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


• Investors at Charles Schwab can sign up for the broker’s Automatic Investment Plan (AIP).

• Only mutual funds are eligible for recurring purchases.

• Besides purchases, sales can also be switched to autopilot transactions.

• Schwab’s AIP can be used for dollar-cost averaging.

Instead of making regular transactions on a mutual fund at Charles Schwab, it’s possible to establish automatic purchases or sales of funds on the broker’s website. It’s really easy to set this up; we’ll show you how.


Synopsis of Schwab’s Automatic Investment Plan


The Automatic Investment Plan (AIP) at Schwab can be established for certain mutual funds. Not all mutual funds can be enrolled, and other securities, like stocks and exchange-traded funds, are completely off limits. Schwab’s AIP can be used on either trade side—buy or sell. There is a minimum transaction amount of $100, and once turned on, it’s possible to unenroll a fund at any time.


Finding Eligible Funds


Before actually enrolling in Schwab’s AIP, the first thing you need to do is buy a mutual fund. A fund has to actually be in your account before you can sign up for recurring transactions. It’s easy to see if a fund is eligible for Schwab’s AIP on the fund’s profile. Near the top of the main tab, there is a section on Status. Here, there will be a yes or no for AIP.

Funds on Schwab’s OneSource Select List® are usually eligible for systematic transactions. It’s really easy to search for these funds using Schwab’s fund screener. Simply head to the Research tab in the main menu of the website and select the link for mutual funds in the drop-down menu. On the next page, click on the tile for Schwab’s OneSource Select List. There are currently 184 funds on this list.


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All of Schwab’s mutual funds (there are 64 in total) are eligible for recurring transactions. To find these funds, go back to the mutual-fund link and this time click on the tile for the screener. Search by fund family.


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Enrolling in Schwab’s AIP


Once you have an eligible mutual fund in your account, there are two options to enroll it in Schwab’s AIP. The first is a pdf form that needs to be filled out and turned into Schwab. It is a fillable form, so it’s not too much trouble, although each account at Schwab will require a separate form.

The second option is enrolling electronically through the website. This method is a little easier, faster, and has more frequency options than the hard-copy form. To pull up the digital form, click on the Trade tab in the top menu of the website and select the link for Automatic Investing. Now you’ll have the online form.

If you have more than one account, you’ll need to first select the account that contains the mutual fund you want to enroll. If you have the same fund in multiple accounts, you’ll need to enroll it more than once.


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Once you specify the account, you’ll get a list of eligible mutual funds currently in the account. Each fund will have a blue enrollment hyperlink. Click on the link to get the enrollment form for that fund. Each fund has to have a separate enrollment. The following fields must be completed:

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

On the sell side, the amount can be in either shares or dollars. For purchases, only dollars can be used. Schwab offers 7 frequencies on its digital form. They are:

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

AIP instructions submitted through the digital form are processed the same day and go into effect the following business day.


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AIP Purchases and Sales


Purchase transactions for an AIP require settled cash. Money market mutual funds (only) can be used in lieu of settled cash. If an account doesn’t have either of these, the AIP will be skipped that day.

An automatic sale requires sufficient shares to cover the sell order. Sales established in dollars must have at least 90% of the estimated transaction available in the fund. If either condition isn’t met, the AIP will be skipped.


Funding Purchases


If an Automatic Investment Plan is set up on the purchase side, the necessary funds must come from somewhere. It is possible to establish recurring deposits just like recurring purchases. To set up a recurring-ACH schedule, head to the Move Money tab in the top menu and select Online Transfer from the drop-down list of choices. Doing so will give you the ACH page where autopilot deposits can be established on an account. Frequency choices include:

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


Editing an AIP


To modify or cancel an existing AIP on a fund, simply go back to either form, digital or paper, and complete the form again, being careful to turn off the AIP if that’s what you want to do.


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Cost of Schwab’s AIP


Schwab does not assess any fees for signing up for Automatic Investment Plans or cancelling one. However, every AIP transaction at Schwab is a purchase or sale of a mutual fund. Many funds eligible for the broker’s AIP will be no-transaction-fee funds, so there’s no charge. But if an AIP fund does normally carry a transaction fee, there will be a charge of 8.5% of principle (there is a $10 cap).

Mutual funds themselves could have short-term trading fees or other transaction fees that could apply to AIP transactions, so be sure to fully understand the prospectus before signing up a particular fund.


Schwab Dollar-Cost Averaging


Dollar-cost averaging is an investment theory that suggests using recurring purchases in whole dollars to grow an investment over time. In dollar-cost averaging, whole-dollar amounts are used, and this form of long-term investing garners more shares when prices are low. Schwab’s Automatic Investment Plan is a form of dollar-cost averaging because whole dollars are used.


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Updated on 1/23/2024.


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.