One of the most common methods used by us ordinary folks to invest is the mutual fund. In many cases the mutual fund offers instant diversity, and provides an easy way to grow your money. Managed mutual funds have higher fees, though, because supposedly an expert is making sure that your money grows at a better pace. But some studies have shown that managed mutual funds rarely do better than funds that are not managed by professionals. So, it’s possible that you’re not seeing a return on the higher fees you are paying.
If you are interested in how much mutual fund fees could be costing you, Market Riders offers a free tool to help you figure it out. You enter the symbol for your mutual funds, and how much you have invested. I used two managed funds that are in a Roth IRA I opened with my insurance agent years ago. The fees are one of the reasons that I don’t have much in that account, and am focusing my money on other accounts that I have. Market Riders compares your current mutual fund fees to what you would pay with a comparable ETF. And then shows you the 20-year difference:
Of course, the small amounts I have in there mean a difference of nearly $2,000 over 20 years. But if I were dealing with bigger amounts in these particular mutual funds, I would probably see an even bigger difference. My other accounts do not use ETFs, as Market Riders suggests, but they are in low-cost index funds, which I like. In any case, this tool is an interesting one, and one that can be a real eye-opener with regard to mutual fund fees. I suggest using it if you are interested in seeing just how much more of your money could be working for you.
Market Riders did not pay me to write about their tool. I did enjoy playing around with it, though.