The Dividend Post

Dividend Post - Long term investment time frame - Growing income stream - Risk averse - Join Us

Friday, May 23, 2008

Buy Mutual Funds at your own peril

I am starting to post some facts and figures around the high cost to participate in mutual funds. Do I think investors would be better to go it alone..........

The average Canadian MER of 2.1% curtails registered retirement savings plans by 47 percentage points over 30 years"

The Rule of 40

To compute how long it takes mutual fund management expenses to consume one third of your investment: take 40 and
divide by your mutual fund's MER. or... After "n" years, the percentage of your money you get to keep in a mutual fund is:

(1-MER)n * 100

"In 25 years, a one-time $10,000 investment earning 10% per annum would be worth $15,885 more, just because of a 1% saving in MER."

Let's do the math - $ 100,000.00 one time investments will cost you $ 155,885.00 after 25 years.

Most funds charge a lot more than 1 %. ......... now do the math !

Mutual fund costs are shameful.


MUCH MORE TO COME ..


Visit my site at www.dividendpost.com


Posted by VMW at 3:26 PM

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)

Dividend Post

The Dividend Post is first and foremost a stock selection newsletter,
where I profile great companies that pay dividends. My criteria for stock selection
rests on the following sound investment principles rated in order of importance:

1) Strong past performance.
2) Solid business franchise.
3) Strong Free Cash Flow to fund future dividends and sales growth.
4) Dividend Growth to provide a growing income stream over time (Dividend Growth Model)
5) A good purchase price so as to benefit from capital gains over long periods of time.

Dividend Post is targeted at the following investment profile:

a) Long term investment time frame (5 years or more)
b) Desire for an additional and growing income stream in the next 5 to 25 years.
c) Risk averse