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TD Ameritrade Recurring Investment in 2024
Can I use automatic recurring investment plan (AIP) on TD Ameritrade? Does TD Ameritrade have dollar cost
averaging program (DCA)?
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TD Ameritrade Closed Its Doors
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Can You Set Up an Automatic Investment at TD Ameritrade?
Investors at TD Ameritrade can take advantage of a free automatic investing plan (AIP). TD Ameritrade allows any type of mutual fund to be set up for automatic purchases.
Both load and no-load funds, as well as transaction-fee and no-transaction-fee funds, can be enrolled. Over 13,000 mutual funds are available on TD Ameritrade, with 4,200 of them being commission-free.
Unfortunately, stocks and ETFs are not eligible for automatic purchases.
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TD Ameritrade Dollar-Cost Averaging
The automatic investment plan offered by TD Ameritrade is a form of dollar-cost averaging. With this method, you make fixed-dollar purchases at regular intervals. Since the dollar amount is fixed, you buy more shares when the price is lower. This approach allows you to accumulate fractional shares, which isn't possible with ETFs and stocks.
For example, you could invest $50 every week in VBINX, the Vanguard Balanced Index fund.
TD Ameritrade Automatic Investment Fee
There is a transaction fee of $49.99 on the initial purchase. Before setting up automatic investments, you must first buy the fund. This fee applies only to the first purchase. After that, automatic investments are free of additional charges.
TD Ameritrade Automatic Investing in ETFs and Stocks
TD Ameritrade's automatic investment service is not available for ETFs and stocks.
Funding the Recurring Purchases
To fund your automatic mutual fund purchases, TD Ameritrade offers a convenient funds transfer tool that allows you to set up recurring deposits into your brokerage account. You can schedule recurring transactions on a weekly, bi-weekly, monthly, quarterly, semi-annual, or annual basis. Other options, like the third Friday of the month, are also available.
Setting up a TD Ameritrade Automatic Investment Plan
To set up an AIP, you’ll need to call TD Ameritrade's customer service. They will send you a paper form to fill out and submit. The minimum purchase amount is $50, and you can schedule the investment weekly, semi-monthly, monthly, quarterly, semi-annually, or annually. Multiple accounts can use this service, and there’s no limit to the number of mutual funds you can enroll. If you need to change or cancel your AIP later, you can do so by contacting TD Ameritrade.
Does TD Ameritrade Offer Automatic Investing on Stocks?
TD Ameritrade does not offer automatic investing for stocks, except through a dividend reinvestment plan.
Comparison
Not all brokers allow load funds and transaction-fee funds in an automatic investment plan. For example, E*Trade limits its AIP to no-load, no-transaction-fee funds, which reduces the number of funds eligible for automatic purchases.
On the other hand, E*Trade provides more detailed information about its AIP on its website. TD Ameritrade offers less information, so customers may need to search for details if they want to use this service.
Updated on 8/21/2024.
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