Speaker 1: Right now, let's say good morning to the host of
Speaker 1: How to Money from noon to two on Sunday. Right
Speaker 1: here on KFI, it's Joel large Guard. So Joel, President
Speaker 1: Trump says it's time to ditch the pennies.
Speaker 2: Hey, I've been saying this for years, Amy, nobody's listening
Speaker 2: to me.
Speaker 1: But well, apparently you got the president's here.
Speaker 2: Maybe maybe I doubt it, But this has been a proposal,
Speaker 2: a bipartisan proposal. Actually, there have been people on both
Speaker 2: sides of the aisle saying, hey, the penny, it's long
Speaker 2: overdue to get rid of it. Especially like think about
Speaker 2: when the good old days, when my grandma would tell
Speaker 2: me about buying a coke for a nickel, and that's
Speaker 2: five pennies, right, and so, like pennies actually mattered because
Speaker 2: you could buy stuff with them. There's like essentially nothing
Speaker 2: that you could buy for a penny anymore. Even think
Speaker 2: about like dollar stores. Most of the dollar stores have
Speaker 2: gone away from selling things for a dollar because of
Speaker 2: rising prices, and so you can't really buy as much
Speaker 2: for a dollar anymore. So the fact that the penny
Speaker 2: costs more than a penny to make essentially almost four
Speaker 2: pennies to make a penny, I think it makes sense
Speaker 2: to get rid of it. And then the next thing
Speaker 2: potentially on the chopping block is the nickel.
Speaker 1: Oh okay, so how you said that to make a
Speaker 1: penny it costs four cents. How many pennies do they
Speaker 1: make every year? Do we know?
Speaker 2: So that is a good question. Usually what they're doing
Speaker 2: is they're attempting to make pennies to because there's some
Speaker 2: of these fall out of circulation. So when you put
Speaker 2: your pennies, I think there was a billions of pennies
Speaker 2: churned out last year, maybe three billion pennies. And I
Speaker 2: think the reason is essentially because when you stick them,
Speaker 2: when you lose them in your couch cushions or you
Speaker 2: stick them in some sort of a jar to kind
Speaker 2: of save up, those pennies fall out of circulation. And
Speaker 2: so the US mint has to replace those pennies. So
Speaker 2: what's it going to look like. It's not that we're
Speaker 2: gonna like stop seeing pennies immediately. Pennies will still be
Speaker 2: in circulation. It's just so we will stop minting new
Speaker 2: pennies to basically, you know, make up for those pennies
Speaker 2: that we have either lost, not picked up or stuck
Speaker 2: into a jar.
Speaker 1: Somewhere and we can save a lot of money on it.
Speaker 2: Yeah, I mean this is a good this is Obviously
Speaker 2: there's been a lot of focus in these first few
Speaker 2: weeks of the Trump administration on cost cutting and some
Speaker 2: ways some people would say really great ways, and other
Speaker 2: people would say, oh, man, I don't really like what
Speaker 2: they're doing over here. I think this is at least
Speaker 2: one of those things where the vast majority of people
Speaker 2: can agree on the fact that pennies are essentially worthless
Speaker 2: and there's no reason to manufacture them anymore, especially as
Speaker 2: our world gets more and more digital and paying with
Speaker 2: debit cards. Credit cards are just kind of the norm.
Speaker 2: Pennies are just kind of more of a pain than
Speaker 2: they are a solution.
Speaker 1: Okay, so if you are still pinching pennies. We were
Speaker 1: talking about how much is a fair fee for investment
Speaker 1: companies to take because they need a coot to stay
Speaker 1: in business, and what is that? Is there a hard
Speaker 1: and fast number, Jewel.
Speaker 2: So there's not really a hard and fast number. But
Speaker 2: over the past few decades this has only gotten better
Speaker 2: and better and better. For individual investors, it's become fees
Speaker 2: have dropped precipitously. And this is honestly, I think we
Speaker 2: can call it the Vanguard effect because Vanguard was the
Speaker 2: was the low cost brokerage firm launched by Jack Bogel
Speaker 2: in the late nineteen sixties early nineteen seventies, and he
Speaker 2: kind of invented in some ways the index one. He
Speaker 2: didn't fully invent it, but he at least brought it
Speaker 2: into the mainstream in that in particular, in his focus
Speaker 2: on lowering fees for investors, basically was the lowering tide
Speaker 2: that lowered all fees. And so Vanguard literally just announced
Speaker 2: last week they're lowering their fees even more, and they're
Speaker 2: basically the lowest cost fe brokerage firm in existence, and
Speaker 2: they're lowering fees even more. The average fee now on
Speaker 2: a Vanguard fund is point oh seven percent, which is
Speaker 2: pretty miniscule. The rest of the industry is point four
Speaker 2: to four percent, almost half a percent. So the difference
Speaker 2: between what you're going to pay in fees based on
Speaker 2: where you're investing could be significant.
Speaker 1: Are they expecting others kind of follow suit or are
Speaker 1: they going to just say, no, we're keeping our fees
Speaker 1: where they are.
Speaker 2: They don't care. They don't care if other people follow suit.
Speaker 2: But the truth is other people have to, right because
Speaker 2: this is why like Fidelity, which is another one of
Speaker 2: my favorite brokerage firms, has launched what they call zero
Speaker 2: fee funds, Like I don't know, this was probably seven
Speaker 2: or eight years ago, and so they literally have a
Speaker 2: few in house funds that charge a zero expense ratio.
Speaker 2: And when you think about what this means for investors,
Speaker 2: the fact that that Vanguard just cut fees by a
Speaker 2: little bit, well that's big news in some ways, but
Speaker 2: it's not big news in other ways. The big news
Speaker 2: is what individuals do with this information. And the truth
Speaker 2: is where you invest matters. If you're with a really
Speaker 2: high cost firm where they charge a lot of money
Speaker 2: for advice and where they charge a lot of money
Speaker 2: for you to own a fund that's very similar to
Speaker 2: what you can get much cheaper at like Fidelity, Schwab
Speaker 2: or Vanguard, then you're overpaying. And so this should be
Speaker 2: just another reminder to everyone out there who is investing,
Speaker 2: which is great, to check your fees and to make
Speaker 2: sure more of your money isn't going to pay the
Speaker 2: fund manager than is going to invest in assets that
Speaker 2: are going to grow on your behalf for years and
Speaker 2: decades to come.
Speaker 1: Okay, so always ask that question before you make your investments.
Speaker 1: How much am I paying you?
Speaker 2: Yeah? How much am I paying you? And then almost
Speaker 2: how much does just the fund itself charge? And you
Speaker 2: can go into the back end of your investment. You
Speaker 2: know your investment company. You can see Oh wait a second,
Speaker 2: the expense ray show on this fund. You need to
Speaker 2: type it into Google. Right, So, like Voo is one
Speaker 2: of Vanguard's S and P five hundred funds, and I
Speaker 2: think the expens ray show is like point oh two
Speaker 2: or point oh three. It's it's essentially non existent. Go
Speaker 2: type in those letters from your fund that you're invested
Speaker 2: in and figure out what the expense ray show is.
Speaker 2: If it's above point three point four point five, you
Speaker 2: should be thinking again and seeing if there's lower cost
Speaker 2: place you can do business. And I guarantee you there is.
Speaker 1: Okay, always great advice from our buddy Joel Larsgard, and
Speaker 1: you can get more information about how to manage your
Speaker 1: money and other great advice every Sunday from noon to
Speaker 1: two right here on KFI. It's called how to Money
Speaker 1: with Joel Larsgard. You can also follow Joel on Instagram
Speaker 1: at how to Money Joel