This isn't how you would calculate the lost value. This is saying it'd be $30 per year, but contributions and previous shrinkages would both affect this loss each year.I'm with rkhusky and White Coat Investor. The difference in expense ratio is not material. 0.03% is $30 per $100,000 invested per year. Even compounded over many years, this is not going to make a significant difference (50 x 30 = $1500).
0.03% expense ratio means you capture 0.9997 of the value each year. Using your example of 50 years, you'd have 0.9997^50 = 0.985 times what you'd otherwise have with a 0% expense ratio, or just about 1.5% less. If you let $10k compound at 7% real each year, it's the difference between $294,570 and about $290,184. Over 30 years, it's the difference between $76,122 and $74,890.
Which may not be very much of the grand scheme of things. But for international stocks with an expense ratio roughly double that, and with larger sums of money, we could easily hit differences of 5 figures. Not bad for submitting one single-paged form and twiddling your thumbs. Certainly better time-adjusted return than credit card churning or cutting off a few dozen bucks from tax software.
Full disclosure, I moved from Vanguard to Fidelity for zero ER international funds. Was very simple, very easy, and have no regrets.
Statistics: Posted by JMACatfish — Mon Feb 03, 2025 10:19 pm — Replies 66 — Views 3395