I am very fortunate to have a job that offers a 401k. I’m even more fortunate that my job offers that 401k through Vanguard. Recently, the powers that be did some swaps on the investment options and got us some ridiculously cheap deals. We now have access to an institutional version of VFINX for a whopping expense ratio of 0.013% (0.127% below market) and an institutional version of VTSAX for 0.0175% (0.0225% below market).
I took a page out of their book and decided to move some stuff around in preparation for the upcoming changes.
Here is what I was spending before the changes:
According to Personal Capital, I was losing ~4% of my earnings to fees. This was very dumb of me. I call this dumb because I spent about 10 minutes moving some things around within the existing investment options and was able to cut down my costs significantly:
I saved myself 3% and thousands of dollars of earnings in the long term! See? Dumb.
The new investment options haven’t even kicked in yet, but I imagine they will bring that number down even more. I’m currently looking into whether I can move my IRAs into the 401k account to take advantage of these amazing fees. If so, I imagine I can get my average expense ratio under 0.02%.
**UPDATE 1 of 2? 3?**
The fee keeps going down! This effect came from moving 2 (out of 4 total) IRAs into my 401K.
I’ll do another update when the 401K investments get moved to the cheaper index funds… and maybe one more once I move my other 2 IRAs into this 401K.
**UPDATE 2 of 2**
Alas Personal Capital does not import the expense ratios of institutional funds, but they do allow you to set an estimate of what those funds cost. Unfortunately, that slider allows you to pick expense ratios in 0.1% increments. My new sexy index funds are one whole decimal point away from those increments in the 0.01%-0.02% ballpark, so it does not work for me. ¯\_(ツ)_/¯