Getting it wrong–to your own disadvantage

I wouldn’t bother to note a bonehead arithmetic error in an ad–even if it’s a full-page ad in Fortune–because there are so many of them. But this one was odd, because the error works to the disadvantage of the advertiser.

The ad is for Charles Schwab’s Total Stock Market Index Fund; I saw it in the August 1, 2017 Fortune (as usual, I’m about to months behind on magazines), but it’s probably appeared elsewhere.

The ad compares Schwab’s Total Stock Market Index Fund, 0.03% cost with $5,000 investment (or any investment), with Vanguard’s Total Stock Market Index Fund, 0.15% cost with $5,000 investment.

And under the 0.15% says “Nearly 80% more expensive than Schwab.”

Which is a true statement, but a boneheaded one. 400% is “nearly 80%” with a whole lot left to spare.

The Schwab fund is 80% less expensive than the Vanguard–but percentages are not commutative: 80% more and 80% less are not at all the same thing. If A is 80% less than B is 400% more than A.

I’m not sure where the “nearly” comes from in any case, unless those cost percentages are rounded.

I suspect the error didn’t come from Schwab itself, but from a copywriter or editor who thought “80% more expensive” under Vanguard was more impressive than “80% less expensive” under Schwab.

In either case, it’s wrong. And boneheaded. (Not an attack on Schwab, given that we use them.)

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