Picking up Nickels

Friday, October 06, 2006

What I love and hate about the Vanguard Diehards

I have been enjoying the collaborative book review effort that The Bogleheads’ October Project is doing for The Bogleheads' Guide to Investing. As a member of the Morningstar Vanguard Diehards Forum myself, I have learned a lot about saving and investing by reading and participating in the discussions there.

The Diehards Forum is a community full of helpful people that want to see you succeed in your financial journey. If you post a question, you can be sure to get many opinions and recommendations on bonds, mutual funds, asset allocation, retirement planning, investment risk, and just about any other topic you can think of.

However, there is one thing I don't like about the Diehards forum: the blind pro-Vanguard bias that some Diehards (understandably) have. I always strive to get the best deal for my money whether I am buying a car, a mutual fund, or a tube of toothpaste, and it can be frustrating when I see someone who doesn't let the facts get in the way of defending their pro-Vanguard position.

For example, Fidelity lowered expense ratios to 0.10% for its Spartan index funds two years ago, which were lower than some Vanguard index fund expense ratios. Although Diehards should be pleased that Vanguard's low cost index funds were the main reason that Fidelity made this change, there are some that dismiss the facts and imply that Fidelity is doing this to mislead potential investors (see: Fidelity index funds lower cost than Vanguard). The fact is, Fidelity's lower expenses bring more competition to the market, which is good for everyone. And no matter what some Diehards say, a good deal is a good deal (even if it's not from Vanguard).

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