Choose funds with low expense ratios from "summary" of Common Sense on Mutual Funds by John C. Bogle
A critical consideration in the selection of mutual funds is the expense ratio, which measures the cost of owning a fund. The expense ratio represents the percentage of a fund’s assets that are deducted annually to cover management fees, administrative costs, and other operating expenses. These costs can have a significant impact on an investor’s returns, as they are deducted directly from the fund’s net asset value. Investors often overlook the importance of expense ratios when evaluating mutual funds, focusing instead on historical performance or star ratings. However, research has shown that expense ratios are a strong predictor of future performance. Funds with low expense ratios tend to outperform those with high expense ratios over the long term, as the lower costs enable more of the fund’s returns to be passed on to investors. In selecting ...
Similar Posts
Focus on the long term
The key to successful investing is to focus on the long term. This means looking beyond short-term fluctuations and market nois...
Don't let fear or greed drive your investment decisions
When it comes to making investment decisions, it is essential to keep emotions like fear and greed in check. Fear can cause inv...
Manager monitoring ensures adherence to investment guidelines
Manager monitoring is a critical function in institutional investment management. This process involves the continuous oversigh...
Consider the company's management team
When looking for potential investments, it's crucial to pay close attention to the individuals running the show at the companie...
Let go of societal expectations
Society expects us to follow a certain path: go to school, get a good job, buy a house, have kids, and retire at 65. But what i...
Understand efficient market hypothesis
Efficient market hypothesis is a cornerstone of modern financial theory. It suggests that the prices of securities in financial...
Start by setting clear investment goals
When it comes to investing, it's crucial to have a clear idea of what you're trying to achieve. Setting clear investment goals ...
Stay committed to your investment plan
When it comes to investing, one of the most important things you can do is stay committed to your investment plan. This means s...
Take calculated risks in your investment strategy
The concept of taking calculated risks in your investment strategy is a crucial one. In the world of investing, there are no gu...
Time in the market beats timing the market
The idea that time in the market is more valuable than attempting to time the market is a common theme in the world of investin...