Vanguard has just announced some changes to their fee schedule, which includes some great news for us smaller investors who like Vanguard but kept getting dinged by their low-balance fees.
Before, you had to dodge the following $10 fees:
- The maintenance fee on index fund accounts with a balance of less than $10,000.
- The custodial fee on traditional IRAs, Roth IRAs, and SEP?IRAs with a balance of less than $5,000.
- The low-balance fee on all nonretirement accounts with a balance of less than $2,500.
These have all been replaced with a single account service fee of $20 annually for each Vanguard fund with a balance under $10,000. Okay, that’s not too special. The good news is that if you agree to get electronic versions of statements and other documents, all the fees are waived!
The waiver is available immediately, so switch now If you have $100,000 in total balances, you’re also fee-free. I already have everything set to deliver electronic format, so I’m all set. (Also you save lots of trees! Those prospectuses are thick.) In addition, you can still choose the “E-delivery and mail year-end-statement” option and get the fee waiver. That’s perfect for me.
I’ve always felt the $10 fees were justifiable, as if you were paying for things a la carte, because otherwise at 0.20% of say $5,000, that’s just $10 a year for IRS filings, paper, printing, postage, great customer service, and so on. Still, they were annoying. Even though my wife and I together have over $60,000 invested with Vanguard, we were still being hit with fees.
Now I’m less likely to switch to Vanguard’s ETF offerings, as I was considering for the future when I start putting money into taxable accounts. I prefer the simplicity of mutual funds.