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I have had it with paying Schwab 1% and getting new managers assigned
every year that swoop in and
recommend huge sell/buys and create tax burdens but
never beat the markets ....
I understand that paying these fees is affecting my
portfolio growth .
My reluctance in making the leap is concern about what I may not be considering...
I am also unsure how it works when 80 % of my money is in an IRA..
Does my IRA $ stay in index funds separate from my other investments???
Advice about making the switch would be appreciated...
IRA money MUST stay separate. You probably have your current investments in a Schwab Brokerage account and in the title of that account will be a reference to IRA. Just sell your current investments and buy your index funds. I would look at the ETF's as they trade like stocks. You will have no current income taxes on the buying and selling since you are in an IRA.
Your other 20% HAS to be in a separate Schwab brokerage account. You will have income tax gains and loses from the sale of these funds.
The only downside I see is if you start buying and selling a lot. Be sure you are going to be a buy and hold investor. Also be sure you diversify your investments.
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If not too active trader, it is handy to consolidate investments under one provider. You should be fine at Schwab with both personal and IRA accts (in separate accts, but can hold the same securities). But several others will work too. I use both Fidelity and Vanguard, but also a couple brokerages. (Ameritrade keeps buying my favorites )
Index funds or their equivalent ETF work well for passive investors. Keep diversified and dollar cost average adding to the investments. You can swap your managed fund for a similar EFT / Index in one swoop. I prefer ETF's in passive monies, so I can add trading rules / stops and have auto execute while I'm on perpetual vacation. Is wise to re-calibrate / balance at least 2x / yr. Helpful to stay informed weekly.
Five years ago I put nearly half my retirement money into a TIAA managed account. I was traveling full time and wanted someone to look after my portfolio. It turned out I had no issues adjusting my non-managed portfolio while on the road. Even so I have kept the managed account. The 1% management fee eliminates the individual fund fees for TIAA funds. The fund is periodically rebalanced and assets are picked based on my stated goals and risk tolerance. The account includes some hedge funds and unusual diversifications that I would never have known about. Slightly better performance and significantly better diversification more than offsets the extra fee.
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