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So your strategy isn't, "buy the whole market", it's "buy the market as it existed in $current-year", which misses all the new stocks that come out. (Also it as
by ikeboy 10y ago
So your strategy isn't, "buy the whole market", it's "buy the market as it existed in $current-year", which misses all the new stocks that come out. (Also it assumes you have a fixed amount to invest and never want to invest more)
- grondilu 10y agoI don't get what you mean. You can buy and hold, and keep buying.
- ikeboy 10y agoBut then it's not a one time-fee. More generally, your strategy only works if you're investing a large amount every time, it doesn't scale down. You can't put 10k into 5000 stocks, and even 500 stocks would be difficult.
- grondilu 10y ago> But then it's not a one time-fee. I meant one time per line, not per portfolio. > it doesn't scale down. It scales down just fine if you're willing to accept that you're going to pay a lot in broker fees, with the only consolation that you'll pay them only once per line in your portfolio. If you have say 500 stocks and pay like $10 in broker fees per stock, in the end you'll pay $5000. That's not the end of the world for a long term investment.
- icebraining 10y agoAt a 0.05% expense ratio, you need to hold $250k for 40 years to pay $5000, not to mention the extra fees if you want to rebalance as the market changes. It doesn't seem to make sense for lower-end investors, which are many of us.
- jonknee 10y ago> If you have say 500 stocks and pay like $10 in broker fees per stock, in the end you'll pay $5000. That's not the end of the world for a long term investment. If you only buy each stock one time. Which is absurd if you want a balanced portfolio you would need to buy a little bit of all 500 stocks a lot of times. A ETF lets you do this cheaply.