401k / transaction fee for buying or selling funds

[FoolFromAZ]

I work for one of the major banks. I am maxing out my 401K contribution. I have been buying and selling my company stock (mostly) and also NASDAQ funds very regularly in the last 3 months or so. I was under the impression that there is no transaction fee for selling or buying. I tried reading all the prospectus, I could not find anything that says they would be charging some money every time I buy or sell stocks/index funds. Do you guys think there would be any transaction fee which I am not aware of. Is this wrong moving funds very regularly?

thanks for your advice.

[disneysteve]

Some mutual funds do have early redemption fees to prevent/discourage trading. Mutual funds are not intended as short-term investments. I would suggest you stop attempting to time the market and establish a long-term investing plan with dollar cost averaging from each paycheck going into a well-diversified portfolio.

[bjl584]

Originally Posted by FoolFromAZ

I work for one of the major banks. I am maxing out my 401K contribution. I have been buying and selling my company stock (mostly) and also NASDAQ funds very regularly in the last 3 months or so. I was under the impression that there is no transaction fee for selling or buying. I tried reading all the prospectus, I could not find anything that says they would be charging some money every time I buy or sell stocks/index funds. Do you guys think there would be any transaction fee which I am not aware of. Is this wrong moving funds very regularly?

thanks for your advice.

How have you done with this strategy? While generally not a good idea, my stepdad has successfully done this in one of his 401K's. He will buy into the Dow index whenever the market corrects and sell it when it recovers.

[kv968]

Originally Posted by FoolFromAZ

I work for one of the major banks. I am maxing out my 401K contribution. I have been buying and selling my company stock (mostly) and also NASDAQ funds very regularly in the last 3 months or so. I was under the impression that there is no transaction fee for selling or buying. I tried reading all the prospectus, I could not find anything that says they would be charging some money every time I buy or sell stocks/index funds. Do you guys think there would be any transaction fee which I am not aware of. Is this wrong moving funds very regularly?

thanks for your advice.

When you say "funds", do you mutual funds or ETF's? If they're ETF's you're probably paying a brokerage commission to trade them. If they're mutual funds, it may be early redemption fees as Steve pointed out. Also, with mutual funds, many companies may freeze your trading for a period of time if you make a "round-trip" (buying into a fund, selling it within 30 days and then buying back into the same fund within 90 days). The timeframe may vary with different fund families but all have a similiar structure.

[GrimJack]

I was in TIAA-CREF in the 90s and there were people who traded out of their stocks on Friday and back in on Mondays - they bought real estate over the weekend. I never understood this and tiaa-cref finally instituted some rule changes to put a stop to it.

The only thing I heard about this was that since stocks do not trade on the weekend they would buy real estate. I only bring this up because -wtf were they thinking, and what are you thinking? I can imagine buying company stock at an employee discount and selling it for full price but in and out, rinse, repeat in a 401k makes no sense.

[kv968]

Originally Posted by GrimJack

I was in TIAA-CREF in the 90s and there were people who traded out of their stocks on Friday and back in on Mondays - they bought real estate over the weekend. I never understood this and tiaa-cref finally instituted some rule changes to put a stop to it.

The only thing I heard about this was that since stocks do not trade on the weekend they would buy real estate. I only bring this up because -wtf were they thinking, and what are you thinking? I can imagine buying company stock at an employee discount and selling it for full price but in and out, rinse, repeat in a 401k makes no sense.

I have NO idea how you sell stocks on Friday, buy real estate over the weekend and be back in on Monday but I can understand getting in and out of company stock even without an employee discount. Some companies allow you to make round-trips in company stock via your 401k without a penalty and if you're willing to try to market time it, you can trade in and out without commissions. I've done this with my company stock at times in the past. Its just like buying the stock through a broker except you can only trade at the end of the day. I don't recommend it and I haven't done it much but it is an option if your company's plan allows it.