What is the best option for automatic investing?
May 5, 2012 8:04 AM   Subscribe

What is the best option for automatic investing?

I would like to set up an account where I can have money automatically transferred from my bank account (or set up a direct deposit from my paycheck), and then have that money automatically invested in mutual funds according to an allocation that I specify. Essentially, I want a brokerage account that works like my 401(k).

Googling indicates that there are a lot of options for this (Ameritrade, Fidelity, ShareBuilder, ETrade, Vanguard, etc.), but I'm having trouble figuring out which one is the best.
posted by Blue Jello Elf to Work & Money (9 answers total) 5 users marked this as a favorite
Basically any of those will let you set this up, Vanguard has a wide variey of it's own managed funds with low fees.
posted by T.D. Strange at 8:08 AM on May 5, 2012

Best answer: I love Vanguard. I like to go in a few times a year, check how my funds are doing, and allocate my investments based on current/historical prices, but my brother also uses Vanguard and just has automatic transfers.
posted by jabes at 8:23 AM on May 5, 2012

Best answer: Here's some info on minimum investments and the automatic investing plan with Vanguard -- looks like you have to buy in with $3000 per fund but can then invest in $50 increments.
posted by jabes at 8:25 AM on May 5, 2012

Best answer: I will nth Vanguard but here's why: Look carefully at the fees of anything you invest in. You obviously want to avoid anything with transaction fees, since you'll be making 12 or more transactions a year. The next thing you want to look at after transaction fees is the expense ratio on any mutual funds you invest in. Vanguard has some of the lowest fees in the business.

If you are starting small, a difference between a 1% expense ratio ($1.00 in expenses per $100 invested) and a .1% expense ratio ($0.10 in expenses per $100 invested) may not seem like a lot, but think if it this way-- if you earn a 10% return in a year, with a 1% expense ratio, you are giving up 10% of your earnings to expenses. With a .1% expense ratio, you are giving up 1% of your earnings to expenses. Vanguard has many funds with expense ratios (ERs) even lower than .1%.

I have been using Vanguard for about 7 years, never had any complaints.
posted by matcha action at 8:37 AM on May 5, 2012 [2 favorites]

I set up with Fidelity years ago and stuck with it out of inertia. But if I were doing it now, I'd go with Vanguard. I believe the lower fees, etc, would have performed better over time.
I'm still with Fidelity, though, and have no complaints.
posted by fivesavagepalms at 8:39 AM on May 5, 2012

Remaining agnostic about how you want to invest your money, Vanguard or Fidelity.

If you know you are really only using passive products, Vanguard is your best option. Even if you want to do anything Vanguard is good, but Fidelity is at least worth
posted by JPD at 8:40 AM on May 5, 2012

Note also that you can have an account with Fidelity, yet purchase Vanguard funds. And iirc, Vanguard waives their minimum purchase requirement for automatic investment plans.
posted by misterbrandt at 1:10 PM on May 5, 2012

I was long ago recommended T.Rowe Price. I've been with them for about 6 years and my IRA is doing really well. If Vanguard doesn't work out I'd look into them.
posted by krisak at 8:23 PM on May 5, 2012

Response by poster: Sounds like the consensus is Vanguard. Thanks, everyone!
posted by Blue Jello Elf at 9:04 AM on May 6, 2012

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