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Vanguard Automatic Investing Plan


2021: Does Vanguard offer automatic investment plan (AIP)? Vanguard dollar cost averaging program (DCA) review. AIP fees on ETFs, stocks, and mutual fund auto investing.



Automatic Investing Plan at Vanguard


If you currently own shares in a Vanguard mutual fund, the best way to make future investments may be to setup a recurring investment plan that makes regular contributions to the fund. The broker charges nothing for this convenient service.


Vanguard Automatic Investment Plan Details


The one major caveat of this service is that it is available only for Vanguard mutual funds. So if you own funds from American Century or T. Rowe Price inside your Vanguard brokerage account, they won’t be eligible for automatic purchases.

Money can be moved either from an external bank account or from a settlement fund inside your Vanguard account. If you have multiple bank accounts linked to your Vanguard securities account, you can pick whichever one you want to use.

The frequency of money movement can be set at once per month, once per week, every 2 weeks, or twice a month. Start and end dates can be established if you wish.

If you hold two or more Vanguard funds, you can split your contribution between them. So for example, 60% could go to one fund, 30% to another, and 10% to the third.


Automatic Withdrawals


Vanguard has a unique service in the brokerage industry that allows investors to move money in the opposite direction. You can set up regular sales of fund shares and have the proceeds automatically moved to an external bank account or a Vanguard brokerage account. Cash can also be automatically moved to a Vanguard IRA and counted as a contribution.


Signing Up


Vanguard’s website isn’t the easiest in the world to navigate. To find the sign-up page for auto investments or withdrawals, we typed in “How do I set up recurring automatic investments online?” in the search box in the upper-right portion of the website. We were then directed to a page with “Navigate to the automatic investments plan page.” Click on this link, and you’ll have the online enrollment form for periodic investments. If you want withdrawals, be sure to click on “Navigate to the automatic withdrawals plan page.”


Vanguard Dollar Cost Averaging


Should You Use Dollar-Cost Averaging at Vanguard?


Investing a fixed-dollar amount with periodic investment plans is known as dollar-cost averaging. With dollar-cost averaging, you get to buy more shares when the price is low. You also get to purchase fractional shares.

Market timing, however, is lost because you invest the same amount periodically, whether the market is up or down. This style of investing loses the possibility of buying only when the market is over-sold.


Comparison


Vanguard is the only brokerage firm we know of that allows for robo withdrawals. Several other companies do permit periodic investments, however. M1 Finance is one such broker. It is also better priced than Vanguard.

On the other hand, Firstrade customers get to use the broker’s automatic investment plan with any fund family, a great advantage over Vanguard’s system. Also, the broker offers all mutual funds FREE of any commissions.


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