October 16, 2009
Mistake #4 on my list of the top 10 mistakes investors make is ignoring cost. Cost is a vital determinant of investment performance. Reams of academic and professional research show that no-load funds with low expense ratios and no 12b-1 fees consistently outperform their high-cost cousins. There is absolutely no good reason to invest in any fund with a sales load or a 12b-1 marketing scab. These fees are simply kickbacks that fund companies pay brokers for hawking their funds. See the conflict here? Brokers aren’t interested in finding the best funds for you; they’re interested in finding funds with the highest kickbacks. It’s scandalous. If you own any funds with front-end loads or 12b-1 fees, dump them today. At my family-run investment company, we craft client portfolios that include mutual funds and ETFs with no loads, no 12b-1 fees, and low expense ratios. Please join us.
Dick Young
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