Are Charles Schwab Index Funds the Cheapest? - YouTube

all right this is rich from Rich on Money .com and bringing you another awesome

video today are Charles Schwab index funds the cheapest that is the big

question and I'm gonna answer it today but first let me just talk about rich on

money.com It's a website where I talk about financial independence I talked

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our Charles Schwab index funds the cheapest that is a

question I want to get through this fast I don't when we want to try for some

shorter videos so here we go let's talk about josh wob for a second when you buy

Charles Schwab index funds there's a lot of different things that you get you

know yet you get all you access to all their index funds that are free and

they've got some that aren't that that are in their family and then the ones

that aren't in their family and then you've got like you can do trades for

$4.95 per trade you can buy stuff outside of the mutual fund family for

$76 which is a horrible idea and you can also buy ETFs outside

of their family of ETFs for 495 per trade which is also a bad idea so if you're

gonna go as Schwab just make sure you stick with what's already free because

if you want to buy something you can always go to the location where that

one's free instead of you know buying it from somewhere where you got to pay that

stupid fee so what's awesome about Josh Wahb index funds 106 it's 167 billion

under management third largest provider of mutual funds behind Vanguard and

fidelity which are the the big three that we're talking about today and the

ones that are all vying for the competition of

who has the cheapest fees when it comes to index funds and they have no

minimums to invest and I'll say that that's also the case with fidelity

investments no minimums which is awesome Vanguard has minimums but they used to

be ten thousand for the cheaper funds now they're minimums are mostly at three

thousand so the minimums aren't too bad but if

you really you know if you just want to invest with a small amount you're gonna

be fine at Schwab or fidelity so to see if Charles Schwab index funds are

the cheapest I'm gonna compare the three most important index funds in my like

really humble opinion S&P 500 index total stock market index and

international index fund let's go with S&P 500 index first that's the benchmark

of all index funds in my humble opinion it has a dear place in my heart is a

place where I invested all my money most of my career that's the only fund I

invested in just doesn't be 500 it's also Warren Buffett's go-to index fund

what's their expense fee at Charles Schwab Oh point zero two percent that's cheap

