| A common misconception about mutual funds is | | | | that of the higher-costs funds. So what did they |
| that pretty much any reputable fund will do. Of | | | | find out? In eight out of nine categories, the |
| course, any investment that produces a solid | | | | low-cost fund outperformed their higher-cost |
| return for you is better than nothing, but not all | | | | counterpart. The average low-cost fund |
| funds are created equal. When you buy a mutual | | | | outperformed the typical fund by an average of |
| fund, you'll pay a management fee. It's what you | | | | 20 percent. It's important that you not only |
| pay for someone to handle your accounts. A | | | | choose a low-cost fund, but you analyze the |
| low-cost fund will charge you one-fifth of one | | | | performance of that fund in years past. Check to |
| percent per year. A typical high-cost fund will | | | | see who was actively managing that fund over |
| charge about eight times more than that. | | | | that time, and if they were successful and are still |
| Research was recently published analyzing a 25 | | | | managing that fund, then consider putting your |
| year old investing 10 percent of their $30,000 | | | | money with them. |
| income each year until retirement into mutual | | | | What's great about figures like these is that they |
| funds. Comparing money put high-cost funds with | | | | show the amazing power of investing over time. |
| that put into low-cost funds produced quite | | | | Even better is that they show how simple |
| dramatic results. The good news is that the | | | | decisions, like choosing a low-cost mutual fund |
| person investing in the high-cost funds ended up | | | | over a high-cost one, can reap dramatic benefits. |
| with around $1.7 million at retirement. Not too bad! | | | | Look at it this way, would an extra $1.2 million (oh |
| But here's the real kicker - the person investing in | | | | whatever the difference would be based on your |
| a low-cost fund ended up with $2.9 million! | | | | age) be worth time it takes to make the right |
| The S&P recently did some research | | | | financial decision? |
| evaluating the performance of low-cost funds vs. | | | | |