How Bad Are Mutual Fund Fees?

When investing, there are three to keep in mind that can erode the purchasing power of each dollar that we have:

(1) The first one is inflation. If inflation runs at 4.0% annually, that means it will take $1.04 in 2014 to buy what cost you $1.00 in 2013.

(2) The second thing is taxes. If you own 1,000 shares of ExxonMobil in a taxable account, you will receive $2,520 in annual dividends. But, if you are in the 15% tax bracket, you will have to send $378 to Uncle Sam, effectively giving you $2,142 in oil well money from Exxon that you can use to spend as you please.

(3) The third way that you can lose money is by paying mutual fund fees. If you have $100,000 in an account that charges a 1% annual expense fee, you are paying someone else $83 per month in perpetuity to … Read the rest of this article!