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2-3% per year? Nice try. While estimates of averages vary, most funds do not charge 2-3% per year.

Fair enough. I should have said most actively managed funds (you know, the kind the brokers like to sell) charge 2-3% per year. Some are higher. Heck, the Motley Fool fund has a gross fee of 2.30%, although they're subsidizing part of that fee until the end of February to entice people in.

I was thinking of the Morgan Stanley funds, Merrill Lynch funds, and other name funds which have high expense ratios. You can find lower cost funds, particularly index funds, but then you are still giving up return (in return for something: usually diversification and therefore safety.)

(I note your links talk about "expense ratios", but in my experience the fund managers often lard other costs on top of that: marketing fees, commission and so on. And even so-called "no-load" funds start you out with a large back-end load penalty if you withdraw early, so I can't really see how that can reasonably be called "no expense.")

A new study profiled in The Los Angeles Times shows that investors can lose up to half of their contributions to fees when they're in high-cost mutual funds.

Syndicated financial writer Kathy Kristof reports that a self-help portfolio management group called MarketRiders has found the typical investor who puts $4,000 annually into an IRA can lose 54 percent in fees alone each year.

The takeaway here is simple: Don't buy your investments through full-commission brokerage houses or an insurance agent.
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