{"id":5564,"date":"2013-01-10T07:29:13","date_gmt":"2013-01-10T15:29:13","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=5564"},"modified":"2016-12-21T07:30:47","modified_gmt":"2016-12-21T15:30:47","slug":"fund-fees-slash-them-early","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/fund-fees-slash-them-early\/","title":{"rendered":"Fund Fees: Slash Them Early"},"content":{"rendered":"

It’s sometimes hard to impress upon people the impact of fund fees. In a\u00a0recent\u00a0Wall Street\u00a0Journal<\/em>\u00a0article<\/a>, however, I saw the perfect example sitting about halfway through the piece.<\/p>\n

The article isn’t about fund fees directly. Rather, it is a good recounting of how\u00a0investors are dumping active mutual funds for cheaper passive strategies<\/a>, partly over fund fees but also over a general feeling of discontent regarding performance.<\/p>\n

\"fund<\/a><\/p>\n

I can’t say I blame them.\u00a0Lots of pro stock pickers warned against investing<\/a>\u00a0in 2012. Yet the S&P 500 Index finished the year up 16% (total return). Oops.<\/p>\n

I found more interesting the quote from Kevin Olson, a 26-year-old from\u00a0Iowa\u00a0who say he and his wife just put $5,000 into the Vanguard\u00a0Total\u00a0Stock Market Fund (VTI). I love VTI, but there are of course reasonable alternatives, such as Schwab’s U.S. Broad Market ETF (SCHB).<\/p>\n

Olson is an engineer. No surprise there. Money pros know that engineers tend to be the most judicious and least emotional of their clients. All spreadsheets and software and realism about numbers. They also tend to actually retire on time and well.<\/p>\n

But the really telling part is that he’s young and putting aside a nice chunk of change. I have no idea if that’s their entire portfolio or just the amount they decided to move now, or what portion of his or her salaries that might be (nor does it matter).<\/p>\n

But $5,000 is impressive. Most young folks would have trouble figuring out where to find $1,000, much less $5,000, to put away right now.<\/p>\n

And now is when it matters. Here’s the fund\u00a0fees picture for Olson and his wife:<\/p>\n