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Choose lowcost funds from "summary" of The Little Book of Common Sense Investing by John C. Bogle
The key principle that underpins all successful investing is the importance of keeping costs low. When it comes to mutual funds, the costs can be a significant drag on returns. High expense ratios, sales loads, and excessive trading can eat away at your investment over time. That's why it is crucial to choose low-cost funds for your investment portfolio. Low-cost funds are a smart choice for investors because they allow you to keep more of your investment returns. By minimizing costs, you can improve your long-term investment performance without taking on additional risk. In fact, studies have shown that low-cost funds tend to outperform high-cost funds over time. When selecting funds for your portfolio, it's essential to pay attention to the expense ratios. These fees are charged annually as a percentage of your investment, and they can vary significantly from one fund to another. By choosing funds with low expense ratios, you can ensure that you are not giving away a significant portion of your returns to fees. Another factor to consider when choosing funds is the impact of sales loads. These fees are charged when you buy or sell shares of a mutual fund, and they can erode your investment returns. By selecting no-load funds or funds with low sales loads, you can avoid these unnecessary fees and keep more of your money working for you. In addition to expense ratios and sales loads, it's important to consider the impact of excessive trading on your investment returns. High turnover rates can lead to increased costs and tax liabilities, which can reduce your overall returns. By choosing funds with low turnover rates, you can minimize these costs and maximize your investment performance.- The key to successful investing is to keep costs low. By choosing low-cost funds for your investment portfolio, you can improve your long-term performance and keep more of your returns. So, the next time you are selecting funds for your portfolio, remember to prioritize low costs to maximize your investment success.
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