Comments on: The Impact of Costs on Mutual Fund Returns http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/ A personal finance blog where we share insights on carefully saving money, investing, early retirement, mortgages, stocks because the little things matter in achieving financial freedom! Sat, 21 Nov 2009 08:01:45 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: Best CD Rates http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15492 Best CD Rates Tue, 21 Apr 2009 20:23:49 +0000 http://moneyning.com/?p=2767#comment-15492 Nice post OI. In order to avoid fees I keep most of my retirement savings in CDs or index funds. Nice post OI. In order to avoid fees I keep most of my retirement savings in CDs or index funds.

]]> By: Irina I http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15460 Irina I Sun, 19 Apr 2009 23:45:27 +0000 http://moneyning.com/?p=2767#comment-15460 This is why I loved Daniel Solin's "The Smartest Investment Book You'll Ever Read." That was his main point about investments - pick the index fund with the lowest expense ratio so that you get to keep your money. This is why I loved Daniel Solin’s “The Smartest Investment Book You’ll Ever Read.” That was his main point about investments – pick the index fund with the lowest expense ratio so that you get to keep your money.

]]> By: Gtudor http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15361 Gtudor Thu, 16 Apr 2009 23:08:11 +0000 http://moneyning.com/?p=2767#comment-15361 Excellent summation on the net effects of investment expense and the total drag it has on returns. While one reader has commented he has rarely seen many ETF's out perform strong mutual fund managers I would submit that through diversification and negatively correlating your assets (Modern Portfolio Theory) your portfolio should perform better over time. I agree that if you are only buying one index fund (like the S&P500) you will have one volatile ride during this recession versus buying a highly diversified money manager. Unfortunately many of those managers have exceeded losses in excess of 45%. Excellent summation on the net effects of investment expense and the total drag it has on returns. While one reader has commented he has rarely seen many ETF’s out perform strong mutual fund managers I would submit that through diversification and negatively correlating your assets (Modern Portfolio Theory) your portfolio should perform better over time. I agree that if you are only buying one index fund (like the S&P500) you will have one volatile ride during this recession versus buying a highly diversified money manager. Unfortunately many of those managers have exceeded losses in excess of 45%.

]]> By: George http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15350 George Thu, 16 Apr 2009 15:13:49 +0000 http://moneyning.com/?p=2767#comment-15350 Great, easy to understand analysis! I think you would have to be crazy to invest in a managed fund. The rate of return on C is 7%. After inflation and taxes, you would actually lose money. Besides that, what managed fund outperforms the market over 30 years? None. There are some other big problems of investing in funds, including index funds. The rate of return for C is 9% (due to low fees), but inflation and taxes are going to eat up most of that. The real cost is the opportunity cost. That $10,000 could be put into another investment that would could start you on the path to being rich... Great, easy to understand analysis!

I think you would have to be crazy to invest in a managed fund. The rate of return on C is 7%. After inflation and taxes, you would actually lose money. Besides that, what managed fund outperforms the market over 30 years? None.

There are some other big problems of investing in funds, including index funds. The rate of return for C is 9% (due to low fees), but inflation and taxes are going to eat up most of that.

The real cost is the opportunity cost. That $10,000 could be put into another investment that would could start you on the path to being rich…

]]> By: ObliviousInvestor http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15348 ObliviousInvestor Thu, 16 Apr 2009 14:51:42 +0000 http://moneyning.com/?p=2767#comment-15348 Hi Neal. You're right on both counts: 1. Performance <i>is</i>, of course, what we're shooting for. 2. Performance numbers <i>are</i> shown on an after-cost basis. So let's ask the real question. Going forward, which would you wager on as a better predictor of future performance: A low cost structure, or a high long-term performance record? :) (I'm curious to hear everybody's thoughts here, so please chime in!) Hi Neal. You’re right on both counts:
1. Performance is, of course, what we’re shooting for.
2. Performance numbers are shown on an after-cost basis.

So let’s ask the real question. Going forward, which would you wager on as a better predictor of future performance: A low cost structure, or a high long-term performance record? :)

(I’m curious to hear everybody’s thoughts here, so please chime in!)

]]> By: Wealth Pilgrim http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15347 Wealth Pilgrim Thu, 16 Apr 2009 14:41:36 +0000 http://moneyning.com/?p=2767#comment-15347 Yes, costs matter. However, performance matters more. I am a fan of ETF's and index funds....but performance numbers net the costs out. On an absolute basis, I rarely see ETF's outperform the best funds. Yes, costs matter. However, performance matters more.

I am a fan of ETF’s and index funds….but performance numbers net the costs out. On an absolute basis, I rarely see ETF’s outperform the best funds.

]]> By: Sherin http://moneyning.com/investing/the-impact-of-costs-on-mutual-fund-returns/comment-page-1/#comment-15346 Sherin Thu, 16 Apr 2009 14:10:20 +0000 http://moneyning.com/?p=2767#comment-15346 Excellent post. Very interesting and it help me later. I am sure. Excellent post. Very interesting and it help me later. I am sure.

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