Brag about reduced expenses

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whodidntante
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Brag about reduced expenses

Post by whodidntante »

By switching from high cost actively managed mutual funds to low cost passive mutual funds and ETFs, I have reduced my weighted expense ratio to 0.19%. The weighted expense ratio would have been 1% or more before I started this. This is thousands of dollars saved per year. I'm starting to understand how our 401k provider can afford to fly their representative halfway across the country to meet with employees.

I still have 12.3% of my portfolio in a fund that charges 0.95%, so I have some work to do still. But I am happy for the progress. I have no one who wants to hear this in my life, but I thought someone here would celebrate with me. :sharebeer

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orca91
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Re: Brag about reduced expenses

Post by orca91 »

Nicely done! The one thing we can actually control in all this is the expenses we pay.

I was lucky enough to find Bogleheads early on as I started saving/investing, so I learned early the value of low ERs and fees.
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cheese_breath
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Re: Brag about reduced expenses

Post by cheese_breath »

I'll celebrate with you. Good job!!!
The surest way to know the future is when it becomes the past.
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oldcomputerguy
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Re: Brag about reduced expenses

Post by oldcomputerguy »

Our company initially offered its employees a 401k plan about 30 years ago. Like most young, ignorant-of-investing-principles workers, I took someone's recommendation for investment options, then thought no more about it. A few years ago, our company moved our plan to Fidelity, at which time my account was distributed among what they claimed were the "closest" matches to the existing elections:

20% - Spartan 500 Index Fund (0.05% ER)
30% - Spartan Extended Market Index Fund (0.07% ER)
20% - Dodge & Cox Stock Fund (0.52% ER, 15% turnover)
30% - Fidelity Growth Company Fund (0.77% ER)

No international, no bonds.

Since then, I've endeavored to educate myself (in large part through the resources available here and through several great books) and now am well diversified in inexpensive index funds, with the highest ER in my portfolio being 0.12% (MSCI ACWI exUS-tracking index fund). I've also learned to distinguish between such options as Spartan U.S. Bond Index Fund (0.07% ER, 75% turnover) versus PIMCO Total Return Fund (0.46% ER, 265% turnover).

Thanks, Bogleheads; and thanks as well to Mr. Larimore, Mr. Swedroe, Mr. Bernstein, Mr. Ferri, Mr. Merriman, and (of course) Mr. Bogle.
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LadyGeek
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Re: Brag about reduced expenses

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General (general bragging rights).

See the wiki: Expense ratios

In particular, pay attention to this image which shows why expenses are important:

Image
The above hypothetical situation shows that saving 1% over 30 years will give you 10 more years of retirement money.

For those who want to calculate the impact themselves, see: Effect of expenses on a portfolio (I prefer the second spreadsheet.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Wagnerjb
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Re: Brag about reduced expenses

Post by Wagnerjb »

whodidntante wrote:I'm starting to understand how our 401k provider can afford to fly their representative halfway across the country to meet with employees.
Do you ever wonder who pays for the lavish Super Bowl parties that the brokers throw? Do you ever wonder who pays for the lavish trips to Las Vegas for brokers and bankers? Do you ever wonder who pays for the lavish dinners at the ritzy restaurants when the brokers dine there? You did. But no more.... :D
Andy
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blueblock
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Re: Brag about reduced expenses

Post by blueblock »

Congrats!

And I love Lady Geek's chart. I'm going to be sharing that.
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LadyGeek
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Re: Brag about reduced expenses

Post by LadyGeek »

Be sure you understand how those numbers were created, which is cited under the image. Expense ratios "Notes 1"

For those who don't want to do the detailed calculations, the Financial Industry Regulatory Authority, Inc (About FINRA | FINRA.org) has a calculator that lets you compare funds directly.

See: Fund Analyzer
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
letsgobobby
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Re: Brag about reduced expenses

Post by letsgobobby »

down to a weighted average of 10 basis points. It would be much less, except wife's 403b administrator only offers investor, not admiral or institutional shares of Total Bond Index. A 'brutal' 20 basis points at the investor level is killing my average.
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LAlearning
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Re: Brag about reduced expenses

Post by LAlearning »

Just updated someone's portfolio and cut there ER almost in half.
I know nothing!
Detroittl
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Re: Brag about reduced expenses

Post by Detroittl »

Congrats! I've been slowly shifting from actively managed funds to low ER similar funds. Don't forget about how you aren't paying for all their advertising and brick and mortar anymore :)
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GreatOdinsRaven
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Re: Brag about reduced expenses

Post by GreatOdinsRaven »

:sharebeer

Well done!
"The greatest enemies of the equity investor are expenses and emotions." -John C. Bogle, Little Book of Common Sense Investing. | | "Winter is coming." Lord Eddard Stark.
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