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Good article from The Economist on how the investment industry is getting squeezed as more people wise up to excessive financial advisor fees.

This distinguishes them from “active” funds where a manager tries to select assets that will do better than average. Such funds have higher costs and, unless they outperform markets over the long term (which the average fund does not), those costs eat into returns. Invest $100,000 for 30 years at 6%, with annual charges of 0.25%, and your portfolio will be worth almost $535,000; if the annual charges are 1.5%, your pot will grow to only $375,000.

Even great investors think that low-cost tracker funds make sense. In his latest letter to Berkshire Hathaway shareholders, Warren Buffett describes what should happen to his personal portfolio after his death. “My advice to the trustee could not be more simple: put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”


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