Welcome to the Jill on Money Podcast. It's Wednesday, September 30th and I cannot believe it. I said it yesterday, end of the month oh my god well put it in the books kiddos because we're just gonna

soldier on if you've got a financial question send us an email ask Jill at Jill on money.com. Ask Jill at Jill on money.

That's our email address. And you know we also post a bunch of stuff on our

YouTube channel and I got a message here a question on our

YouTube channel and it says hi Jill you often mention that companies like Fidelity or

Schwab or Tiro Price and Vanguard charge rock-bottom fees.

Then how do they make money?

It would be nice if you could expand upon this concept on one of your shows.

For the average American, it sounds too good to be true.

Would be great if you could provide some transparency

and context into how these firms are generating revenue?

Great question.

Okay, first of all, the reason they can have

rock-bottom fees, generally speaking,

is that a lot of their business is based on index funds and index

funds are pretty easy to manage. You just buy the stuff that's in an index. Now there are certain companies like a Vanguard for

example where they kind of built their whole business on a low fee structure.

Other businesses they may charge more money, but the whole industry has been squeezed on fees.

So I think that what you need to understand is one of the ways that they make money is that they have other they have some

funds that do charge more expensive fees maybe it's a half a percent a year

whereas maybe the an index fund is a three basis points a year, so 0.03% a year.

So if you stick to the index funds in those firms, they're not making a lot of money.

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