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Investment Fees

Do you know how much you pay in fees for your current portfolio?

Many mutual fund investors are aware of their funds' expense ratios,
but there are several other potential costs to be aware of.

Experts have concluded that many investors are actually paying
total investment costs that are 2 to 3 times higher than their funds' expense ratios.

The examples below illustrates the damage fees can do.

Example:
If you invested $100,000 and were able to earn an annual rate of return of 10%,
you would have $672,750 after 20 years. If you paid total investment fees of 2% annually (not uncommon) you would only end up with $476,429. If you had to pay 5% load (sales commission) on your initial investment in addition to the 2% annual fees, you would only be left with $442,791.

FeesChart

The longer you hold your investments in high cost funds,
the more severe the damage becomes:


Compounding_Costs

Lagging

These numbers are staggering!

The charts above show, that if you pay 2.5% a year in fees for 50 years, you are left with a nest egg that is almost 70% smaller than the amount available from the markets pre-expense return.

Charts and information taken from The Little Book of Common Sense Investing,
by John C. Bogle
.
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