Cheaper than Vanguard

[Totoro]

Transaction costs in switching will eat up years of that 0.04% advantage.

I'd use it for allocating new money vs. switching funds.

[samclem]

Quote:

Originally Posted by Totoro Transaction costs in switching will eat up years of that 0.04% advantage. I'd use it for allocating new money vs. switching funds.

If we're talking about mutual funds in a tIRA, RothIRA, etc, the transaction and tax costs would typically be zero.

[youbet]

Quote:

Originally Posted by samclem Well, that's $400 per year on a $1 million portfolio, and you get it for spending 15 minutes online. Given what I see people do in the supermarket checkout lane to save $0.35 on a roll of paper towels, I'd say some folks are probably doing it. Like you, I probably wouldn't swap funds for an ER difference of .04%, but I do place a premium on making sure it doesn't pop up, as I tend to not watch that stuff closely. So, I wouldn't go for a teaser rate, etc.

In the situations where I've discovered an equivalent fund at a slightly lower ER, I'm often constrained because I've held the higher ER fund for many years and would have to pay whopper LTCG taxes doing the conversion. Fortunately, all of these involve differences of a few 0.01%, but it's still irking that you must pay LTCG taxes on these conversions from fund to fund tracking the same index.

If there was serious money involved, I guess I'd work on it harder.

[eta2020]

Quote:

Originally Posted by Ian S While it's nice to have low fees, I'm primarily interested in performance and I'm still not convinced that passively managed funds with the most rock bottom fees will always perform better than actively managed funds that have higher fees.

Not always...just most of the time.

[mrfeh]

Quote:

Originally Posted by photoguy Are they actually running their fund cheaper than Vanguard? or are they subsidizing the ER for use as a loss leader/marketing?

I don't care what their motivation is. All that matters is the cost to me.

[heyyou]

Quote:

that's $400 per year on a $1 million portfolio, and you get it for spending 15 minutes online.... And that $400 every year turns into $27K over 30 years, compounded at 5%.

Who has had or will have a million $ portfolio for thirty years?

[samclem]

Quote:

Originally Posted by mrfeh I don't care what their motivation is. All that matters is the cost to me.

If it's not in an IRA, etc, then you should care about the fees now and decades ahead, because selling can be very expensive tax-wise. A relatively common tactic for less scrupulous companies is to waive fees and lower ERs initially to get a bunch of people in the fund. After a few years the waivers end and the costs go up..Try to get out and you may pay bog CapGains taxes. Best bet is to go with a company that is committed to low cost as a central tenet of their business.

[mrfeh]

Quote:

Originally Posted by samclem If it's not in an IRA, etc, then you should care about the fees now and decades ahead, because selling can be very expensive tax-wise. A relatively common tactic for less scrupulous companies is to waive fees and lower ERs initially to get a bunch of people in the fund. After a few years the waivers end and the costs go up..Try to get out and you may pay bog CapGains taxes. Best bet is to go with a company that is committed to low cost as a central tenet of their business.

I use Fidelity's total US market fund, and I'm not going to switch just to save a couple basis points.

That being said, if I was investing in total market today, I'd be using these iShares funds. Given the direction of fees, I'd be shocked if the ER of this fund would ever be above .05.

If it's a loss leader for iShares, that's fine by me, because I wouldn't buy anything of theirs that isn't an index fund.

[jetpack]

Quote:

Originally Posted by heyyou Who has had or will have a million $ portfolio for thirty years?

Well, I've had one for ten years now... Hope it can stay with me another 40


Sent from my iPhone using Early Retirement Forum

[mpeirce]

Quote:

Originally Posted by heyyou Who has had or will have a million $ portfolio for thirty years?

This is EARLY-retirement.org, so many folks here have a nice pile of assets and many years to enjoy them.

[ERD50]

Quote:

Originally Posted by heyyou Who has had or will have a million $ portfolio for thirty years?

Quote:

Originally Posted by jetpack Well, I've had one for ten years now... Hope it can stay with me another 40 ...

Well, if you start with $1M, draw 3.5% and adjust for inflation each year for 40 years, there is a good chance you will have more than $1M at the end. The historical average was over $3M.



FIRECalc: A different kind of retirement calculator

an average at the end of $3,099,196. ... FIRECalc found that 3 cycles failed, for a success rate of 97.1%.

I'm not sure why heyyou is questioning this?

-ERD50

[Olbidness]

My FIDO 401K 500 index fund has an expense ratio of 0.02 and I've wondered if my employer subsidizes the expense. My Vanguard 401K 500 index fund has an expense of 0.05 an thought that was rock bottom.

[hnzw_rui]

Quote:

Originally Posted by Olbidness My FIDO 401K 500 index fund has an expense ratio of 0.02 and I've wondered if my employer subsidizes the expense. My Vanguard 401K 500 index fund has an expense of 0.05 an thought that was rock bottom.

Vanguard Institutional Index Fund Institutional Plus VIIIX (S&P 500) has ER of 0.02%. Of course, it requires minimum investment of $200M.