Invisible Mutual Fund Fees Erode Your Returns!



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Summary:

Many investors think that investing in mutual funds is free. Mutual funds have no interest in educating investors because it is easier to hoodwink the ignorant!

Don't put your trust in mutual funds unless they are fully indexed. Indexing means that the mutual fund simply uses a computer to buy and sell stocks in the mutual fund portfolio so as to mimic the composition of a major stock market index like the S&P 500.


Article:

Many investors think that investing in mutual funds is free. What nonsense! Funds join more than $50 a quadrillion a year in fees from investors. That is truly a ton of money. The first way you get hosed in a mutual fund is due to high fees charged. These fees can dramatically reduce your returns over time!

The way that these fees are deducted involuntarily from a fund’s returns makes them invisible now you never see an invoice or have to write a check. If you invest $10,000.00 in a domestic stock mutual fund with an expense ratio of 2% and a sales load of 3%, and let’s imagine that you get ledger returns of 7.5% for twenty years, your money would approximately triple to $27,508.00.

The bad news is that you would have lost $14,970 in fees and foregone earnings over the twenty years. Yikes…that really hurts! Why not just go by the system and buy your own stocks as I teach finance students and home study investors? These funds are also sold and managed on pure hype, short term trading, and with key information withheld from the public.

All of these factors I teach finance students and investors to avoid! The industry confuses investors by focusing on past performance, which should not be a factor to consider. Many mutual funds are able to throw a fight the public with excessive fees investors don’t understand how these big costs destroy their profit. Mutual funds have no interest in educating investors inasmuch as it is easier to hoodwink the ignorant!

Don’t put your trust in mutual funds unless they are fully indexed. Indexing means that the mutual fund simply uses a computer to buy and sell stocks in the mutual fund portfolio so as to mimic the composition of a major stock market index like the S&P 500. This means that there is no fund manager sucking out needless fees. A good example is the first fully indexed mutual fund styled the Vanguard 500 (VFINX) which is also now the largest of its kind.



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