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09-07-2004, 02:07 PM
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#1
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Recycles dryer sheets
Join Date: Aug 2004
Posts: 113
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E*Trade Lowers Fees
For those of you interested in the S&P 500 or an International Index fund, E*Trade has just lowered their fees to 0.09%.
http://biz.yahoo.com/prnews/040907/sftu123_1.html
The Russell 2000 index fee was lowered to 0.26%.
I just love price wars!
__________________
Robert<br />https://www.austinexplorer.com/<br />https://www.texashiking.com/
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09-07-2004, 04:16 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
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Re: E*Trade Lowers Fees
It will be interesting to see if Vanguard joins the fight.
Since they have a high percentage of their assets under
management in index funds, it would affect their net
profit more than other providers.
At some point, the convenience of having all your
funds under one roof is worth a few extra $ in expenses,
at least for me that's true.
Cheers,
Charlie
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09-07-2004, 04:40 PM
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#3
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Re: E*Trade Lowers Fees
But isn't Vanguard owned by the shareholders of the funds? There are no profits. Any decrease in fees must be offset by lower operating costs.
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09-07-2004, 05:59 PM
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#4
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Full time employment: Posting here.
Join Date: Mar 2004
Posts: 526
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Re: E*Trade Lowers Fees
Is that true? I didn't know that. Like a credit union of mutual fund companies?
Anne
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09-07-2004, 08:44 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Dec 2003
Posts: 4,459
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Re: E*Trade Lowers Fees
Vanguard's response is "read the fine print." So I did. The low etrade fees are good until April 30, 2005. Not even a full year. Sheesh.
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09-07-2004, 08:52 PM
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#6
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Recycles dryer sheets
Join Date: Aug 2004
Posts: 151
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Re: E*Trade Lowers Fees
Moving funds can be a hassle. I bet they are banking on people not reading the fine print, moving their money and then either not noticing that the rate has changed or can't be bothered with moving the accounts again after such a short time period.
Also, if these funds are outside of a retirement vehicle, would "selling" the one index and moving it to E*Trade cause you to recognize cap gains?
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09-07-2004, 09:15 PM
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#7
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Re: E*Trade Lowers Fees
Quote:
But isn't Vanguard owned by the shareholders of the funds? There are no profits. Any decrease in fees must be offset by lower operating costs.
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Quote:
Is that true? I didn't know that. Like a credit union of mutual fund companies?
Anne
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Hello Anne,
Vanguard's structure is unique among mutual fund companies. That's how they can offer such low fees. It's also why John Bogle is often standing alone criticizing the financial industry and 'corporate America.'
http://www.vanguard.com/web/corpcont...nvestHere.html
or go to www.vanguard.com and click on 'About Vanguard'.
It's still not clear to me how transparent the business is.
--John
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09-09-2004, 04:30 PM
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#8
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Full time employment: Posting here.
Join Date: Mar 2004
Posts: 526
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Re: E*Trade Lowers Fees
Wow, I've owned Vanguard index funds for years and never knew that. Found out how cheap they were and never looked back!
Thanks, John, that's great to know. Cutting out layers of bureaucracy and layers of profit-takers seems would inevitably lead to cost savings.
Anne
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09-09-2004, 05:04 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Re: E*Trade Lowers Fees
Quote:
*Cutting out layers of bureaucracy and layers of profit-takers seems would inevitably lead to cost savings.
Anne
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That is the usual argument for social democracy. I think it is sometimes true-eg British or European health systems vs. ours in the US.
Mikey
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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09-19-2004, 10:30 AM
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#10
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Dryer sheet wannabe
Join Date: Aug 2004
Posts: 17
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Re: E*Trade Lowers Fees
I'm a vanguard fan ... but i guess competition should be good.
Fidelity seems to be on board now...
http://yahoo.smartmoney.com/bn/index...4750&afl=yahoo
it's tempting to get the best bang for the buck for index funds that ride time - especially if rebalancing assets (which I am about to do). Is there anyway to transfer ... say an equal type fund S&P 500 indexed from one place to another without incurring possible capital gains in a non-sheltered fund?
My guess is no ... so sad to save maybe some easy (though small) money.
notTwain
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09-19-2004, 01:01 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Re: E*Trade Lowers Fees
Nope...you can transfer stock and fund assets that are identical from one brokerage to another, but these in-house index funds are not identical...hence a taxable event.
Which may not be the worst thing...if your fund is down, you can take the loss and apply it against other gains...which means your new holding will create a higher gain if/when you eventually sell...or if you have a gain and your tax profile is low, you can take a little hit now at a low tax rate and readjust your cost basis in the fund a little higher.
On some of these 'lowered' fees, make sure you read the fine print. Some may be offering these lower rates as a teaser, and move to higher rates a year or so from now.
Also...once you're down below 25 basis points, the cost savings is almost moot unless you're working with many millions in assets. Even there, convenience and service should come to bear before costs.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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09-19-2004, 01:09 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
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Re: E*Trade Lowers Fees
Quote:
. . .Fidelity seems to be on board now...
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It figures. :-/ Because of my job and investment history, I had my investments in a large number of different accounts when I retired just over a year and a half ago. I just finished up consolodating a lot of those funds -- primarily into Vanguard index funds.
I hope Fidelity's move starts a price war so that Vanguard will follow. Otherwise I might be looking at moving everything again before long.
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09-19-2004, 01:48 PM
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#13
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Re: E*Trade Lowers Fees
I've used Fidelity in the past and I've found Vanguard to be far superior.
Yes, it looks like Fidelity is out to beat vanguards low management fees on some index funds. But look at the fees for other funds.
Index 500
Vang - .18%
Fidel - .1%
GNMA
Vang - .20%
Fidel - .59%
ST Bond
Vang - .21%
Fidel - .57%
Balanced
Vang Wellington - .36%
Fidel Balanced - .67%
Fidelity will bombard you with literature marketing funds that have higher management fees.
The difference on the Index500 is very small, and on the average Vanguard is still significantly less expensive.
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09-19-2004, 02:53 PM
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#14
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Not so fast.
Any bets on when Fidelity's ERs will start sneaking upward again? Perhaps a month after E*Trade's deal expires?
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