Vanguard gets a lot of love because they exist to make money for investors, not to extract the maximum amount from investors. By investing in Vanguard funds, you own a small part of the company. So what is in your best interest, is in their best interest.
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The Vanguard fund fees are very low compared to competitors. The lowest fee fund is the flagship fund, the Vanguard 500. The fee to invest is .05%.
Take a look at your 401K fee. Some of them can be as high as 1%. Over time that is a massive amount of difference. Vanguard doesn’t have shareholders baying for returns so they don’t have to constantly look for ways to squeeze investors with nickel and dime fees.
Vanguard’s Target Retirement Funds, or Lifecycle Funds are designed to change as you get closer to retirement. If you’re under 30, you will be invested at 90% stocks and 10% bonds because you have years ahead to grow your wealth and can take the risk. As you get older, the balance shifts towards bonds which are safer.
We wrote an awesome thing (and did an episode) on our favorite Vanguard funds. Check it out!
Don’t be nervous about horror stories like Bernie Madoff. He was involved in hedge funds which have very little oversite. With Vanguard we’re talking about mutual funds which are much more regulated.
We don’t want our listeners to mistake this episode for a thirty minute commercial for Vanguard. We will always research and choose the best products for you. And remember what we talked about in Episode 107.
Until you have fully funded your emergency fund up to $25,000, you should not be getting into Vanguard. If you’re still short of your $25,000 goal, take the time to do some research into Vanguard so when the times comes, you’ll be ready.
Vanguard Explained: Andrew’s blog explaining Vanguard and his picks.
Vanguard: The investment management company we talked about today.