indexfundfan wrote: ↑
Fri Sep 22, 2017 4:02 pm
Anyone knows if purchasing or selling a NTF mutual fund is sufficient to avoid the yearly inactivity fee?
I had to call Saturna for something else today, and asked them this. The person I talked to said you can avoid the inactivity fee this way, as long as you're talking about the "FundVest Focus" funds in the brokerage account. "Saturna's affiliated mutual funds" don't count, since they're a separate mutual fund account, not through Saturna Brokerage Services.
And there are restrictions, as mentioned on https://www.saturna.com/saturna-brokera ... d-platform
. You must buy in with $2,500, and you have to hold it for at least 6 months. So it sounds like you could buy $2,500 worth of, say, PREIX (the T Row Price S&P500 fund, ER 0.21%), and then a year later sell it all and buy it back the next day, and keep doing that every year. The savings seem pretty small, of course, and they get smaller over time:
With that system, you'd have $2,500 in PREIX effectively all the time, and presumably growing. Compared to VTSAX (Vanguard Total Stock Market, Admiral shares, ER 0.04%), that's about $4.25 per year lost from the higher expense ratio (assuming the only difference in performance is the ER), in order to save the $14.95 inactivity fee. So you save a whole $10.70 per year, less than $1 per month.
And as mentioned, that amount would grow over time, so you save less every year. Assuming the value doubles every 10 years or so, the ER difference would exceed the inactivity fee in about 18 years I think, if everything else stays the same (log(14.95/(2500*.0017))/log(2) * 10). And if you ever change your mind and want to sell PREIX to buy back in to VTSAX, it'll cost you another $25, blowing away some of the previous savings.
Also keep in mind that the inactivity fee is paid with non-HSA funds (according to replies in this thread), but any loss from a higher ER is effectively lost from the HSA.
The bigger benefit may be that you don't need to go through the annoyance of sending them a check every year for the inactivity fee. Even then, I'd probably prefer to just let things sit in VTSAX, but that's just me.