I keep seeing people buy index funds without checking the expense ratio first

My buddy threw $10k into a fund last year that charges 1.5% fees. That's $150 a year straight out of his returns. Meanwhile a similar index from Vanguard is like 0.03%. Over 20 years that difference could cost him thousands. I checked his fund after he bragged about his gains and had to break the news. Why do people just assume all index funds are the same?

3 comments

3 Comments

dianahayes1mo ago

Oh man, 1.5% is brutal. That's basically lighting money on fire over the long haul. Honestly I get why people don't check though, you see "index fund" and assume it's all the same cheap stuff. But nope, some of those actively managed ones hide behind the name and charge way more than they should. Your buddy losing $150 a year on a $10k bet hurts my soul. He could have saved almost all of that just by picking a different ticker.

janarivera1mo ago

Can't believe that's actually a thing, hiding active fees behind an index fund label. @dianahayes you're totally right, $150 a year on $10k is just painful to think about when a simple VTI or something would cost like 10 bucks. Honestly makes me wonder how many people are getting quietly rinsed like that without ever knowing.

olivia3981mo ago

Oh man, right?! It's like putting a "salad" label on a bucket of fried chicken and calling it healthy... technically true but c'mon. The worst part is those fees compound over time too, so that $150 turns into way more down the road. Feels like the whole finance world is just one big "gotcha" game sometimes.