If you’re considering purchasing Fidelity mutual funds within your Schwab account, halt that thought for a moment!
I was about to make a BIG mistake until I saw this on my Trade Ticket. Apparently, there is a transaction fee to buy non-Schwab mutual funds.
It looked something like this:
Just because you can purchase Fidelity mutual funds through Schwab doesn’t necessarily mean you should.
In this blog post, I’ll break down the transaction fee for non-Schwab mutual funds and show you how to avoid it.
Cost of Buying Fidelity Mutual Funds on Schwab
It costs $74.95 per trade to purchase Fidelity mutual funds in your Charles Schwab account.
This fee is applied only to the buy side, which means it costs nothing to sell. Furthermore, the transaction fee is excluded from dividend reinvestment.
Let’s do a simple calculation to determine how much you will be charged for weekly investments in a Fidelity mutual fund on Charles Schwab.
For example, suppose you purchase FXAIX (Fidelity 500 Index Fund) shares in your Schwab account every Friday. At the end of the month, you would have incurred $299.80 in transaction fees.
How to Avoid Schwab Transaction Fee on Fidelity Funds?
As you can see from the math above, this cost is not justifiable, and there are better ways to go about it.
There are alternative options available and you don’t have to pay a single dime in transaction fees.
The easiest way to avoid paying for transaction fee of non-Schwab mutual funds is to purchase the Schwab equivalent funds.
Schwab provides its own mutual funds, which compete with the likes of Fidelity and Vanguard. In certain cases, Charles Schwab’s mutual funds may be better.
| Fidelity | Schwab |
|---|---|
| FXAIX | SWPPX |
| FSKAX | SWTSX |
| FSPSX | SWISX |
| FSPGX | SWLSX |
Does Schwab Charge Fees for Fidelity ETFs?
Charles Schwab does not charge any fee for Fidelity ETFs. The transaction fee discussed earlier is only for Fidelity mutual funds.
Therefore, if you prefer Fidelity funds, go with their ETFs.