Does Charles Schwab offer recurring investments for stocks, ETFs and mutual funds? How to enroll in Charles Schwab automatic investing plan.

Dollar-Cost Averaging with Charles Schwab

Charles Schwab is one of the biggest broker-dealers with a wide range of services for its clients. But do they offer dollar-cost averaging? Yes! But there’s a catch of sorts. Automatic investing with Schwab is limited to mutual funds, and the minimum periodic investment amount is $100. The service is entirely free, however, and a smart way to invest.

What is dollar-cost averaging?

Schwab themselves recommend dollar-cost averaging as a powerful time-tested strategy that tends to work better than trying to time the market, particularly for amateur investors.

But what is dollar-cost averaging, you ask? In essence, dollar-cost averaging involves investing a fixed dollar amount (hence the name) on a regular basis, no matter what the share price is.

Not only does this develop a regular investing habit, but it’s a smart strategy because over time it is likely to lower your average cost per share. Why? Because you’ll be buying fewer shares when the price is higher, and more shares when the price is lower.

Charles Schwab’s automatic investment plan

Now, if you want to do dollar-cost averaging with stocks, that’s great. You’ll just have to do it manually. That said, it’s easier than ever given there are no fees to trade equities with Schwab, and they offer fractional shares for many of the largest companies. You can also explore automated (not to be confused with “automatic”) investing through Schwab’s robo-portfolios that will automatically adjust for you.

For truly automatic investment, though, Schwab currently only offers this with mutual funds.

How to set up Schwab’s automatic investing

Using this form, you can quickly and easily set up Schwab’s Automatic Investment Plan (AIP).

After entering your account information, you then simply list the mutual funds that you wish to invest in automatically, providing the fund symbol, fund name, amount, and frequency of investment.

Finally, you note how you will pay for your automatic investments, with options including electronic funds transfer with Schwab MoneyLink, direct deposit, or cash in account.

How to fund the automatic investing

Schwab offers three ways, which are listed just above.

Schwab MoneyLink – This service enables you to easily transfer money electronically between your Schwab account and another U.S. financial institution.

Direct deposit – This allows your money to be withdrawn directly from a Schwab bank account or another bank account.

Cash in account – This requires you to have the necessary amount of cash in your account at the time of each automatic investment, so you’ll want to ensure that you have ample cash in there.

Can I buy stocks and ETFs this way?

The short answer is no. The longer answer is yes, sort of.

While it isn’t truly automatic, it’s easier than ever to dollar-cost average with stocks thanks to zero-commission trading and fractional shares.

For example, you could remind yourself to purchase shares on the first Monday of every month. With Schwab’s “stock slices,” or fractional shares, you could purchase $100 in a given stock—say Microsoft (MSFT) or Apple (AAPL), or even a basket of available stocks. Over time, you would be purchasing more shares when the price is lower, and fewer shares when the price is higher, which is effectively dollar-cost averaging.

Unfortunately, though, for automatic dollar-cost averaging, the service is currently only available for mutual funds at Schwab.

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Wrapping up

If you have a mutual fund or funds, dollar-cost averaging can be a great way to boost your investment and mitigate risk over time. And with Schwab, it’s a pretty painless process to get set up.

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