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| *Ostroff, Fair and Company>>>Investing |
Hello Can you tell me if the fees for the following T Rowe Price Index fund are reasonable? |
Hello I have decided to invest in the T Rowe Price Index Fund partly because they waive the minimum balance if I make montly contributions. But it seems that the fees are higher than the Vanguard and Fidelity Index Funds. Is it a good deal to start now with balance I have or wait to accumulate the minimum that the other funds require? http://www.troweprice.com/common/indexfu... The previous answerer obviously doesn't know his mutual fund companies. Many index funds have lower fees than he claims and have fairly low initial investments. As you mentioned in the question, Vanguard and Fidelity have lower expenses. Those are the better funds than T Rowe (as all S&P funds should perform very similarly except for the expenses). You should start with T Rowe until you get enough to move the money into Vanguard or Fidelity. (I'm a fan of Vanguard, but I see the Fidelity S&P fund is quite respectable as well.) Notice that T Rowe has a .5% redemption fee for shares held less than 90 days. If you are contributing monthly to the fund, you will only owe this .5% on the last 3 months of contributions, so that is not much of a loss. Or if you want to be sneaky and avoid the fee altogether you can simply stop investing for the last 90 days after you have enough money in the fund and then move the money to Vanguard or Fidelity. yes T. Rowe Price's fees are very reasonable. As an example:T. Rowe Price S&P 500 index fund has a 0.37% annual expense ratio. Morgan Stanley also has a S&P 500 index fund and they charge 0.38% for a class of the fund that requires a minimum of $5 million initial investment. Anything smaller has an expense ratio of 1.38%. |
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