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Secret Fees Make Mutual Funds Billions At Your Expense!
By: Dr. Scott Brown, Ph.D.
Many investors think that investing in mutual funds is free. What nonsense!
Funds collect more than $50 billion 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 automatically from a fund’s returns makes
them invisible because 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 annual returns of 7.5%
for twenty years, your money would almost 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 bypass 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 cheat the public with excessive fees because investors don’t
understand how these big costs destroy their profit. 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. This means that there is no fund manager sucking out
needless fees. A good example is the first fully indexed mutual fund called the
Vanguard 500 (VFINX) which is also now the largest of its kind.
About the Author:
Dr. Scott Brown, Ph.D., the Wallet Doctor, is a successful investor. Dr. Brown
holds a Ph.D. in finance. The Wallet Doctor is sought after for investment
advice and coaching. For more information visit Dr. Brown’s site at http://www.BonanzaBase.com
or sign up for his investment tips at http://www.WalletDoctor.com
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