4 ms·

I'll be contrarian. The general wisdom is hold the fund with the lowest fee structure. However, if the fee structure is 0.07%, that's $70/year / 100k invested.

I'll be contrarian. The general wisdom is hold the fund with the lowest fee structure. However, if the fee structure is 0.07%, that's $70/year / 100k invested. Even if it's 0.44%, you're talking about $440. The fees on most funds are small enough now to not matter much. It's worth shopping for lower-fee funds, but the more you go below 0.5%, the less it matters. If I save $500 per year for 50 years, that's $25k+interest, which is kind of the breakpoint of where it has practical impact on e.g. when I can retire.

guntars 2y ago
With 7% interest it’s over 200k.
- pinkmuffinere 2y ago
  Sure but that’s an order of magnitude above the numbers the parent is comparing? A 7% fee is certainly crazy, agreed with you there
  - HDThoreaun 2y ago
    No. https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+from+0+to+50 https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+from+0...
  - frognumber 2y ago
    guntars did the amortization on $25k growing with interest (not fees). In other words, the claim is that 0.5% can be significant. Which is true. When I did the math with my life savings, 0.5% was about the breakpoint where things become significant. $200k would be more significant, so I suspect when I did the math properly, I was expecting to retire in less than 50 years. In 50 years, I'll likely be dead.
    - pinkmuffinere 2y ago
      Ah I see, the 7% yearly interest on the 0.5% fee can add up to be significant. That is a good point, good job @guntars
loeg 2y ago
I agree that minute differences don't really matter. E.g., 0.09% vs 0.07%; who cares. Differences as large as 0.5% are much more material in the long term, though.
boglethemind 2y ago
Agreed. I'm looking for non-financial features at this point. Vanguard supports FIDO hardware keys and Fidelity doesn't. I'm not storing my retirement funds in the latter.
wil421 2y ago
At %0.07 you would lose about 2% of your total value after 30 years.[1] No thanks. [1]https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annual_fees_after_many_years%3F https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annu...
- francisofascii 2y ago
  That is the average. Many of them are just 0.03% or 0.04%
- Maxatar 2y ago
  2% over 30 years is inconsequential. At an average rate of 7%, that mean you'll grow your investment by 759% over 30 years instead of 761%.
  - yerebnu 2y ago
    Your math is way off. It's not merely 2% of the initial investment, but your final overall wealth.
- neogodless 2y ago
  ... of the original value, ignoring growth, dividends, and inflation.
layer8 2y ago
For index funds, the important measure is the tracking difference [0] anyway. While the costs contribute to it, different ETFs on the same index differ in their typical/historic tracking differences beyond their differences in nominal cost. [0] https://www.morningstar.com/business/insights/blog/funds/etf-tracking-difference-error https://www.morningstar.com/business/insights/blog/funds/etf...
deleted 2y ago
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guntars 2y ago

With 7% interest it’s over 200k.

pinkmuffinere 2y ago
Sure but that’s an order of magnitude above the numbers the parent is comparing? A 7% fee is certainly crazy, agreed with you there
- HDThoreaun 2y ago
  No. https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+from+0+to+50 https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+from+0...
- frognumber 2y ago
  guntars did the amortization on $25k growing with interest (not fees). In other words, the claim is that 0.5% can be significant. Which is true. When I did the math with my life savings, 0.5% was about the breakpoint where things become significant. $200k would be more significant, so I suspect when I did the math properly, I was expecting to retire in less than 50 years. In 50 years, I'll likely be dead.
  - pinkmuffinere 2y ago
    Ah I see, the 7% yearly interest on the 0.5% fee can add up to be significant. That is a good point, good job @guntars

loeg 2y ago

I agree that minute differences don't really matter. E.g., 0.09% vs 0.07%; who cares. Differences as large as 0.5% are much more material in the long term, though.

boglethemind 2y ago

Agreed. I'm looking for non-financial features at this point. Vanguard supports FIDO hardware keys and Fidelity doesn't. I'm not storing my retirement funds in the latter.

wil421 2y ago

At %0.07 you would lose about 2% of your total value after 30 years.[1] No thanks. [1]https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annual_fees_after_many_years%3F https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annu...

francisofascii 2y ago
That is the average. Many of them are just 0.03% or 0.04%
Maxatar 2y ago
2% over 30 years is inconsequential. At an average rate of 7%, that mean you'll grow your investment by 759% over 30 years instead of 761%.
- yerebnu 2y ago
  Your math is way off. It's not merely 2% of the initial investment, but your final overall wealth.
neogodless 2y ago
... of the original value, ignoring growth, dividends, and inflation.

layer8 2y ago

For index funds, the important measure is the tracking difference [0] anyway. While the costs contribute to it, different ETFs on the same index differ in their typical/historic tracking differences beyond their differences in nominal cost. [0] https://www.morningstar.com/business/insights/blog/funds/etf-tracking-difference-error https://www.morningstar.com/business/insights/blog/funds/etf...

deleted 2y ago

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