What's a good brokerage for investing with Portfolio Recipes?
For implementing Tactical Portfolio Recipes (which have "t." in their ID) and Strategic Portfolio Recipe (which have "s." in their ID) choose a brokerage that has 1) low trading fees to reduce the rebalancing cost 2) an easy-to-use trading interface to save time.
Financial advisors usually have separate software or an advisor-only trading interface that allows quick portfolio rebalancing.
For do-it-yourself investors, we describe below three types of brokerages that can work with Portfolio Recipes. If would like to suggest an additional solution for implementing Portfolio Recipes, please contact us.
We use the term "Portfolio Brokerage" for a broker that provides an online tool which allows rebalancing your entire portfolio based on percentage allocations. We like FolioInvesting.com for easy investing and rebalancing with Portfolio Recipes. FolioInvesting.com offers the following features that, as a group, are unmatched by other brokerages:
The chart below compares costs at FolioInvesting, Schwab, Vanguard, Fidelity, and TD Ameritrade.
|Cost to buy/sell ETF using a window trade||$0 per trade (on Unlimited Plan)||not available||not available||not available||$6.95 (using Think or Swim)|
|Cost to buy/sell ETF using market order||$4 per trade (on Unlimited Plan) or $10 per trade (regular plan)||$4.95 per trade||$7.00 per trade (or less if you own $500K of Vanguard products)||$4.95 per trade||$6.95 per trade|
|Number of ETFs with no transaction fee||1938 (on Unlimited Plan)||250+||1800 (including all Vanguard ETFs)||265||314|
|Early redemption fee for no-transaction fee (NTF) ETFs||$0||$0||$0||$49.95 if ETF sold within 60 days||$9.99 if ETF sold within 30 days|
|Cost to buy a transaction-fee mutual fund||$0 (on Unlimited Plan)||$76||$20 (or less if you own $500K of Vanguard products)||$49.95 or $75||$49.99|
|Cost to sell a transaction-fee mutual fund||$0 (on Unlimited Plan)||$0||$20 (or less if you own $500K of Vanguard products)||$0||$49.99|
|Number of mutual funds with no transaction fee||1626||4010||3000+||3707||4000|
|Early redemption fee for no-transaction fee (NTF) mutual funds||$0||$0||$50 if fund sold within 60 days of purchase||$49.95 if fund sold within 60 days of purchase||$49.99 if fund sold with 6 months|
The brokerages, such as Charles Schwab, Vanguard, and Fidelity have per-trade fees under $10, have a selection of no-fee exchange-traded funds, and have a mutual fund "supermarket."
Using No-Transaction Fee ETFs
One approach to keeping costs low at a Discount Broker is to use their no-transaction fee (NTF) ETFs. Many of the Tactical Portfolio Recipes (i.e., those recipes with an ID starting with "t.") are created using specific ETFs, such as EEM, that may have a transaction fee. FolioInvesting's Unlimited Plan gets rid of those fees, but if you're using a Discount Broker like Schwab, Vanguard, or Fidelity you have another option.
You may substitute no-transaction fee ETFs for the ones specified in the Portfolio Recipe. This is analogous to substituting margarine for butter (or vice versa) in a recipe... it won't be exactly the same, but it could be close. See the table below, "How to Use No-Transaction Fee ETFs with Tactical Portfolio Recipes"
|What to buy at FolioInvesting||
What to buy
What to buy
What to buy
What to buy
at TD Ameritrade
|If a Portfolio Recipe calls for EEM:||EEM||SCHE||VWO||EEM||SPEM|
|If a Portfolio Recipe calls for EFA:||EFA||SCHF||VEA||EFA||SPDW (or DWM)|
|If a Portfolio Recipe calls for GLD:||GLD||SGOL||GLD||IAU||GLDM|
|If a Portfolio Recipe calls for IWM:||IWM||SCHA||VB||IWM||SPSM|
|If a Portfolio Recipe calls for IYR:||IYR||SCHH||VNQ||FREL||USRT|
|If a Portfolio Recipe calls for QQQ:||QQQ||SCHG||VUG||ONEQ||QTEC (or FXL or TDIV)|
|If a Portfolio Recipe calls for SPY:||SPY||SCHX||VOO||IVV||SPLG (or SPTM)|
|If a Portfolio Recipe calls for TLT:||TLT||TLO||VGLT||TLT||SPTL|
|If a Portfolio Recipe calls for DBC:||DBC||USCI||USCI||GSG||PDBC|
These brokers offer low-cost or zero-cost trades. These brokerages have per-trade fees at $5 or less.
|Cost to buy/sell ETF using market order||1/2 cent per share (minimum $1.00)||$0 per trade||$5 to buy, $0 to sell||1/2 cent per share (minimum $0.99)|
|Trading interface||desktop app (Mac or Windows or Linux), web, mobile (Android or iOS)||mobile only (Android or iOS)||desktop app (Mac or Windows), web||desktop app (Windows), web, mobile (Android or iOS)|
|Cost to buy a transaction-fee mutual fund||$14.95||not available||not available||not available|
|Cost to sell a transaction-fee mutual fund||$14.95||not available||not available||not available|
|Number of mutual funds with no transaction fee||2912||not available||not available||not available|
|Early redemption fee for no-transaction fee (NTF) mutual funds||$0||not available||not available||not available|
VizMetrics helps investors and advisors maximize results by providing Portfolio Recipes and tools to choose, invest, and rebalance.
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Houston, Texas USA
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