I recently decided to change brokerages. I changed from TD Ameritrade, a brokerage
that I was very happy with to Vanguard. Why? Well, you're going to have to keep watching to find out.
My name is Dash and this is Mind Over Finance. And for the sake of all that is good and algorithm,
please chest stomp that like button.
I've been with TD Ameritrade for several years, but after seeing one of my recent statements,
I decided to change. What I saw in my statement was a $17 fee when buying the Vanguard Index Fund,
VFIAX. And what it made me do is it made me go back and look at other statements. And I
realized that I had been paying that fee every time I would buy more of the fund.
And it was a fee that I wasn't really thinking about because it wasn't right in my face,
but it was there. And I know to somebody listening, $17 might not sound like a
lot of money to you. It might not sound like a lot to pay for a brokerage fee,
but if we look at the current price of VFIAX, I'm just going to look on my computer really quick.
So the current price for a VFIAX is $314.26. That's about 5% of a share of VFIAX.
And that really does add up over time. And if this index fund is something that I'm going to
keep investing in over time, it doesn't make sense for me to waste that kind of
money on a brokerage fee. And how does Warren Buffett say it? The first rule of investing is
not to lose money. The second rule of investing is not to forget rule number one. Yeah and when
it comes to retail stock investing the kind of investing that most of us common investors do,
the goal of the game is to keep those brokerage fees and management fees to a bare minimum.
Otherwise, it can start munching away at what your investment earns over time.
You have to keep in mind that your index fund, even if it's a good one, like VFIAX, like VTSAX,
it already has a management fee associated with it. It's called an expense ratio. And with a
good index fund, you end up paying far lower fees than you would for any other type of mutual fund.
But I figured if I'm going to end up paying $17 in TD Ameritrade brokerage fees on top of that
expense ratio, then I lose the low cost advantage of that index fund right there. It doesn't make
good financial sense to pay fees that you don't have to. So here's what I did. Because I'm still
very much a satisfied TD Ameritrade customer and to be honest, I like their platform a lot
better for buying and selling stocks, I decided to keep my stock holdings with TD Ameritrade.
Not to mention that when you buy and sell stock with TD Ameritrade,
it is commission-free just like it is with Vanguard. So I wouldn't get any added benefit
by moving my individual stock portfolio to Vanguard. I did decide to move all of
my Vanguard index funds and ETFs straight to their source by becoming a Vanguard customer.
So that's going to eliminate that fee that I was having to pay every time I would buy into that
Vanguard fund. And instead I can use that money to buy more of VFIAX or whatever Vanguard fund I
choose to invest in. And I'm not sure if there was a benefit to me moving my ETFs over to Vanguard,
but for me, it helps me to keep things organized in my brain. I now know that my index funds and
ETFs are with Vanguard and my individual stocks are over here with TD Ameritrade.
So in the end to slash those management and brokerage fees and to continue doing
so over the long term, I decided to become both a Vanguard and TD Ameritrade customer.
Well, that'll do it for today's video guys. As always, thank you so much for watching.
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