At Exchange 2023, David Sharp, senior ETF capital markets specialist at Vanguard, sat down with NYSE’s Judy Shaw for ETF Leaders, powered by the New York Stock Exchange, to talk about saving for retirement.
“That’s something I feel like every American is really thoughtful about,” Sharp said. He added that everybody wants to finally “settle into a nice retirement” after their working days are over. But there’s a problem.
“Unfortunately, when you look at some of the stats from the Board of Governors of the Federal Reserve, what we find is the average retirement account is only $65,000,” Sharp said. He also noted that “25% of non-retirees have no savings at all.”
So, Sharp said that “it’s important for clients and Americans in general to think about retirement early, [and] think about it often.”
According to Sharp, Vanguard is working hard to ensure that its “clients have a fair shake and are able to keep as much of their money invested at all times.”
Keeping Costs Low
Sharp said that Vanguard is focused on giving its clients “the best chance for investment success.” And one of the main ways it does this is by keeping its “fund costs as low as possible.”
Sharp said the average expense ratio for the 3,000 ETFs in the market is 55 basis points. Meanwhile, the average expense ratio for Vanguard’s ETFs is nine. He explained why that matters.
“If you had $100,000 invested on day one and you were to keep that in an account for 25 years returning 9.2% annual… in a 55-basis-point account, you end up with $869,000,” Sharp said. “That’s a great return. That’s a great story.”
Sharp continued: “But when you’re in a nine-basis-point account, [with] the effect of those compounding returns, you return $975,000, an additional $106,000. That’s more than your initial investment.”
So, Vanguard wants its “clients to understand the impact of those compounding returns,” according to Sharp.
Ultimately, Vanguard wants to give its “clients the best chance for investment success with those really low fees,” he added.
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