Investing in mutual funds can feel confusing at first, especially if you are used to buying stocks or ETFs. The process works a little differently, and understanding those differences is important before placing your first trade. In this guide, you will learn exactly how to buy and sell mutual funds on Charles Schwab, how orders execute, and what settings can help your investments grow over time.
Understanding How Mutual Funds Work
Before you start buying mutual funds on Charles Schwab, there is one major thing you need to know. Mutual funds do not trade instantly like stocks or ETFs.
Stocks and ETFs trade throughout the day while the market is open. Mutual funds only trade once per day after the market closes at 4:00 p.m. Eastern Time. At that point, the fund calculates its NAV, which stands for Net Asset Value. That NAV becomes the price for every order placed during the day.
For example, if you place a mutual fund order at 10:00 a.m., the order will still wait until after market close to execute. You will receive whatever the NAV ends up being at 4:00 p.m.
This is one of the biggest differences between stocks and mutual funds on Charles Schwab.
How to Access Mutual Funds on Charles Schwab
To begin buying mutual funds on Charles Schwab, open the Schwab mobile app and tap the “Trade” button near the bottom center of the screen.
At the top of the trading page, you will see three tabs:
- Stocks & ETFs
- Options
- Mutual Funds
Tap the “Mutual Funds” tab.
Once inside, you will see:
- Your selected brokerage account
- Your available cash balance
- A search bar for finding funds
One important detail is that mutual fund purchases require settled cash. Unlike stocks and ETFs, Charles Schwab does not usually provide instant buying power for mutual fund orders after a fresh deposit.
If you deposited money today, you may need to wait a day or two before you can buy mutual funds on Charles Schwab.
Choosing a Mutual Fund
A popular example is SWPPX, the Schwab S&P 500 Index Fund.
SWPPX is considered one of Schwab’s flagship mutual funds because it:
- Tracks the S&P 500
- Has a very low expense ratio
- Has no minimum investment requirement
- Provides broad exposure to large U.S. companies
To find it, type “SWPPX” into the search bar.
Once the fund page loads, you will see information including:
- Current NAV
- 52-week range
- Expense details
- Transaction fees
- Sales load information
If the fund says “No Transaction Fee,” that means Schwab does not charge you a fee to buy it. Many funds inside Schwab’s Mutual Fund OneSource program can be traded without transaction costs.
You may also notice “Sales Load: None.” This means there is no commission built into the investment itself, so your money goes directly into the fund.
These advantages make SWPPX one of the most beginner-friendly mutual funds on Charles Schwab.
How to Buy a Mutual Fund Step by Step
How to Buy a Mutual Fund Step by Step
Once you choose your fund, scroll down to the order setup section.
Tap the “Action” field and choose “Buy.”
Here is where mutual funds work differently from stocks and ETFs.
Instead of choosing the number of shares you want, you enter the dollar amount you want to invest. Schwab automatically calculates the fractional shares for you.
For example:
- Entering $5 into SWPPX might purchase approximately 0.274 shares
- Fractional ownership is automatically handled by Schwab
Many people are surprised to learn that some mutual funds on Charles Schwab have no minimum investment amount at all. You can literally start with just a few dollars.
Reinvesting Dividends and Capital Gains
One of the most important settings when buying mutual funds on Charles Schwab is the reinvestment option.
You will typically see these choices:
- None
- Dividends and Capital Gains
If you leave reinvestment set to “None,” any dividends paid by the fund will sit in your account as cash.
Many beginners accidentally leave this setting unchanged, which slows long-term compounding.
If your goal is long-term growth, selecting “Dividends and Capital Gains” is usually the smarter option. This automatically reinvests payouts into additional shares of the fund.
Over time, automatic reinvestment can significantly increase portfolio growth.
Reviewing and Placing Your Order
After entering your investment amount and reinvestment preferences, tap the green “Review Order” button.
Double-check:
- Fund symbol
- Dollar amount
- Reinvestment settings
- Account information
Then tap “Place Order.”
You will see an “Order Received” confirmation message. However, remember that the order still has not executed yet.
The trade remains pending until after market close when the mutual fund calculates its NAV.
This delayed execution process is completely normal for mutual funds on Charles Schwab.
How Mutual Fund Orders Execute
How Mutual Fund Orders Execute
After 4:00 p.m. Eastern Time, Charles Schwab processes the order using that day’s NAV.
The shares will typically appear in your account the next trading day.
You may notice small price differences between when you submitted the order and when it executed. That happens because the final NAV is not known until the market closes.
This system applies to nearly all mutual funds on Charles Schwab and other brokerage platforms.
How to Sell a Mutual Fund
How to Sell a Mutual Fund
Selling mutual funds is very similar to buying them.
First, go to the “Accounts” section of the app and locate your fund position.
Tap the mutual fund position to open additional options such as:
- View Profile
- Buy
- Sell
- Sell All
- View Lot
- Manage Investments
- Sell One Buy Another
Tap “Sell” to continue.
The sell screen looks very similar to the buy screen, except the action will now display a red “Sell” indicator.
You will see:
- Total shares owned
- Current market value
- A “Sell All” option
Selling by Shares or Dollars
When selling mutual funds on Charles Schwab, you usually have two methods:
- Shares
- Dollars
Selling by shares allows you to choose the exact number of shares to sell.
Selling by dollars allows you to request a specific cash amount, and Schwab calculates the share quantity automatically.
For example:
- Selling $500 worth of a mutual fund
- Keeping the remaining balance invested
This flexibility makes managing mutual funds on Charles Schwab very convenient.
Sell One Fund and Buy Another
One useful Schwab feature is “Sell One Buy Another.”
This lets you exchange one mutual fund for another in a single transaction.
For example, you could:
- Sell an S&P 500 fund
- Buy a total market fund
- Move into a bond fund
Instead of waiting for settlement and manually placing another trade later, Schwab handles everything together.
This can save time when adjusting your investment strategy.
How Mutual Fund Settlement Works
How Mutual Fund Settlement Works
After reviewing the sell order, tap “Place Order.”
Just like with purchases, the order will show “Order Received” until the market closes.
Once the NAV is calculated after 4:00 p.m. Eastern, the order executes.
The cash from the sale typically appears in your account on the following trading day.
Understanding settlement timing is an important part of managing mutual funds on Charles Schwab successfully.
Setting Up Recurring Investments
One of the best long-term investing tools available is recurring investments.
Instead of manually buying shares every week or month, Schwab can automatically invest for you on a schedule.
This strategy helps:
- Build consistency
- Remove emotional decision-making
- Grow investments automatically over time
- Encourage disciplined investing habits
Many successful investors use recurring investments to steadily build positions in mutual funds on Charles Schwab without constantly monitoring the market.
Final Thoughts
Learning how to buy and sell mutual funds on Charles Schwab is easier once you understand the key differences between mutual funds and stocks.
The most important things to remember are:
- Mutual funds trade once daily after market close
- Orders execute using the fund’s NAV
- Purchases require settled cash
- You invest by dollar amount rather than share count
- Dividend reinvestment can significantly improve long-term growth
Whether you start with $5 or thousands of dollars, mutual funds on Charles Schwab offer a simple way to build a diversified investment portfolio over time.
