Mutual Funds
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How important are expenses?
They matter. A lot. Many mutual funds are sold as “no load” or “no sales commission” funds, which can save
you money. Load funds can charge a significant commission upfront, which means you would have to make higher
returns in order to make up for the load.
Management costs matter too. Actively managed funds have total expense ratios that can add up to about 1.25%
to 1.5% of total fund assets. This money comes out of investment returns before they are delivered to
shareholders. Index funds’ total expenses are around 0.25% to 0.18%