About a year ago, after much talking and deliberation with this blog’s co-founder, Greg, I had what I’ll call a “Financial Awakening”.
My entire life, I’d basically done the prudent thing and saved my earnings and 401K as much as possible into various index funds. I worked with an advisor assigned by my brokerage and retirement accounts to ensure I have good exposure to Domestic & international Stocks, as well as bonds and other “less risky” instruments. The idea is to stay as diversified as possible to lower your risk of any one area taking a nosedive and losing all your assets. Most of my money is in various funds, and it’s been fun reviewing all of them, and somewhat shocking to learn how much some of the funds I picked 5-10 years ago have high expense fees (i.e. 1%!!!) If they do well, I don’t mind paying the extra fee, however when they’re not, I’m very critical of them, especially when a low-cost index fund that references a similar benchmark index can basically do the same or better.
My first project is to audit all my funds over the next 6 months, review their fees and performance, then determine what could be “replaced” with a cheaper alternative ETF, or stock that includes similar exposure.
Take a look at the chart below. Which fund do you think has the highest fee, and which has the lowest? Is it based on return?
How are you investing your funds and what are some of the highest and lowest fees you’ve paid in your investment journey? Have the returns matched your expectations?