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Submitted by: Puthan(VJ) Vijayan
Puthan(VJ) Vijayan is the Principal member of PMV Investment Advisors, LLC. The firm is a Registered Investment Advisor. VJ is a Certified Estate Planner and Registered Financial Consultant, with over 15 years of planning and investment experience.
Expenses ratios, what is it worth?
Mutual fund expense ratios and loads, along with advisor fees and wrap account charges are among the many ways In which investors pay for investment management.
Assess tradeoffs between alternative fees arrangements expressed in fraction of a percentage point requires a calculator with time value of money calculation capability, that too many investors lack.
Kinds of misunderstandings are low expense ratios generally more important in the case of stock or bond funds? If paying a load earns a reduction in expense ratio should the load be paid on stock fund or bond funds? If one financial planner charges a wrap fee, and another a one time setup charge, what is the best way to compare total costs?
The proper procedure is not to focus on the magnitude of the expense ratio in relation to the forecast returns, but to calculate dollar results for the two exponential series.
All basis points are not created equal when you figure in exponential series. The higher the rate of return, the more costly a single basis point of additional expense becomes.
Wrap fees can be far more expensive than they first appear.
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