Vanguard doesn't permit levered or inverse ETF buy orders in IRAs

[jim584672]

I tried to enter an order for an ETF like TQQQ or SQQQ in my Roth and the order was refused. They are going to tell me what I can invest in? Time for a real brokerage.

 

[NW-Bound]

Trying to protect account holders.

I am sure that they allow individual stocks, but some of these are actually more volatile and riskier than leveraged but broadbased ETFs.

 

[prudent_one]

True, they don't try to be everything to everyone.

 

[brewer12345]

That is amazing. Yet another reason to take your business elsewhere.

 

[ERD50]

I know you can't short in an IRA - fed regs. Maybe that's been extended to funds that short? Or maybe VG is being conservative in their interpretation.

Has there ever been a ruling on this? I'm not sure I'd blame VG for this, it might just be prudent.

-ERD50

 

[jim584672]

I know you can't short in an IRA - fed regs. Maybe that's been extended to funds that short? Or maybe VG is being conservative in their interpretation.

Has there ever been a ruling on this? I'm not sure I'd blame VG for this, it might just be prudent.

-ERD50

At first I thought it might be some regulatory reason. But I researched it and found other brokers permit it, Vanguard just decided it won't let certain investments be available to their customers.

 

[ERD50]

At first I thought it might be some regulatory reason. But I researched it and found other brokers permit it, Vanguard just decided it won't let certain investments be available to their customers.

I'm curious if my brokers allow it, I may test it next week during market hours.

But I guess that's your answer, if you want to do it, time to switch.

-ERD50

 

[COcheesehead]

Fidelity makes you agree that you are an "aggressive" investor and other *&^%@ before they let you buy certain investments or trade after hours.

 

[obsessed]

Here is a link to Vanguard’s explanation on why they don’t allow these investments

http://https://investornews.vanguard/vanguard-to-stop-accepting-purchases-in-leveraged-and-inverse-investments/

 

[11522914]

Today I traded the SPXU and UPRO all day long in my Fidelity Roth account. I suggest you go somewhere else.

 

[NW-Bound]

Here is a link to Vanguard’s explanation on why they don’t allow these investments

http://https://investornews.vanguard/vanguard-to-stop-accepting-purchases-in-leveraged-and-inverse-investments/

I do not use my Vanguard accounts for active trading, so did not know about this restriction.

Yes, just as I thought, Vanguard seeks to protect account holders from "hurting" themselves.

With other brokers, they did not care. Outright shorting stocks in an IRA account is against the IRS rule, I believe, because it means borrowing somebody else's shares to sell. Buying a bear ETF is not a problem. Same with leveraged ETFs.

Some time last year, Schwab made account holders acknowledge that these ETFs carry higher risks. "Don't blame us if you hurt yourself" is what they try to say.

PS. Should Vanguard disallow account holders from trading GE, or Tesla, or energy stocks? These are quite volatile too. Who's going to determine the criteria?

 

[ESRwannabe]

I tried to enter an order for an ETF like TQQQ or SQQQ in my Roth and the order was refused. They are going to tell me what I can invest in? Time for a real brokerage.

That was the straw that broke the camel's back for me as well. Not that I own any levered funds, but I'll be damned if I let a broker tell me I can't buy etf XYZ or whatever.

My brokers job is to do what I tell them to do with my money and keep their opinions to themselves.

 

[OldShooter]

... My brokers job is to do what I tell them to do with my money and keep their opinions to themselves.

Nothing wrong with this, but you are apparently a customer that VG doesn't want to keep: "This change is part of an ongoing effort to align the products and services we offer with our investors’ focus on the long term. These investments, which are generally incompatible with a buy-and-hold strategy, run counter to this long-term focus."

From time to time it becomes necessary for a company to fire a customer. Good managers understand this.

 

[pb4uski]

I have no problem at all with Vanguard prohibiting or restricting trading for certain stocks and ETFs to protect their customers from themselves (be it customers who are misinformed or customers that fat-finger a ticker symbol).

The needs of the many ourweigh the needs of the few.

And for those who this upsets enough for them to leave Vanguard... don't let the door hit you in the arse on your way out.

 

[ESRwannabe]

Its become apparent that I have a two person fan club on this forum.

Does anyone know if there is a way to put people on ignore, so I don't have to see their comments anymore?

 

[pb4uski]

.... Does anyone know if there is a way to put people on ignore, so I don't have to see their comments anymore?

Yes, there is a way to put people on ignore.

 

[upset264]

I find Vanguard inferior to Fidelity in many respects. The only reason I stay there is to not have all my eggs in one basket.

 

[ERD50]

Its become apparent that I have a two person fan club on this forum.

Does anyone know if there is a way to put people on ignore, so I don't have to see their comments anymore?

Many of us know.

Many of us don't use it, we want to hear dissenting opinion, that's how we learn.

-ERD50

 

[wmc1000]

Fidelity makes you agree that you are an "aggressive" investor and other *&^%@ before they let you buy certain investments or trade after hours.

Yes, I had to do that just last week with Fidelity but it was easy to do.

 

[ESRwannabe]

For those that didn't know (like me), if you login you can click on a users name and there is a drop down to add someone to your ignore list.

 

[Chuckanut]

Vanguard has the right to not be involved in certain trades that go against its investment long-term philosophy, and we have the right to do business with another broker. Or as my grand pappy used to say, "They can keep their product-name and I will keep my money."

There are plenty of other options. I have 'fired' certain companies over the years that did not live up to my expectations and/or meet my needs. It's EZPZ.

 

[CRLLS]

If Vanguard chooses to limit customer options because of Vanguard's (not the customer's) ideas on how and where to invest, that is their choice. However, it seems to me that they are acting in a partial-advisor manner. They don't tell customers where to invest their money, but will tell them where they can't invest.

As has been said, if a person wishes to invest in something that Vanguard will not let them, find another place to park the money. Vanguard obviously won't miss them. And that is a sign that should be headed IMO.

 

[NW-Bound]

ESRwannabe was stating what he expected out of his broker. Vanguard is not a good fit for him. Fidelity or Schwab or any other broker will work better.

I have not used Fidelity, and currently have accounts at 3 brokers, Vanguard included. Thought about consolidating to Schwab, which was my first broker, and going back 25 years. Leveraged ETF or not, their service is the best among the ones I have used.

I only opened accounts with other brokers because of the higher commissions at Schwab. With them recently giving free trades, that takes away the main reason to keep other brokers.

 

[captain3d]

I have held leveraged stock, bond and gold ETFs long term. Rebalancing between them is a long term, low volatility strategy. TD Ameritrade for me.

 

[MRG]

Vanguard has the right to not be involved in certain trades that go against its investment long-term philosophy, and we have the right to do business with another broker. Or as my grand pappy used to say, "They can keep their product-name and I will keep my money."

There are plenty of other options. I have 'fired' certain companies over the years that did not live up to my expectations and/or meet my needs. It's EZPZ.

+1

It's still a free country and you can find less restrictions elsewhere. Personally I'm happy for a little warning. I recall when I was certain charts were everything you needed to effectively day trade. Some brokerage, perhaps Options Express, wouldn't allow me to trade a certain equity. Huh, I'd traded it before there? Didn't see anything that had changed. A few weeks later that equity was delisted.