USAA Commission versus Expense Ratios?

[bearkeley]

Hi - I know this is a stupid question, but I can't seem to get an answer from USAA --

We're trying to buy Dodge & Cox thru USAA but its saying there's a $45 commission (.75%) to buy it...is that a USAA thing or would I have to pay that if I used Scott trade, etc. Other funds we purchased thru USAA had some comission (same %) but others didn't have it at all... we just want to buy it to get it over with, but part of us wonder if we're being stupid for doing so....If we found another similar fund (ie., vanguard), would there be the same fees on top of the expense ratio for the fund? I am so confused

 

[mickeyd]

I have never purchased a non-USAA fund from them however I have had a lengthy relationship with them and, if nothing else, they always have given excellent customer service and bend over backwards to get you the information that you need to make your decision.

If you do not get a sufficient answer just ask to speak to a supervisor, but before asking tell the rep that you are very pleased with the excellent service that you have received from him/her however you are just not getting the explanation that is understandable. Also tell the supervisor that you received excellent service from "Bob" but you still do not understand his response.

I have done this a number of times and they have always thanked me for not going away with less information than I need.

 

[LOL!]

Most discount online brokers charge a transaction fee (i.e. a commission) to purchase decent mutual funds. 

There are brokers with NTF funds (No Transaction Fee), but I have found that these NTF funds are those that you probably would not buy anyways because they have front-end loads, high 12b-1 fees, back-end loads, contingent-deferred sales charges etc.

To avoid the $45 commission, you have to purchase the Dodge&Cox fund directly from D&C.

Full disclosure: I own DODBX and DODFX which I bought in my online brokerage account and paid a commission on each purchase.  I do not pay commission on re-invested dividends and cap gains.  You may ask why did I pay a commission: there is no good answer, I was lazy, I like to simplify my statements, whatever.  I have Vanguard funds with Vanguard, AmCentury funds with AmCentury, and 20 other accounts so it ain't statement simplification.

I think that DODBX and DODGX are closed to new investors.

Edited to add: Each broker has a list of NTF funds. You can easily check with USAA if you have to pay a transaction fee for Vanguard funds. You can easily check with Scottrade if you have to pay a transaction fee for Dodge&Cox and Vanguard funds. I can tell you that if your broker is TDWaterhouse, then you will need to pay a transaction fee to purchase Vanguard funds and Dodge&Cox funds.

Of course the transaction fee is a one-time expense (and possibly a second-time to sell shares) while the expense ratio is sucked away behind the scenes over the course of every year.

 

[bearkeley]

Ok

I think we need to clarify about the USAA experience. My wife (the original poster) asked me to call USAA but I was to busy and told her I didn't get through . I looked on the website and couldn't figure out the fees.

Once I got through, they did as they always have in the past provide a good explanation of their fees/commissions (which are complicated and not readily evident). I have USAA insurance, Banking, and Brokerage accounts and the service is always great.

As far as the fees they vary depending on the fund from NTF to alot. DODFX for example has a minimum of $45.00 to a maximum of $75 coming and going.

That seems high but is it worth not having a bunch of accounts to keep track of?

any thoughts?

 

[LOL!]

TDWaterhouse has the same transaction fee rate for DODFX. If you buy $10,000 worth of DODFX is costs you $30. If you buy more than $25,000 worth then the fee is $75. So I try to buy in amounts of $50,000 and above. For the convenience of not opening an account directly with D&C, I pay a 0.15% front-end load. Not too bad, but I know some Bogle-heads that would be outraged by that.

If you are going to buy once and forget it, then staying with USAA would be OK. But if you are going to DCA in at $500 to $2000 a month, then it would be a pretty expensive way to go.

I've had an account at Vanguard for decades and we add to those accounts in sub-thousand dollar amounts occassionally, so we do not use a middleman like USAA for them.

 

[lazyday]

You might get those fees way down with a different broker.

Firsttrade currently lets you trade funds with no fee.
I'm skeptical that will last forever, but for now, $0.

Brownco charges $5 per fund (or 0 for ntf) and has for awhile, but has been bought by Etrade, so who knows the future there.

According to someone at fundalarm discussion group, wells fargo's brokerage, if you also open a certain bank account, has $10 mutual fund trades, and really cheap stock trades. I don't know about fees on the bank account.

Scottrade charges $17 per fund, but I don't like their tactic of starting off free, then jacking up the fees after getting lots of accounts.

Ameritrade is a little higher than that, I think.

Vanguard is $35, but has some pluses like free trading of their own funds, and buying treasury bonds at auction free or cheap, and low spreads on treasury bonds. Great price structure if you have over $1M with them.

Fidelity is $75 to buy, free to sell, but is reputed to have great customer service, and also has some pluses.