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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19821  
Subject: Re: Load Vs. No load mutual fund Date: 6/4/2000 11:33 AM
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galeno wrote,

Here is a quote from the link I suggested in the last reply. After reading it, do you still feel the same way about managed mutual funds?

"Over the past 15 years, for example, mutual fund fees and operating expenses, sales charges and transaction costs, opportunity costs, and the horrendous tax costs—generated, in turn, by grossly excessive portfolio turnover—have consumed nearly six percentage
points—one-third—of the stock market's return of 18% per year. (It would take a truly remarkable money manager to leap that six-point hurdle for 15 years in a row!) In the last year alone, all-industry costs absorbed an estimated $120 billion of the returns earned by mutual fund shareholders—an astonishing figure."

Great quote, galeno.

I dumped my mutual funds in 1990 and bought a portfolio of 10 individual stocks. This allowed me to reduce my annual investment expenses to 0.02% (2 basis points) of assets. According to Morningstar, the average actively managed mutual fund has an expense ratio of 1.43%. By eliminating the expenses of "professional" management, I was able to retire in 1994 at age 38. In the 6 years since I retired, my portfolio has grown to the point that my annual living expenses are now about 1% of assets. That's right, I'm comfortably living on less money than I'd pay a mutual fund manager to underperform the market.

The only smart investment is a low-fee investment. It's a risk free way to boost your investment returns.

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