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Comment by frognumber | Hacker News Reader

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.

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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...

With 7% interest it’s over 200k.

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

No. https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+from+0...

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.

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

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_annu...

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%.

Your math is way off. It's not merely 2% of the initial investment, but your final overall wealth.

That is the average. Many of them are just 0.03% or 0.04%

... of the original value, ignoring growth, dividends, and inflation.

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.

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.

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