do you have simular experience invest in mutual fund?
a friend invested 25,000 dollars 15 years ago into mutual fund, he told me he's investment went up to 40,000 today.
I told him he got riped off by his mutual fund manager big time.
why is that? he asked me
tsx been going up on average 12 percent per year, for the past 15 years.
here are the figures,
year percentage
91 12
92 -3.8
93 30.9
94 0.2
95 16.7
96 31.9
97 10.1
98 -1
99 20.5
00 18.6
01 -14
02 -10
03 22
04 16.9
05 22
-------------------------
if he simply invested his money into index, which is XIU in toronto sotck market, which he pays 0.17 percent manage fee. he would get the return above plus divident.
for every dollar you invested you get 4.536 time in 15 years, so for $25,000 invested, he should get $113420 return if he brought index.
so what happened to his investment.
he gain 15,000 dollars in 15 years, which is less than the inflation, basicly he lost money, the money manager pocketed the difference with is 73,000 dollars.
from all the research i did, very very few mutual fund will out perform the index, on top of that they charge between 2-5 percent on management fee.
don't get fooled by the people who try to sell you mutual fund, if you aren't certain on buying stocks, the just buy ticker xiu on toronto stock exchange, it's a set of largest 60 sotcks on tsx, and you will be better off than buying any mutual fund.
some of the mutual fund will pay the seller 5 percent right away, money manager are building wealth with your money, you will end up with less money than what you start with if you facter in the inflation, don't get fooled.
i would like to see some good argument on this topic.
a friend invested 25,000 dollars 15 years ago into mutual fund, he told me he's investment went up to 40,000 today.
I told him he got riped off by his mutual fund manager big time.
why is that? he asked me
tsx been going up on average 12 percent per year, for the past 15 years.
here are the figures,
year percentage
91 12
92 -3.8
93 30.9
94 0.2
95 16.7
96 31.9
97 10.1
98 -1
99 20.5
00 18.6
01 -14
02 -10
03 22
04 16.9
05 22
-------------------------
if he simply invested his money into index, which is XIU in toronto sotck market, which he pays 0.17 percent manage fee. he would get the return above plus divident.
for every dollar you invested you get 4.536 time in 15 years, so for $25,000 invested, he should get $113420 return if he brought index.
so what happened to his investment.
he gain 15,000 dollars in 15 years, which is less than the inflation, basicly he lost money, the money manager pocketed the difference with is 73,000 dollars.
from all the research i did, very very few mutual fund will out perform the index, on top of that they charge between 2-5 percent on management fee.
don't get fooled by the people who try to sell you mutual fund, if you aren't certain on buying stocks, the just buy ticker xiu on toronto stock exchange, it's a set of largest 60 sotcks on tsx, and you will be better off than buying any mutual fund.
some of the mutual fund will pay the seller 5 percent right away, money manager are building wealth with your money, you will end up with less money than what you start with if you facter in the inflation, don't get fooled.
i would like to see some good argument on this topic.
