Fidelity and Casino Buffets
Today is the day the cost of investing officially went to zero. Fidelity has opened up two index mutual funds that have expense ratios of '0.0%'. How can this be? As we learned in economics, there is no free lunch, so lets dig a little deeper.....
These funds are free in the same way the buffet at the casino is free. It is the hope of the casino that after you eat some free food you will wander over to the slots and make the casino some real money. Similarly, it is Fidelity's hope that after you buy some free funds, you will wander over to the pricier offerings to 'complete' your portfolio.
These 'free' funds will be good for the discriminating and educated investor and bad for masses. Be on your guard as you wander into the casino (Fidelity).