Author Topic: FIRE with Vanguard fees?  (Read 2057 times)

mozar

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FIRE with Vanguard fees?
« on: October 28, 2015, 11:52:37 AM »
Say that Vanguard charges .08% (I read on Joshua Kennon that when you add everything up it comes to about 1.5% but that's not important right now). If I wanted to retire with 500k does that mean I need to come up with an extra 4k a year/ actually retire with 600k to cover the Vanguard fee?

seattlecyclone

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Re: FIRE with Vanguard fees?
« Reply #1 on: October 28, 2015, 12:16:30 PM »
0.08% of $500k is $400, not $4k. If you would feel better about saving an extra $10k to pay for Vanguard's fees, go ahead and do it.

Or you could consider that the "4% rule" is likely a rounded version of the "at least 4.08% rule" and not worry about it.

mozar

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Re: FIRE with Vanguard fees?
« Reply #2 on: October 28, 2015, 12:19:22 PM »
Quote
"at least 4.08% rule" and not worry about it.

OK, that helps. I want to save as little as possible.

nereo

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Re: FIRE with Vanguard fees?
« Reply #3 on: October 28, 2015, 12:27:48 PM »
hold on a minute!  You can't just suggest fees might come out "to about 1.5%" and then say it's not important right now.
Vanguard's fees are pretty transparent - it's 0.05% for most of their Admiral index funds.  Slightly more for blended or international funds.

As Seattlecyclone pointed out, it's basically a rounding error.  Better yet, take a look at fireCalc and notice how broad the results are after 30 years and a 4% WR- a few portfolios failed while others more than quadrupled in size.  In statisical terms, the 'noise' or natural variance in the system is so much greater than the fees you are accounting for.  It would be like trying to predict the temperature at noon a week from now and worrying that your thermometer may be off by 0.05F. 

BarkyardBQ

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Re: FIRE with Vanguard fees?
« Reply #4 on: October 28, 2015, 12:30:40 PM »
Quote
"at least 4.08% rule" and not worry about it.

OK, that helps. I want to save as little as possible.

Also, are you accounting for taxes in your withdrawal rate, inflation, adjustments to your budget either increasing or decreasing. 'Saving as little as possible' might sound ideal but it's not very forgiving.

nereo

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Re: FIRE with Vanguard fees?
« Reply #5 on: October 28, 2015, 12:32:29 PM »
Quote
"at least 4.08% rule" and not worry about it.

OK, that helps. I want to save as little as possible.

then be flexible, cut your spending and be ok with finding a part time job during 'retirement' when necessary.  Even a 6% WR succeeds about 50% of the time. 
It is possible to quit your job and live on $200-300k worth of investments for the rest of your life... it's just not for everyone.