State Street Global Advisors is rolling out a new slate of low-cost ETFs with expense ratios so small that they’d be easy to overlook!
The ETF battle heats up…
First, let’s take a step back.
If you’re not familiar with ETFs, they are a type of investment that combines the best of the worlds of stocks and index/mutual funds.
ETFs are sold by the share like stocks, but they offer you ownership of tiny slices and dices of hundreds or thousands of companies like an index fund would — instead of you owning just a single company.
But they’re even better than index funds when it comes to management fees. Most ETFs have expenses that are just a fraction of what you’d pay for a typical index fund.
On October 16, State Street cut the pricing on ETFs drastically, dropping expense ratios down to a range of 0.03% to 0.11%.
At 0.03%, on the low-end of that range, only three cents out of every $100 you have invested gets diverted toward expenses. Everything else achieves its intended purpose — building your financial future and working for you!
Here’s a complete rundown of State Street’s new ETF pricing:
As if news of lower fees weren’t good enough, here’s more cause for celebration…
So now there’s essentially zero cost to investing. There are no commissions going in or out of these ETFs. And the fees for managing the money are incredibly low.
Remember, we’re talking three one hundredths of one percent per year here!
Yet, at the same time, it’s entirely possible to pay a full commission brokerage 1.5% or so — plus additional commissions both in and out — to invest. It’s like the investment market has completely split into low and high cost arenas.
That why it’s imperative that you invest with discount firms.
If you’re confused by investing, money expert Clark Howard recommends hiring a fee-only financial planner to build a plan for you for a flat fee. You can rest assured they won’t steer you toward any investments that pad their pockets.
Remember, every extra penny that you can save on fees can be used to build your retirement nest egg!
RELATED: ETF Guide