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tony

6 Index Funds Cheaper Than Vanguards

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Alright you all know I am a Vanguard man and I am very loyal to them because of their corporate culture and mission statement. And because they made me more money than any other investment I have ever been in

 

I realize some might not be as loyal and want the lowest of the lowest expense ratio regardless of the company that offers it.

 

This article is for you

 

http://www.kiplinger.com/slideshow/investing/T030-S003-6-index-funds-that-are-cheaper-than-vanguard/index.html?rid=EML-1

 

 

 

P.S. Doesn't mention Fidelity or Blackrock both which offer index funds lower than Vanguard by a hair or two.

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I noticed that too and thats why I added Fidelity and Blackrock to the list. Still I don't believe its a paid advertisement. I just think the article was meant for non-retirement accounts. And despite lower cost than Vanguard (by a hair) they let you open an account with no minimum. Vanguard requires $3,000 minimum in a taxable fund. That definitely gives Schwab a big edge in taxable accounts.

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The only significant factors are what index is being tracked and what is the expense ratio.

 

If you really get into the details there are some subtle differences. Some funds track the index better than other funds. Vanguard funds return a little bit more profit because of some kind of fancy, proprietary patent/maneuver they have for ETFs. However, when you start talking about these things you're well into the margins of what matters.

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When it comes to indexed mutual fund or ETFs just follow the costs. Never pay more than .05% for an EFT. I pay .04% for my Vanguard Total Stock Market index ETF.

 

 

Where it gets complicated is if you are contributing to a 403b, 457b or 401k plan. The employer and or the record keeper has to charge a fee.

 

Below are two tables that show the cost difference between what I pay as a retired teacher with Vanguard vs my working colleagues at LAUSD making contributions in our award winning 457b plan.

 

What my colleagues pay at LAUSD:

 

457b_total_fees_Jan._2017.png

 

 

Compared to what I now pay directly with Vanguard and TIAA (traditional annuity):

 

2017_Q2_Expenses.png

 

This is the primary reason to roll over your 403b, 457b and your 401k to an IRA. I am retired and I do NOT want to pay the .25% fee for their plan. I am gone, and no need to pay record keeping costs.

Always roll over your money directly to Vanguard or who ever after you leave each employer.

 

Millionaire Educator, Ed, with his wife both moved from school district to school district so they could get their money out of a high-cost vendor into a low-cost vendor. It is inconvenient for most of us, I would never have done that, but he and his wife did, and it worked for them--they are millionaires in the 50s. Dan Otter has a podcast about their fascinating story! Click here for his blog.

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