I can relate to a ton of what's been discussed here. Back before someone said "hey Jack, what's the cost on those funds in your 401k?" and I had to answer "no clue".....so went and looked at Contrafund and almost fell over and got gravel in my stache......what was I saying?
Oh yah, I've used both S&P 500 and total stock and compared and contrasted them and reached the following conclusion: Theoretically, total stock should be better because it has more stocks so is more diversified.....but in reality, they're virtually the same.
On the Vanguard vs all the dark lords of the world: It used to be that Vanguard had THE cheapest funds anywhere. That is no longer true and for most basic high volume index funds, someone has a cheaper fund or a cheaper ETF or both. Does Vanguard look out for you more than the evil Johnson family? I don't think so. They're not the Salvation Army and their CEO isn't taking home under $100k. I honestly believe that they are inefficient and have been cutting people way too much for the service they need to provide. In the last year and a half, they're usually cited as having the worst customer service of any of the major providers. I still have an international fund with them with a quarter mil in it so I do want them to improve, but for my other money, I'm using Fidelity (cheaper bond and equity funds) and Schwab (cheaper ETFs than either of the above). Both Schwab and Fidelity will pick up the phone or email chat at 3 in the morning on a Sunday morning. Vanguard is sleeping then.
So my long rant simply is saying to check out everyone before blindly going with the big V.
Vanguard's funds are more tax efficient, due to their method of distributing capital gains through the corresponding ETF (something like that). The patent on this runs out in a decade or two I believe, then the others can copy them.
Vanguard's ETFs have a lower spread, typically overcoming any difference in fees.
In actual practice, however, it's all negligible. If you're choosing between Vanguard/Fidelity/Schwab index funds/etfs, you'll likely be fine. As things are now anyway. The investing world is moving towards indexing in a big way. Vanguard owns the world's largest stock fund, the world's largest bond fund, and the world's largest international stock fund (the 3 components of the 3-fund portfolio).
If I'm betting on which one of these 3 companies will still be around and offering low-cost index funds in 70 years (which Fidelity/Schwab are currently losing money on, hoping to get you to switch to a high-fee fund)...it's an easy choice.
How are FIdelity and Schwab currently losing money on these funds?
Source (one of many):
http://www.etf.com/sections/features/14649-inside-schwabs-etf-price-cuts-.html-------------------------------------
A Loss LeaderMoreover, it’s hard to get away from the conclusion that, after the price cuts,
Schwab is losing money on its ETFs, according to Rick Ferri, head of Michigan-based registered investment advisor Portfolio Solutions and a well-known figure in the world of index investing.
That’s because we know that Vanguard—a mutual fund company that’s owned by its fund holders—runs its funds at cost as a matter of course. Vanguard’s funds are considerably bigger than Schwab’s, meaning it has better economies of scale than Schwab. So, if Schwab’s smaller funds are cheaper, it’s pretty obvious Schwab is losing money on them, Ferri said.
Ferri stressed that Schwab will try to use the cheap and commission-free ETFs as loss leaders.
“What they’re trying to do is get people to come to their platform,” said Ferri. “Get them into the store, then they’ll spend money there,” he added, noting Schwab is said to make good money on products such as its money market funds. Its Options Express unit is also said to be very profitable.
A Vanguard official made clear that Vanguard will never use a loss-leader approach to selling its funds, again, because it’s owned by fund holders, and such a policy would violate its at-cost pricing policy.
“If it is a loss leader for them, we just wouldn’t be pulled into that,” Vanguard spokesman Dave Hoffman said in a telephone interview. “We would also ask,
how long can a company play that game?,” Hoffman added.
“We don’t view reducing our prices as being competitive. We reduce our costs because it’s a function of our structure. We pass on savings with increased assets.”
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