The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Mr. Crowe on March 23, 2018, 12:49:05 PM
-
Howdy, because of this forum, for some time now, I have been an owner of some Vanguard 500 Index Fund Admiral shares. My question is: considering that the expense ratio of this particular index fund is 0.04%, is there a minimum recommended purchase amount? Is the expense ratio even matter in this regard as there is no purchase fee for this index fund? For example, I sell some of my unwanted possessions on Craigslist and make a few dollars. Would it make sense to buy stocks with it immediately (especially if the stock value is low that day) or is there any reason to wait until I have more money saved up for buying shares? I prefer to buy shares immediately, because the extra money tends to end up being converted into other possessions that I don't need. Thank you!
-
I prefer to buy shares immediately, because the extra money tends to end up being converted into other possessions that I don't need.
Nice that your preference coincides with what is probably the correct action - keep up the good work.
And welcome to the forum!
-
Are you using a mutual fund or ETF? If you're in a mutual fund, buy all the fractional shares you want. Your cost basis is tracked automatically and there's no downside. If you're using the ETF, you can only purchase whole shares, so you need an amount equivalent to the price at your time of purchase.
-
Do you own the mutual fund through Vanguard or a brokerage? If you own direct from Vanguard, it does not make a difference. If you own through a brokerage, then there probably is a fee of ~$45 per transaction, in which case it may be better to consolidate purchases. Either way, you can buy any amount of fractional shares.
-
I buy the ETF version through a Canadian brokerage, costing $9.95 per transaction. There is no limit set, but I have a personal minimum of $2500 to buy Canadian listed equity ETF, $5000 for Canadian fixed income and a whopping $20,000 to exchange $c to $u to buy the US listed versions once a year in order to minimize my % commissions.
Its all a case of what your transaction costs are.
-
You may have better options, but I'm no expert
http://canadiancouchpotato.com/
-
Thank you all for the replies! To be more specific, the VFIAX is a mutual fund, and I own it directly through Vanguard. Thank you.