are Charles Schwab Index Funds the Cheapest?


all right this is rich from Rich on Money
.com and bringing you another awesome video today are Charles Schwab index
funds the cheapest that is the big question and I’m gonna answer it today
but first let me just talk about rich on money.com It’s a website where I talk
about financial independence I talked about doing real estate and doing
investing the right way the kick-ass way in a way that’s gonna make you a lot of
money and I also specialize in doing that for people that are in the military
or veterans so if this is a useful video today please make sure that you like it
please make sure that you share it with friends and please be sure to leave
comments down there so let’s get started our Charles Schwab
index funds the cheapest that is a question I want to get through this fast
I don’t when we want to try for some shorter videos so here we go let’s talk
about josh wob for a second when you buy Charles Schwab index funds there’s a lot
of different things that you get you know yet you get all you access to all
their index funds that are free and they’ve got some that aren’t that that
are in their family and then the ones that aren’t in their family and then
you’ve got like you can do trades for $4.95 per trade you can buy stuff outside
of the mutual fund family for $76 which is a horrible
idea and you can also buy ETFs outside of their family of ETFs for 495 per trade
which is also a bad idea so if you’re gonna go as Schwab just make sure you
stick with what’s already free because if you want to buy something you can
always go to the location where that one’s free instead of you know buying it
from somewhere where you got to pay that stupid fee so what’s awesome about Josh
Wahb index funds 106 it’s 167 billion under management third largest provider
of mutual funds behind Vanguard and fidelity which are the the big three
that we’re talking about today and the ones that are all vying for the
competition of who has the cheapest fees when it comes
to index funds and they have no minimums to invest and I’ll say that
that’s also the case with fidelity investments no minimums which is awesome
Vanguard has minimums but they used to be ten thousand for the cheaper funds
now they’re minimums are mostly at three thousand
so the minimums aren’t too bad but if you really you know if you just want to
invest with a small amount you’re gonna be fine at Schwab or fidelity so to
see if Charles Schwab index funds are the cheapest I’m gonna compare the three
most important index funds in my like really humble opinion S&P 500 index
total stock market index and international index fund let’s go with
S&P 500 index first that’s the benchmark of all index funds in my humble opinion
it has a dear place in my heart is a place where I invested all my money most
of my career that’s the only fund I invested in just doesn’t be 500 it’s
also Warren Buffett’s go-to index fund what’s their expense fee at Charles Schwab
Oh point zero two percent that’s cheap that is very very cheap it’s almost not
even worth mentioning minimum investment zero that’s cheap but it’s not the
cheapest Vanguard comes close with Oh point zero four percent just that’s a
basis point higher no big deal but fidelity S&P 500 index is the winner
with Oh point zero one five percent to their point zero two percent fidelity
slightly wins but there’s a catch there’s something that’s even cheaper
than fidelities point zero one five percent how could you get much cheaper
fidelity launched something last year called there’s zero index funds and I’m
going to talk about those in more detail later but there’s four of them they
launched like two first and then a couple of months later they launched two
more and now there’s four of them well one of those which is called the
fidelity zero large-cap index fund FNILX
it actually mimics the S&P 500 index without being called the S&P 500 index
so they don’t have to pay for the licensing name which actually cost money
it’s essentially the exact same investment but without the licensing
name that is a free index fund of fidelity when I say free that is they
have zero expense fee point zero zero percent instead of point zero two
percent at Schwab or point zero and five percent at the same company fidelity
fidelity is a winner in this category Schwab a second man Gardens third total
stock market index fund is the next category that we are looking at and who
will be the winner there will it be the same or different let’s see the total
stock market index fund is my second favorite index it is the favorite of the
financial independence movement Jim Collins of simple path to wealth fame
recommends it as the primary investment in his book and his blog JL Collins NH
.com which is one of my favorite blogs of all time you buy the whole stock
market with like twenty seven hundred plus stocks with you know one investment
covering large medium and small cap stocks
what’s the expense fee at cha Schwab for this total stock market index fund it is
Oh point zero three percent very cheap minimum investment investment is none
great good for you today Vanguard is point zero four percent slightly higher
for their world-famous you know the world-famous total stock market index
fund I think it’s called the V tax fund which is extremely famous from from Jim
Collins book VTS ax I think is the number are the the letters and but even
cheaper is fidelity with their zero funds fidelity has a zero fund that is
called zero total market index fund well it’s tough to beat that there’s a
zero expense fee fidelity wins again I forgot to mention earlier I’m gonna go
back back to the sp500 I’m a military member I’m in the military I bank at
USAA I wanted to compare USAA to some of these fees as well well for the S&P 500
