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How To Quadruple Your Mutual Fund Returns With One Decision
There are some people who just shouldn't be left anywhere near a calculator.
He writes about a $100K investment in a fund whose underlying portfolio gains 10%/year, and carries a total ER of 1%. He uses the SEC calculator to determine that over 30 years, $147K goes to fees, and earnings are diminished by $307K due to those fees, for a total drain of $454K. From this, he concludes that the value of your investment at the end of those years would be ...
$454K.
Of course that's just a tad more than 1/4 of the $1.7M you'd get with a fund having an ER of 0.10%. But the SEC calculator shows that the former investment would be worth about $1.2M. His sensationalist headline (that you lose most of your money to fees) is dead wrong.
That's just numbers, independent of any concept of mutual funds, which he clearly doesn't grasp. He rails about transfer agency fees. Even bogleheads acknowledge "All funds incur regular operating costs, which include ... transfer agency ... fees." http://www.bogleheads.org/wiki/Mutual_funds_and_fees
"Let’s say you invested the same amount of money (earning the same 10% annually) in an exchange-traded stock fund for 30 years. You’d be paying 0.10 % annually to hold the fund."
One serious error in this statement, which invalidates his whole logic....do you see it? I'll give the same example Managed funds Vs. anything you quote and I'll make you more money....
This type of reporting is misleading to many and Dangerous to proper investment thinking.....grade F But headline got me to read HIS article.....probably their (advertising) intent
Comments
He writes about a $100K investment in a fund whose underlying portfolio gains 10%/year, and carries a total ER of 1%. He uses the SEC calculator to determine that over 30 years, $147K goes to fees, and earnings are diminished by $307K due to those fees, for a total drain of $454K. From this, he concludes that the value of your investment at the end of those years would be ...
$454K.
Of course that's just a tad more than 1/4 of the $1.7M you'd get with a fund having an ER of 0.10%. But the SEC calculator shows that the former investment would be worth about $1.2M. His sensationalist headline (that you lose most of your money to fees) is dead wrong.
That's just numbers, independent of any concept of mutual funds, which he clearly doesn't grasp. He rails about transfer agency fees. Even bogleheads acknowledge "All funds incur regular operating costs, which include ... transfer agency ... fees."
http://www.bogleheads.org/wiki/Mutual_funds_and_fees
One serious error in this statement, which invalidates his whole logic....do you see it?
I'll give the same example Managed funds Vs. anything you quote and I'll make you more money....
This type of reporting is misleading to many and Dangerous to proper investment thinking.....grade F
But headline got me to read HIS article.....probably their (advertising) intent