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Most people are not aware of the high costs of mutual funds, vis-a-vis profits. For example, last year AIM CONSTELLATION, which is an average mutual fund, returned 14.6%. However, the fund deducts a 5.5 % initial sales charge and then charges 1.2% annual fee. Therefore, if you were to invest $ 1,000, you would have only $950 to invest after the initial charge. If you then added 14.6 % (the fund return), you would have $ 1,088.70 at the end of the year. From that, the fund would deduct $ 13.06, leaving a net of $1,075.64. That is a profit of $ 75.64 on an investment of $ 1,000. The initial and annual charges would be $ 63.06 (initial charge plus annual charge). Therefore that means the fund would have charged you 83.38 % of profits ($63.06 / 75.64). If it were a subsequent year, the fees would still be 9.47 % of profits. Thus. at the end of five years. you would have paid an average of 24.25 % per year of profits.
Strategies for calm days?
Or any day?
Kevin J. Tierney is a Registered Investment Advisor and has been a practicing financial consultant for the past 20 years. On this website we will be bringing you all kinds of pertinent information for the investor such as timely Market Commentaries, Strategic Indicators, Position Papers and graphical information which reflects current market and investing trends. Stop by regularly as we develop and update the site.
Strength shines from within
Kevin J. Tierney is a Registered Investment Advisor and has been a practicing financial consultant for the past 20 years. On this website we will be bringing you all kinds of pertinent information for the investor such as timely Market Commentaries, Strategic Indicators, Position Papers and graphical information which reflects current market and investing trends. Stop by regularly as we develop and update the site.
