Vanguard has always been known for their low mutual fund fees, one of the reasons why so many experts celebrate their services. However, in order to get the lowest prices possible, you had to invest over $100,000 into a single mutual fund in order to get Admiral Shares. Today, they announced that the minimum required to purchase Admiral Shares would drop from $100,000 to $10,000 for index funds and to $50,000 for active funds.

Here are a few stats:

• 17 index funds and 35 active funds were affected.
• Nearly 2 million clients will save on expense ratio decrease by qualifying for Admiral shares.
• Range of admiral shares expense ratios – 0.07% for Total Stock & S&P 500 to Capital Opportunity (0.41%).

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In every professional sport, there’s a concept of a “rebuilding year.” These are the years where the team is working on drafting good prospects, building up their young talent, and crafting a competitive championship-caliber team piece by piece. It’s difficult to field a championship team every year for more than a few years, with free agency and everything, so it’s expected that after a few years of stellar performance, you’re bound to have a few leaner years where you’re rebuilding your talent. The good teams do this well, with strong performing rebuilding years, and others do it poorly.

How does this apply to you? It’s a little downside psychology. With the recent economic crisis, a lot of folks are forced into their rebuilding years. You may have lost your job. Your investments may have lost value. Your money doesn’t seem to get you as far as it used to… you’re down, but not out. So turn this year into a money rebuilding year.

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When Vanguard lowered its stock and ETF trading fees this week, I received an email from Eric, one of the long time readers of Bargaineering. He wondered if this made Vanguard ETFs superior to their mutual funds, to which I was pretty sure the answer was “Yes.”

You have to make the assumption that the mutual fund and the ETF will track the underlying index in the same way. If they’re run by the same company, in this case Vanguard, I think this is a fairly safe assumption to make. If there is no tracking error, then it comes down to costs. Whichever investment is cheaper, wins.

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Vanguard recently announced a reduction in their fees. For most investors, those with less than $50,000 in their account, their first 25 stock trades each year will cost only $7, subsequent trades are $20. If you have $50-$500k, all trades are $7. $500k- $1M, all trades are $2. If you have over a million, your first 25 trades each year are free, $2 for subsequent trades.

The bigger news is with Vanguard ETFs, all investors now get to buy and sell Vanguard ETFs for free. For Standard accounts (<$50k assets), there is a $20 account service fee. That's waived for those with $50k+ of assets with Vanguard.

This makes Vanguard ETFs very attractive people with Vanguard brokerage accounts. They already have really low expense ratios and when you make them free to buy and sell, it’s almost a no brainer. The Vanguard Total Stock Market ETF (VTI) has an expense ratio that matches its mutual fund Admiral Shares version (to qualify for Admiral Shares of a Vanguard fund, you need $100,000+ invested in that fund).

Have you ever heard of the 120 Rule? The 120 Rule is a basic asset allocation rule. Take your age and subtract it from 120. That is the percentage you should be invested in stocks and the balance should be in bonds. If you’re 40, then you should have 80% in stocks and 20% in bonds. If you’re 50, then 70% stocks and 30% bonds. It’s one of those age old “rules of thumb” that can be a good starting point for deciding asset allocation but bad as an end point. As a retiree at the age of 65, do you really want the majority (55%) of your investments in stocks? Maybe, maybe not, but your reasoning should go beyond the 120 Rule.

When it comes to Target Retirement or Lifecycle funds, not all funds are created equally.

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If you can keep your wits about you while all others are losing theirs, and blaming you. . . . The world will be yours and everything in it, what’s more, you’ll be a man, my son.

That’s a famous line from Rudyard Kipling’s If and if you followed that advice the last year (the first part anyway), especially in the stock market, you would’ve done very well and kept a few gray hairs at bay. Since the S&P hit its low in March of 676.53, it’s come roaring back a stunning 63.4% since then. While it’s still down from where it was before the recession (it was 1251 on Sept 19, 2008, down 11.64%), you have to admit it’s a pretty amazing recovery in such a short period of time.

We benefited from being young, with decades until retirement, and one thing we’ve been looking into is dividend yielding stocks in our regular non-retirement brokerage accounts.

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Asset allocation is probably one of the hardest parts about investing because while we all know it’s important, we don’t really know what we’re supposed to do. We know that diversification is crucial but we aren’t entirely sure why outside of “don’t put all your eggs in one basket.” Fortunately, there are some simple systems out there that can shed some light onto the asset allocation question.

This post is part of the Bargaineering Annual Financial Review week series where we take a closer look at the four major facets of personal finance and see if we can do better. This post is part of day three – taking a closer look at your investments.

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When it comes to investing, you can’t predict the future. What you can predict, with 100% certainty, is how much your broker is going to charge to get you there. If you’re like me, the majority of your stock market investments are in mutual funds in retirement accounts like 401(k)s, 403(b)s, and IRAs. While we can’t control how they will perform, we can be smart about where we invest by picking good funds with reasonable costs.

In this video, I look at some index funds, the easiest type of fund to compare, and how picking a low cost one can make a huge difference in your retirement nest egg.