4 ms·

What would you consider reasonable? 1%?

• FabHK 10y ago
  Less. 1% they still take a quarter of your money over 30+ years. At most 50 bips = 0.5%, but aim for 10 bips or less, like good old Vanguard.
  • avar 10y ago
    Does that assume some given rate of growth? 4%? What's the formula to calculate this?
    • FabHK 10y ago
      I've put it into Excel a while ago with growth rates between 0% and 6%, the gist of it is fairly robust with respect to growth assumptions. A way to think about it is maybe this: remove 1% pa, and to first order you're down about a third after 35+ years. Now, in the scenario where you're saving regularly, there's much less to take away at the beginning, so the effect is somewhat ameliorated. But it's really this relentless pounding, shaving off a "small" fraction every year, that's so devious. As a consumer, it's hard to see. But the industry knows exactly what they're doing, which is why (for some products) they're paying these fat commissions, which is why you have all these friendly financial advisors calling.
      • tonyedgecombe 10y ago
        Yes, 0.99^35 ~= 0.70
• cpach 10y ago
  When I choose index funds I aim for ≤0.4%