index the expense fee was Oh point zero two right it’s Schwab at fidelity at
USAA it was e where is it point two five a lot higher 0.25 at USAA when it’s like
you know Oh point zero one five of fidelity point zero four at Vanguard so
it’s like what five six seven times higher at USAA get with the program USA
USA does not have the total stock market index fund so I can’t make that
comparison but they do have an international index fund which I’ll talk
about next the international index fund USAA which is a military bank and is
where is where I Bank be fee there is one point zero eight percent Wow more
than one percent for a fee for an index fund I do not recommend that do not ever
pay that much for a fee let’s see about Charles Schwab because that’s what we’re
here for today Charles Schwab expense fee for the International index fund is
only 0.06 percent is like 20 times 18 times lower than USAA thanks USA a
minimum investment none the thing about the international index fund at Chow
Schwab is it’s not like the best type of international index fund it’s a basic
one it only has large cap stocks from developed countries so it’s cheaper this
way if you have an international index fund that has stocks from developed and
developing countries and it has maybe large cap stocks and medium and maybe
even small cap stocks so lots of different sizes of companies from lots
and lots of different countries even smaller countries this is a more diverse
portfolio and it also costs more to buy these
stocks so you’ll see a higher expense fee so you’ve got sort of a more vanilla
index fund here with with with Schwab but but the but the ones that we’re
comparing them to at USA fidelity and Vanguard are also similar so at at you
at a Schwab it’s point zero six percent at USAA it’s 1.08 which is totally
absurd and fidelity ding-ding-ding they have a zero fund called the fidelity
zero international index fund VZ ILX go check it out the expense ratio is zero
zero can’t beat that Vanguard is point one
nine okay point one nine three times higher than Schwab so Schwab is doing
really well not quite as good as zero that’s doing really well I’m gonna go
ahead and say that these differences between zero and like point zero three
point zero two but if you’re just like you know
somebody who wants to stay so you know ah but it’s cheaper if you really want
to split hairs fit all these cheaper fun cuts let’s talk about some fun cuts
let’s just summarize them quickly on December 20th 2018 Charles Schwab index
funds reduced fees on five of their most popular offerings offerings kind of just
everybody’s in this big fight right now and everybody’s reducing funds they did
that on SP 500 index small-cap index Schwab us large cap growth us large
value index fund and mid-cap index fund they all went down like one percentage
point I said percentage point like from point zero five two point zero four or
from point zero you know from point zero three to point zero two respectively
check my blog out if you want to like get the exact numbers and then like I’m
gonna list out and then like they’re doing this because of fidelity because
of fidelity zero funds and because of vanguards low fees to begin with it’s
just big war which we all benefit from as
investors here’s fidelity zero funds I’ll read them off to you Fidel fidelity
zero international index fund fidelity zero large-cap index fund fidelity zero
total market index fund those are three that I out there thinking very useful
and then fidelity zero extended market index fund it’s a decent fund but I hear
it used less often Vanguard had its own answer to the price
wars recently and it was just reducing the minimum investment on its admiral
shares which used to be its which still are its cheapest shares it used to be
that you had to have ten thousand to have the admiral shares now you only
have to have three thousand 438 of their most popular admiral shares to include
the total stock market index and the sp500 the most popular ones conclusion
fidelity is the cheapest Schwab probably comes in second they both have no
minimums Vanguard is a very close third there’s a difference between Vanguard
and fidelity and Schwab Vanguard is consistently a company that wants to
keep fees low and isn’t about gouging the customer fidelity and Schwab are
companies who I believe are just keeping fees low on these index funds to draw
Vanguard type customers in but once you’re there they hope to get you to buy
higher priced products from them so it’s kind of like one of those lures and I
don’t think Vanguard’s like that Vanguard just straight up about let’s
just keep fees low across the board on everything that we have and let’s be
good stewards that’s my opinion is that unfair all right genius give your
opinion comments was I unfair did you like this give it a thumbs up subscribe
to my youtube comment let me don’t you think thanks rich out

5 Comments

  • Fair and balanced analysis. I wonder is it possible for Fidelity to change the zero expense ratio to a higher one in the coming years. If they did that and you wanted to jump ship and move your portfolio to Vanguard…would that be a taxable event. Great vid!

  • Been following your content for some time. Ever thought about doing a vid to compare/contrast the pros and cons of "Cash Only" real estate investing vs "Loan Only" real estate investing. A Trinity Study type deep dive would be awesome. Maybe something like that is already out in the web somewhere. Appreciate your channel.

  • @7:38 omg ur using USAA and u r giving us advice on money, hehehe ur so funny, u should first get urself out of a stupid company as usaa and get urself into nfcu for example my friend, but thx for the video tho

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