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If Robinhood, a start up with very few resources, can offer commission free trading, I'd bet Amazon could offer approximately 0 cost S&P500 funds. If the partn

If Robinhood, a start up with very few resources, can offer commission free trading, I'd bet Amazon could offer approximately 0 cost S&P500 funds. If the partnership with JP Morgan works, people could direct deposit money into their Amazon account, auto-invest into Amazon funds, and then spend on Amazon ecommerce. In this model, Amazon immediately saves ~2% on credit card transaction fees, a small portion of which could be used to subsidize cheap or 0 cost investments. Essentially Amazon could vertically integrate the money that will be spent on their products in the future...

compsciphd 9y ago
vanguard and fidelity offer approximately 0 cost S&P500 funds already today. you're talking .03% in fees. On a $1Mil investment that's $300 a year.
- y4mi 9y ago
  > you're talking .03% in fees. On a $1Mil investment that's $300 a year. i thought vendor creditcard fees are 2-3%? that would come out at $20-30k for each $1Mil
  - ceejayoz 9y ago
    It’s not 2-3% at Amazon’s volume. Amazon also allows you to load up a gift card balance with a checking account.
- anonu 9y ago
  3bps is certainly dirt cheap - but thats purely explicit cost. You have to look at how the fund is managed. If the fund manager is an idiot and forgets to rebalance or makes some other error - that 3bps can pale in comparison to missing the benchmark.
  - ceejayoz 9y ago
    Is there any reason to believe that cheaper fund managers like Vanguard forget to rebalance?
    - anonu 9y ago
      Ah - no - I wouldn't think someone like Vanguard would forget. I was just highlighting that the "headline cost" number isn't the only cost you should consider. Guys like Vanguard actually make money on their rebalances because they are so big. And they keep it in-house - avoiding the costs (both explicit and implicit) of outsourcing their flows to other firms. So being large brings economies of scale as well. EDIT: By "make money" I mean they use their cost-savings to make or beat the benchmark
  - jeffreyrogers 9y ago
    Vanguard doesn't miss the benchmark. They're good at execution.

compsciphd 9y ago

vanguard and fidelity offer approximately 0 cost S&P500 funds already today. you're talking .03% in fees. On a $1Mil investment that's $300 a year.

y4mi 9y ago
> you're talking .03% in fees. On a $1Mil investment that's $300 a year. i thought vendor creditcard fees are 2-3%? that would come out at $20-30k for each $1Mil
- ceejayoz 9y ago
  It’s not 2-3% at Amazon’s volume. Amazon also allows you to load up a gift card balance with a checking account.
anonu 9y ago
3bps is certainly dirt cheap - but thats purely explicit cost. You have to look at how the fund is managed. If the fund manager is an idiot and forgets to rebalance or makes some other error - that 3bps can pale in comparison to missing the benchmark.
- ceejayoz 9y ago
  Is there any reason to believe that cheaper fund managers like Vanguard forget to rebalance?
  - anonu 9y ago
    Ah - no - I wouldn't think someone like Vanguard would forget. I was just highlighting that the "headline cost" number isn't the only cost you should consider. Guys like Vanguard actually make money on their rebalances because they are so big. And they keep it in-house - avoiding the costs (both explicit and implicit) of outsourcing their flows to other firms. So being large brings economies of scale as well. EDIT: By "make money" I mean they use their cost-savings to make or beat the benchmark
- jeffreyrogers 9y ago
  Vanguard doesn't miss the benchmark. They're good at execution.