that is very very cheap it's almost not even worth mentioning minimum investment

zero that's cheap but it's not the cheapest Vanguard comes close with Oh

point zero four percent just that's a basis point higher no big deal but

fidelity S&P 500 index is the winner with Oh point zero one five percent to

their point zero two percent fidelity slightly wins but there's a catch

there's something that's even cheaper than fidelities point zero one five

percent how could you get much cheaper fidelity launched something last year

called there's zero index funds and I'm going to talk about those in more detail

later but there's four of them they launched like two first and then a

couple of months later they launched two more and now there's four of them well

one of those which is called the fidelity

zero large-cap index fund FNILX it actually mimics the S&P 500 index

without being called the S&P 500 index so they don't have to pay for the

licensing name which actually cost money it's essentially the exact same

investment but without the licensing name that is a free index fund of

fidelity when I say free that is they have zero expense fee point zero zero

percent instead of point zero two percent at Schwab or point zero and five

percent at the same company fidelity fidelity is a winner in this category

Schwab a second man Gardens third total stock market index fund is the next

category that we are looking at and who will be the winner there will it be the

same or different let's see the total stock market index fund is my second

favorite index it is the favorite of the financial independence movement Jim

Collins of simple path to wealth fame recommends it as the primary investment

in his book and his blog JL Collins NH .com which is one of my favorite blogs

of all time you buy the whole stock market with like twenty seven hundred

plus stocks with you know one investment covering large medium and small cap

stocks what's the expense fee at cha Schwab for

this total stock market index fund it is Oh point zero three percent very cheap

minimum investment investment is none great good for you today Vanguard is

point zero four percent slightly higher for their world-famous you know the

world-famous total stock market index fund I think it's called the V tax fund

which is extremely famous from from Jim Collins book VTS ax I think is the

number are the the letters and but even cheaper is fidelity with their zero

funds fidelity has a zero fund that is called zero total market index fund well

it's tough to beat that there's a zero expense fee fidelity wins again I

forgot to mention earlier I'm gonna go back back to the sp500 I'm a military

member I'm in the military I bank at USAA I wanted to compare USAA to some of

these fees as well well for the S&P 500 index the expense fee was Oh point zero

two right it's Schwab at fidelity at USAA it was e where is it point two five

a lot higher 0.25 at USAA when it's like you know Oh point zero one five of

fidelity point zero four at Vanguard so it's like what five six seven times

higher at USAA get with the program USA USA does not have the total stock market

index fund so I can't make that comparison but they do have an

international index fund which I'll talk about next the international index fund

USAA which is a military bank and is where is where I Bank be fee there is

one point zero eight percent Wow more than one percent for a fee for an index

fund I do not recommend that do not ever pay that much for a fee let's see about

Charles Schwab because that's what we're here for today Charles Schwab expense

fee for the International index fund is only 0.06 percent is like 20 times 18

times lower than USAA thanks USA a minimum investment none the thing about

the international index fund at Chow Schwab is it's not like the best type of

international index fund it's a basic one it only has large cap stocks from

developed countries so it's cheaper this way if you have an international index

fund that has stocks from developed and developing countries and it has maybe

large cap stocks and medium and maybe even small cap stocks so lots of

different sizes of companies from lots and lots of different countries even

smaller countries this is a more diverse portfolio

and it also costs more to buy these stocks so you'll see a higher expense

fee so you've got sort of a more vanilla index fund here with with with Schwab

but but the but the ones that we're comparing them to at USA fidelity and

Vanguard are also similar so at at you at a Schwab it's point zero six percent

at USAA it's 1.08 which is totally absurd and fidelity ding-ding-ding they

have a zero fund called the fidelity zero international index fund VZ ILX go

check it out the expense ratio is zero zero

can't beat that Vanguard is point one nine okay point one nine three times

higher than Schwab so Schwab is doing really well not quite as good as zero

that's doing really well I'm gonna go ahead and say that these differences

between zero and like point zero three point zero two

but if you're just like you know somebody who wants to stay so you know

ah but it's cheaper if you really want to split hairs fit all these cheaper fun

cuts let's talk about some fun cuts let's just summarize them quickly on

December 20th 2018 Charles Schwab index funds reduced fees on five of their most

popular offerings offerings kind of just everybody's in this big fight right now

and everybody's reducing funds they did that on SP 500 index small-cap index

Schwab us large cap growth us large value index fund and mid-cap index fund

they all went down like one percentage point I said percentage point like from

point zero five two point zero four or from point zero you know from point zero

three to point zero two respectively check my blog out if you want to like

get the exact numbers and then like I'm gonna list out and then like they're

doing this because of fidelity because of fidelity zero funds and because of

vanguards low fees to begin with it's just big war which we all benefit from

as investors here's fidelity zero funds

I'll read them off to you Fidel fidelity zero international index fund fidelity

zero large-cap index fund fidelity zero total market index fund those are three

that I out there thinking very useful and then fidelity zero extended market

index fund it's a decent fund but I hear it used less often

Vanguard had its own answer to the price wars recently and it was just reducing

the minimum investment on its admiral shares which used to be its which still

are its cheapest shares it used to be that you had to have ten thousand to

have the admiral shares now you only have to have three thousand 438 of their

most popular admiral shares to include the total stock market index and the

sp500 the most popular ones conclusion fidelity is the cheapest Schwab probably

comes in second they both have no minimums Vanguard is a very close third

there's a difference between Vanguard and fidelity and Schwab Vanguard is

consistently a company that wants to keep fees low and isn't about gouging

the customer fidelity and Schwab are companies who I believe are just keeping

fees low on these index funds to draw Vanguard type customers in but once

you're there they hope to get you to buy higher priced products from them so it's

kind of like one of those lures and I don't think Vanguard's like that

Vanguard just straight up about let's just keep fees low across the board on

everything that we have and let's be good stewards that's my opinion is that

unfair all right genius give your opinion comments was I unfair did you

like this give it a thumbs up subscribe to my youtube comment let me don't you

think thanks rich out