
Hello, I am the The Polite Investor, a polite Englishman that has been
living in the US for 10 years.

Although I have always been interested
in personal finance and investing, once my employer enrolled me in
their retirement plan, I thought it was time to
get serious and figure out how the American financial system works to
make sound investment choices. 

I started this site to document my financial
journey and offer my opinions to help others. Perhaps you might learn something from
my experiences and together we can all try to lead better financial
lives.

I believe the key to building wealth is disiplined saving
and investing coupled with a somewhat minimalist lifestyle. You don't
need stuff and you should have a healthy skepticism towards activities
your peers engage in: mortgages, expensive cars, expensive vacations.
You'll find a little bit of my personal philosophy peppered throughout
the site.



I hope you feel welcome here. Take what you find useful and leave the
rest. Pass on what you’ve learned to your friends. May you find the
financial success you deserve.

Want to say hello?  [Email me](mailto:hello@politeinvestor.com).


Antony Holmes

Polite Investor, CEO, CTO, employee #1, whatever

Fees, you can't avoid 'em, but knowing whether they're bogus can save you a lot of money long term.



You can't completely avoid investment fees, but using a low cost brokerage will allow you to minimize them. The table summarizes common fees you might see attached to a fund. Understand what they are an when to avoid them.

<table>
<thead>
<tr>
    <th>Fee</th>
    <th>When you pay it</th>
</thead>
<tbody>
<tr class="text-red-500">
    <td>Front load</td>
    <td>Cost to buy into a fund or ETF.</td>
</tr>
<tr class="text-red-500">
    <td>Back load</td>
    <td>Cost to sell your investment.</td>
</tr>
<tr>
    <td>Expense ratio (ER)</td>
    <td>Cost of owning a fund, paid yearly normally as a percentage of the value of the investment.</td>
</tr>
<tr>
    <td>12B-1</td>
    <td>An annual marketing or distribution fee. Never worth paying for</td>
</tr>
</tbody>
</table>

Fees are insidious. Often marketed as small % built into the cost of owning a fund/ETF, a seemingly small increase can cause a dramic drop in the value of your investments overtime because they effectively reduce your return each year and this loss compounds over time.

For example, with a starting balance of **$10,000**, and investing **$1,000** a month for **40** years, an expense ratio of **1%** could end up costing you more than **$700,000**.

Don't believe me? I built an [interactive fee calculator](/calculators/fees) that lets you play around and see how much fees can affect your performance. Even with a modest portfolio you can lose hundreds of thousands of dollars over your life time if you don't pay attention.

[Dave Ramsey](https://www.ramseysolutions.com/retirement/why-dave-prefers-up-front-fees) seems to think front load fees are a good idea. I disagree. High loads = high expense ratios in a lot of cases. Pick any major well regarded stock
fund/ETF from a major brokerage such as Vanguard or Fidelity and you'll see they are almost always no load and have a low ER to boot. Load fees are a red flag for bad management and should be avoided at all costs. They are just a waste of your money.

In the early days of the mutual fund business, the 12b-1 fee was introducted because it was believed that by marketing a mutual fund, its assets would increase and management could lower expenses through economies of scale. Mutual fund assets from companies such as Vanguard that do not actively market themselves still grew rapidly taking in trillions of dollars without any help. You might be asking what the point of this fee is then and you'd be right. Critics seriously question the justification for using and today it's mainly used to pay commissions to salespeople for selling a fund's shares. Another waste of your money.

## So what does a low cost fund look like?

Glad you asked. Here a few funds to give you an idea of what high qualit low cost funds look like. BTW you consider having these in your portfolio if you don't already.

<table>
<thead>
<tr>
    <th>Fund</th>
    <th>Symbol</th>
    <th>Load</th>
    <th>Expense Ratio</th>
</thead>
<tbody>
<tr>
    <td>Vanguard Total Stock Market Index Fund ETF</td>
    <td>VTI</td>
    <td>$0</td>
    <td>0.03%</td>
</tr>
<tr>
    <td>Fidelity Total Market Index Fund</td>
    <td>FSKAX</td>
    <td>$0</td>
    <td>0.01%</td>
</tr>
<tr>
    <td>Schwab Total Stock Market Index Fund</td>
    <td>SWTSX</td>
    <td>$0</td>
    <td>0.03%</td>
</tr>
</tbody>
</table>

<div class="conclusions">

- Load fees are charged by subpar companies for overpriced funds. All the good investments you'll ever need can bought for $0 at a reputable brokerage.
- You can't escape the expense ratio (it does cost a company to run a fund), but you can minimize it so it's practically non-existant.
- Try my [interactive fee calculator](/calculators/fees).

</div>

_What's your favorite credit card? How much do you think you save per year?_

Tag

Investments

Fees! Fees! Millions of fees!