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Looks like an ad for Vanguard and ETrade. You should never pay $10 per trade. Included in this cost is the privilege of placing a market order at no penalty. Us

Looks like an ad for Vanguard and ETrade. You should never pay $10 per trade. Included in this cost is the privilege of placing a market order at no penalty. Use Interactive Brokers instead and place limit orders at nearly no cost. For someone who espouses "1% can make you a millionaire" and then advocates spending $10 on a $1,000 order is just stupid. By their own definition, this alone will make you a millionaire. Another thing I hate, the 10% return on average of the stock market. Since the inception of S&P 500 in the 50's, it's almost 8%. In fact, the average rate of return over any 40 years (the typical investing age) is something around 6.5% [0]. The single greatest thing you can do to save for retirement - negotiate for a 2% salary raise when you start your career. This will literally beat every piece of advice in this entire document combined. [0] https://dqydj.com/sp-500-historical-return-calculator/ https://dqydj.com/sp-500-historical-return-calculator/

andrewvc 7y ago
There's no reason for the average investor to trade ETFs at all when no load mutual funds exist. You can use vanguard directly or etrade (or a billion other companies) for that.
- throw0101a 7y ago
  You're not wrong, but with mutual funds you may be stuck with dealing with whatever offerings your employer-sponsored plan has to offer. ETFs are available from any place that has access to the stock market.
  - astura 7y ago
    My employer-sponsored plan doesn't offer any ETFs.
- bradly 7y ago
  There are minimums investment amounts on many mutual funds include the Vanguard ones which are most popular with personal finance investors. ETFs don't have minimums allowing for more home investor participation, especially from those new to investing or personal finance.
- lotsofpulp 7y ago
  What’s the difference for an average inventor between buying VTI and VTSAX?
- junar 7y ago
  Actually, ETFs do have advantages. Vanguard recently lowered expense ratios on their ETFs, but not on the corresponding mutual funds. https://investornews.vanguard/lower-expense-ratios-on-21-vanguard-etfs-means-more-savings-for-you/ https://investornews.vanguard/lower-expense-ratios-on-21-van... For non-Vanguard funds, ETFs are generally more tax efficient than mutual funds because they can avoid capital gains distributions in ETFs, but not in mutual funds. Vanguard has a patent on the mutual fund method.
- loeg 7y ago
  1. Capital gains reduction, anywhere other than Vanguard (who has exclusive patent on treating mutual funds as an ETF share class), 2. Intra-day trading has some value to some people, and 3. As others have pointed out, fees can be lower for the same dollar investment.
tunesmith 7y ago
Even the 6.5% is high, practically speaking. People tend to put more in the market when times are good (and the market is high), and less when times are bad (because they have less money), which mutes performance. Dollar-cost-averaging helps counteract this, but not all the way. So personal performance in the S&P will be less than the S&P market average. I ran an XIRR analysis on my complete lifetime retirement contribution history, pretending that on the dates I had those sums of money, I put the money in the S&P and held. The results were not pretty, and were way below these "average rate of return" stats the articles like bandying about. (This takes dividend history into account.) On top of that, the above link also shows how performance goes down if you want some degree of confidence. Over a 40-year period, a 90% confidence gives you 4.9%. Finally, people are usually advised not to put all their money in the S&P anyway. Some kind of allocation model is preferred instead, which further mutes performance. Our lack of personal-information education in this country is due in large part to misinformation, not just ignorance. I agree with the above conclusion; your chief weapons are raising income and cutting expenses, not chasing returns.
- loeg 7y ago
  > People tend to put more in the market when times are good (and the market is high), and less when times are bad (because they have less money), which mutes performance. Yes, but even so, it's worth doing: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
  - tunesmith 7y ago
    Just in case it wasn't clear to others, my argument wasn't that it isn't worth doing, it's that you cannot expect the level of returns that almost all articles, publications, and blog posts claim. To expand, the reason one shouldn't rely on those is because people will bust out the spreadsheet, and put their 7-10% expected returns in there, and then figure out an amount of monthly savings that is "enough" for their goals. And then years will pass and they'll fall short. Yes, invest - it'll most likely beat inflation. But don't get the false sense of security. (And you'll like need more than a million anyway.)

andrewvc 7y ago

There's no reason for the average investor to trade ETFs at all when no load mutual funds exist. You can use vanguard directly or etrade (or a billion other companies) for that.

throw0101a 7y ago
You're not wrong, but with mutual funds you may be stuck with dealing with whatever offerings your employer-sponsored plan has to offer. ETFs are available from any place that has access to the stock market.
- astura 7y ago
  My employer-sponsored plan doesn't offer any ETFs.
bradly 7y ago
There are minimums investment amounts on many mutual funds include the Vanguard ones which are most popular with personal finance investors. ETFs don't have minimums allowing for more home investor participation, especially from those new to investing or personal finance.
lotsofpulp 7y ago
What’s the difference for an average inventor between buying VTI and VTSAX?
junar 7y ago
Actually, ETFs do have advantages. Vanguard recently lowered expense ratios on their ETFs, but not on the corresponding mutual funds. https://investornews.vanguard/lower-expense-ratios-on-21-vanguard-etfs-means-more-savings-for-you/ https://investornews.vanguard/lower-expense-ratios-on-21-van... For non-Vanguard funds, ETFs are generally more tax efficient than mutual funds because they can avoid capital gains distributions in ETFs, but not in mutual funds. Vanguard has a patent on the mutual fund method.
loeg 7y ago
1. Capital gains reduction, anywhere other than Vanguard (who has exclusive patent on treating mutual funds as an ETF share class), 2. Intra-day trading has some value to some people, and 3. As others have pointed out, fees can be lower for the same dollar investment.

tunesmith 7y ago

Even the 6.5% is high, practically speaking. People tend to put more in the market when times are good (and the market is high), and less when times are bad (because they have less money), which mutes performance. Dollar-cost-averaging helps counteract this, but not all the way. So personal performance in the S&P will be less than the S&P market average. I ran an XIRR analysis on my complete lifetime retirement contribution history, pretending that on the dates I had those sums of money, I put the money in the S&P and held. The results were not pretty, and were way below these "average rate of return" stats the articles like bandying about. (This takes dividend history into account.) On top of that, the above link also shows how performance goes down if you want some degree of confidence. Over a 40-year period, a 90% confidence gives you 4.9%. Finally, people are usually advised not to put all their money in the S&P anyway. Some kind of allocation model is preferred instead, which further mutes performance. Our lack of personal-information education in this country is due in large part to misinformation, not just ignorance. I agree with the above conclusion; your chief weapons are raising income and cutting expenses, not chasing returns.

loeg 7y ago
> People tend to put more in the market when times are good (and the market is high), and less when times are bad (because they have less money), which mutes performance. Yes, but even so, it's worth doing: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
- tunesmith 7y ago
  Just in case it wasn't clear to others, my argument wasn't that it isn't worth doing, it's that you cannot expect the level of returns that almost all articles, publications, and blog posts claim. To expand, the reason one shouldn't rely on those is because people will bust out the spreadsheet, and put their 7-10% expected returns in there, and then figure out an amount of monthly savings that is "enough" for their goals. And then years will pass and they'll fall short. Yes, invest - it'll most likely beat inflation. But don't get the false sense of security. (And you'll like need more than a million anyway.)