Vanguard Index Fund Purchase

Vanguard LogoI wanted to do something with my cash instead of just keeping it in an Ally savings account and being inspired by the simple lazy portfolio type of investing, I decided to buy some index funds from Vanguard. Why Vanguard and not another service like E-Trade? E-Trade is a broker and does not actively manage any funds, which means you end up paying more fees. This may be fine if you decide to purchase specific stocks, but if you are planning to buy only index funds, then it’s better to use a service like Vanguard. Vanguard actually manages the index funds so you will pay for the management fees only instead of both the fund management fee plus transaction fee. E-Trade needs to put the trade to Vanguard or another fund management company (depending on which fund you purchase) and therefore needs to pay a transaction fee. But by buying directly from Vanguard, you get to skip the third party transaction fee.

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