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On 7/11/2020 at 10:03 PM, tony said:

No, The funds that are actively managed have managers associated with the specific fund and not with Valic.  Active managers pick and chose , buy and sell stocks or bonds  they want in their fund based on research. An index fund is all the funds in a category so you own all funds in that category. An index fund has a manager too but he/she seeks to track the performance of a benchmark index like the 500 index so he doesn't pick individual stocks he might like.. Instead an index fund  invests all of its assets in the stocks that make up the Index so you own all the stocks in that category. The thing to know is most index funds cost much less (expense ratio)and outperform most managed funds. Not necessarily on a day to day basis but over time. It's hard to explain all this. You should try going to investopedia.com and read all you can.

That's such a clear explanation Tony.  Thank you, and I'll definitely try reading investopedia.com.  

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On 7/12/2020 at 12:55 AM, ScottO said:

 

Opps don't know how this happened.It just appeared and I don't know to get rid of it.

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Hi guys!

I just called Charles Schwab service line to inquire about the self-directed brokerage acct.  Below is what the rep told me.  Please advise.  I attached the fine prints on the bottom from Valic.

  • 403b and 457 through Schwab is all mutual funds.  No stocks.
  • Enrolling in Schwab SDBA allows access to 5,000 more mutual funds to choose from
  • SDBA is an extension of the Valic plan with the district.  Valic is still the recordkeeper and Valic controls the fees.  
  • Schwab charges only the transaction fees.  
  • Schwab only holds assets for Valic.

 

The following fees are representative of the fees associated with PCRA: Account maintenance fee: PCRA investors are assessed an annual account maintenance fee of $50.00 by VALIC. Transaction fees: Schwab charges transaction fees on some of its mutual fund offerings. Some funds may also charge sales and/or redemption fees. Standard fees apply on both transactions when placing simultaneous orders to sell one or more transaction-fee fund(s) and purchase additional transaction-fee fund(s) with the proceeds. No-Transaction Fee Funds (includes funds available through the Mutual Fund OneSource® service): Electronic Trade -- $0, Broker-Assisted Trade -- $25 service charge per trade may apply. Schwab's short-term redemption fee will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource service (and certain other funds with no transaction fees) and held 90 days or less. Transaction-Fee Funds: Electronic Trade -- $50 per buy, $0 per sell; Broker-Assisted Trade -- Electronic fee, plus $25 service charge per trade.

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Ultimately I believe this is going to be the superior option. I'm too lazy to read through all 5 pages of this thread, but is the $50 account maintenance fee charged by Valic regardless of whether or not you use Schwab?

You're going to want to have a look at the NTF (no transaction fee) funds...my guess is you'll have access to a wide array of low cost index funds.

You'll never use a broker to execute a trade.

You won't be day trading so their 90 day comment should be irrelevant to you.

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Thanks guys!!  I found out some more about this SDBA through Schwab representative:

  • One can have both Valic and Schwab accounts
  • 4300 mutual funds in their No-load OneSource service
  • This plan only allows ONE SDBA acct so Valic will keep track of my pre-tax and post-tax accounts. 
    • Would this be confusing or be a hindrance in any way?
  • Unless Valic requires to keep some money, all my accounts will be in one sdba account
  • $100-$3,000 initial purchase fee for non-Schwab funds, subsequent purchases $1. 
    • So I should stay away from the non-Schwab funds?
  • For Schwab funds, initial purchase fee and subsequent purchase fees are $1

https://www.schwab.com/mutual-funds/no-load-mutual-funds

https://www.schwabfunds.com/resource/swtsx-fact-sheet:  This is their Dow-Jones total stock market index.  Should I be looking for an index fund with S&P total stock market instead? 

I moved all my funds to VINIX within Valic in my 457 account like 2 days ago.  Would I have saved money on the individual fund transaction fees had I just transferred them to Schwab accounts?  

Thank you guys again for your help.

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It's a bit annoying that Schwab appears to charge transaction fees for non-Schwab funds, but that's fine.

I didn't look closely, but quickly browsing what appears to be the only funds they don't charge fees to buy/sell:

  1. You've got all of the Schwab Target Date Index funds at 0.13%
  2. The three fund portfolio we talk so much about (SWTSX at 0.03%, SWISX, at 0.06% and SWAGX at 0.04%)

I'm too lazy to read through this thread, but if there aren't any other fees then these options will give you better diversification with lower costs. The only fund directly available at Valic worth your attention was the Vanguard S&P500 fund at 0.04%....but the domestic Schwab fund is better diversified and only costs 0.03%. Valic didn't give you good options for bonds or international stocks, Schwab does.

...I didn't see where Schwab would charge you $1 to purchase their funds. I'd double check that.

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Thank you guys!  I realized yesterday that I took steps without the big picture in mind...  I totally moved funds around without thinking too much about the transaction costs and only thought of the money I may lose from the expense ratios which I did not know is an annual fee until minutes ago.  I should've been more cautious and slow-moving.   I'm thinking I may have lost like a couple thousand dollars in transaction fees of transferring around $100K these past couple weeks..  I'm definitely learning through my mistakes but with huge costs... Sigh...  Thank you all for guiding me through and helping me learn.  I'm going to call Valic advisor on Monday to see what the fees are with transferring to Schwab. Hopefully not too expensive 🙂

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Transaction fees are caused by buying and selling in a brokerage account. Unless you are using a Self-directed brokerage account within your Valic 457 account, there should not be any transaction fees. 

As Ed mentioned, a Total Stock Market Index fund is more diversified than 500 Index fund which holds about 80% of TSM fund.

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50 minutes ago, krow36 said:

Transaction fees are caused by buying and selling in a brokerage account. Unless you are using a Self-directed brokerage account within your Valic 457 account, there should not be any transaction fees. 

Hmm.. Please help me understand.  I was referring to transfer(?) or transaction fees within my 457 Valic account.  I had 7-8 different funds and transferred the assets to VINIX within my 457.  So the assets are transferred without any fees?  If that's the case, I would feel so much better😂

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I don't think there is usually a fee to transfer funds within any account. The exception would be if the fund had a rear-end load. These are called class B or C I think, and the load is applied for a year or more after buying.  

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