Your individual retirement account (IRA) gives you the freedom to choose investments that you don’t find in a 401(k). But to make the most of this freedom, it’s essential to consider not just what investments to choose, but also how much you’re paying for those securities.
One way to minimize fees is by using exchange-traded funds (ETFs), which offer broad market exposure at lower costs than actively managed funds. Here are five index ETFs from different fund families that can help you achieve this goal:
1. Schwab U.S. Large-Cap ETF (SCHX) – tracks the Dow Jones U.S. Large-Cap Total Stock Market Index and offers low-fee exposure to the 750 largest U.S. companies.
2. iShares Core MSCI Total International Stock ETF (IXUS) – tracks the MSCI ACWI ex USA IMI Index, covering developed and emerging markets outside the U.S., with an expense ratio of just 0.07%.
3. iShares Core Universal USD Bond ETF (IUSB) – tracks the Bloomberg U.S. Universal Index of investment-grade and high-yield U.S. bonds, offering a 4.22% trailing 12-month yield.
4. SPDR Portfolio S&P 600 Small Cap ETF (SPSM) – measures performance of the S&P 600 Small Cap Index, with an expense ratio of 0.03%.
5. Vanguard Total World Stock ETF (VT) – offers exposure to the FTSE Global All-Cap Index, representing the entire investable global equity market.
These funds can be considered core building blocks of a diversified portfolio. By choosing low-fee ETFs, you can minimize the impact of fees on your investments over time. Remember, even small differences in fees can add up significantly over 20 years, with an initial investment of $100,000 resulting in nearly $28,000 in losses due to a 1% annual fee.
Source: https://pro.thestreet.com/posts/top-5-etfs-that-can-make-minimize-ira-fees-and-improve-investments