Charles Schwab recurring investment

Charles Schwab Automatic Investing (2024)


Does Charles Schwab have automatic investment plan (AIP) contributions? Charles Schwab dollar cost averaging program setup and review. Monthly/weekly Schwab AIP/DCA/recurring investing fees on ETFs, stocks, and mutual funds.


Automatic Investment Plan at Schwab: Highlights


• Charles Schwab offers an Automatic Investment Plan (AIP) for its investors.

• Only mutual funds are eligible for recurring investments.

• You can automate both purchases and sales.

• Schwab’s AIP is a useful tool for dollar-cost averaging.

Instead of making individual transactions for a mutual fund at Schwab, you can set up automatic purchases or sales on the broker’s website. It’s simple to get started, and we’ll guide you through the steps.


Synopsis of Schwab’s Automatic Investment Plan


Schwab’s Automatic Investment Plan (AIP) can be set up for specific mutual funds. However, not all mutual funds qualify, and other types of investments, like stocks and ETFs, are excluded. AIP allows you to set up both buy and sell orders. There’s a minimum transaction amount of $100, and you can unenroll from the plan anytime.


Finding Eligible Funds


Before enrolling in Schwab’s AIP, you need to have a mutual fund in your account. You can check if a fund is eligible for AIP on the fund’s profile page under the Status section, where it will indicate yes or no for AIP.

Funds on Schwab’s OneSource Select List® are generally eligible for automatic transactions. You can find these funds by using Schwab’s fund screener. Go to the Research tab in the main menu and select the link for mutual funds. On the next page, click on the tile for the OneSource Select List. There are currently 184 funds on this list.


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All 64 of Schwab’s mutual funds are eligible for recurring transactions. To find these, go back to the mutual funds section and click on the screener tile. Search by fund family.


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Enrolling in Schwab’s AIP


Once you have a mutual fund in your account, there are two ways to enroll it in Schwab’s AIP. The first is by filling out a PDF form, which you submit to Schwab. Each account needs a separate form, but it’s easy to fill out.

The second way is to enroll through the website, which is faster and offers more options. To find the digital form, go to the Trade tab and select Automatic Investing from the menu. This will bring up the online form.

If you have multiple accounts, choose the one with the mutual fund you want to enroll. If you hold the same fund in multiple accounts, each account will need a separate enrollment.


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After selecting the account, you’ll see a list of eligible mutual funds. Each fund will have an enrollment link. Click on it to open the form for that specific fund. Each fund requires separate enrollment. You’ll need to provide the following details:

  • Action (buy or sell)
  • Amount
  • Frequency
  • Enrollment date (can be in the future)
  • Transaction day

For sales, you can choose either shares or dollars. For purchases, only dollar amounts are allowed. Schwab offers 7 frequency options on the digital form:

  • Weekly
  • Every other week
  • Twice a month
  • Monthly
  • Every 3 months
  • Every 6 months
  • Annually

AIP instructions submitted online are processed the same day and take effect the next business day.


schwab recurring investment


AIP Purchases and Sales


To make a purchase with AIP, there must be enough settled cash in your account. If there’s not enough cash or a money market mutual fund to cover the transaction, the AIP will be skipped that day.

For automatic sales, you must have enough shares to cover the sell order. If you set a dollar amount for the sale, at least 90% of the estimated amount must be available. If not, the AIP will be skipped.


Funding Purchases


If you set up an Automatic Investment Plan for purchases, you’ll need to ensure the funds are available. You can establish recurring deposits just like recurring purchases. To do this, go to the Move Money tab, select Online Transfer, and set up a recurring ACH transfer. Frequency options include:

  • Weekly
  • Monthly
  • Last business day
  • Quarterly
  • Annually
  • Twice a year
  • Twice a month


Editing an AIP


To change or cancel an AIP, go back to the form—either online or paper—and fill it out again, making sure to cancel the AIP if that’s your intention.


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Cost of Schwab’s AIP


There are no fees for signing up for or canceling an Automatic Investment Plan at Schwab. However, AIP transactions are considered mutual fund purchases or sales. Many AIP-eligible funds are no-transaction-fee funds, meaning there’s no cost to trade. If a fund normally has a transaction fee, there will be a charge of 8.5% of the principal, capped at $10.

Some mutual funds may have short-term trading fees or other charges that apply to AIP transactions. Be sure to read the prospectus carefully before enrolling.


Schwab Dollar-Cost Averaging


Dollar-cost averaging is an investment strategy where you invest a set dollar amount regularly over time. This strategy helps you buy more shares when prices are low. Schwab’s Automatic Investment Plan is an example of dollar-cost averaging because it uses fixed dollar amounts for purchases.


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Updated on 9/9/2024.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.