Mutual Funds
Don't Pay a Fee to Lose Money
You can avoid minimum-balance charges on your mutual fund.
By Joan Goldwasser, Senior Reporter
From Kiplinger's Personal Finance magazine, January 2009
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Watching your mutual fund's value shrink as the stock market tanks is painful enough. It adds insult to injury when your fund company charges a fee because your shrunken account no longer meets the minimum-balance requirement. But you can avoid those fees by taking a few easy steps.
If your balance in any one account drops below $10,000, Vanguard charges a $20 annual fee. But sign up to manage your account online and receive electronic delivery of statements and reports, and you can invest fee-free. (Vanguard also waives minimum-balance fees if the total value of all your accounts is $100,000.) If you do owe fees, they won't be deducted until mid 2009, and a spokesperson says that Vanguard "typically makes allowances for investors whose balances drop as a result of market declines."
T. Rowe Price shareholders pay a $10 fee per account if their balance drops below $2,000 (or below $500 for custodial accounts for minors). The fee won't be assessed until September, so you have a good shot at recouping your losses. If that doesn't reassure you, avoid the fee by signing up for automatic investing of as little as $50 a month.
American Century charges a semiannual account-maintenance fee of $12.50 if your total account balance drops below $10,000. But the fee is waived if you manage your account online.
To help its shareholders cope with the market turmoil, Fidelity lowered the minimum account balance needed to avoid its $12 annual maintenance fee from $2,000 to $1,700 for 2008, and the company made August 8 the cutoff date for determining your balance.
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Reader Comments (1)
Posted by: Unhappy Fidelity Customer at 12/01/2009 02:21:48 AM
I believe the $12 fee is not an annual account fee. It is called small balance fee charged by each individual fidelity mutual fund. Fidelity recently charged me $12 Small balance fee even my account balance is above $10k. When I discovered that fidelity sold my mutual fund share to pay for the $12 fee today, I called the fidelity representative. I was told that the fee was charged because my $2500 investment in Fidelity Select Energy Service (FSESX) has dropped below $2000 due to the stock market drop. I complained that I should not be charged for the bad fund performance...the representative said that all Fidelity mutual fund charge Small Balance Fee and it is listed on each fund perspective as below it appeared as small grey print on their website...."Small Balance Fee 2...Fidelity may deduct a small balance maintenance fee of $12.00 from a fund balance with a value less than $2,000. Fund positions opened after September 30 will not be subject to the fee for that calendar year. This fee will not be deducted from fund positions opened after January 1 of that calendar year if those positions use regular investment plans. Refer to the fund prospectus for details."