By: Revanche

On Admiral Shares and setting new investment goals

October 27, 2010

You might have already heard about this from the granddaddy of all PF blogs, My Money Blog

If not, those of you who invest with Vanguard index funds and hold more than $10,000 in those funds, you ay qualify to convert those funds to Admiral Shares.

A quick synopsis on Admiral Shares from their site:

Admiral Shares are a separate share class of more than 50 Vanguard funds that follow the same investment strategy as traditional shares, but with significantly lower expense ratios. They were created to recognize and encourage the cost savings that Vanguard derives from large accounts, and to pass those savings on to investors.

Thanks to their low costs, Admiral Shares can reduce your expenses 18%–50% below the already low expense ratios of our standard Investor Shares. (Find out why investment costs matter.)

For example, if you invest $50,000 in a fund’s Admiral Shares with a 0.07% expense ratio instead of its Investor Shares with a 0.18% expense ratio, you could keep approximately $1,200 more in net returns for your account over a 10-year period, assuming an average annual return of 8%. (This is a hypothetical illustration and does not represent any particular investment. Actual savings for your specific funds may be higher or lower.)

Only one of my funds qualified for conversion so I swapped that right over. I’m no longer actively contributing to my Vanguard funds at the moment but the Roth IRA could use a fresh infusion of funds when I’m ready to let go of some cash. My current accounts stand at $42,768.87 and I’d like to break $50,000 by this time next year [for the record: October 26th, 2011] so I need all the help I can get. 

Be sure to take advantage of the lower expense ratios in the Admiral Shares if you can!

4 Responses to “On Admiral Shares and setting new investment goals”

  1. Thanks for the reminder. Also, when your total assets exceed $100,000, you get to be part of a Voyager program, though I can’t remember why that is important.

    My son opened a Roth IRA with Vanguard and was able to avoid the low account fee by putting his account under our family umbrella.

  2. spiffikins says:

    thanks for pointing this out – I went and manually converted all my eligible funds tonight – although I did read that Vanguard will be automatically converting everyone who is eligible!

  3. Revanche says:

    @FS: I think there are some cost savings associated with being part of the Voyager program as well, perhaps not yet lower fees but perhaps exemption from any annual fees at all?

    I’ve dodged the maintenance fees by going paperless anyway.

    @spiffikins: oh yes, I completely forgot that Vanguard would eventually automatically convert eligible shareholders. I just don’t believe in waiting to save money 🙂

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