|
AdInvest5
Choose a low cost fund and earn $55,000 more!
Some equity funds charge an annual fee of 1%. Some
charge 1.5% or even 2%. In some cases, the financial adviser charge a separate
layer of fee (say 0.5%) in additional to the fee charged by the fund.
If you invest $100,000 for 20 years, the difference of 1% in annual fee can
amount to $55,400. Here is how it works out.
Assume that the average yield on the fund is 7%.
If the net yield is 6% (ie 1% fee), the total payout will be $320,700.
If the net yield is 5% (ie 2% fee), the total payout will be $265,300.
The difference is $55,400.
Wow! That is a lot of money!
Is there a difference in the quality of fund managers?
If you invest in a large, well diversified and properly managed fund, the
diffence in yield between the funds should be quite negligible over the long
period. The higher fee goes to increase profits for shareholders.
So, take my advice. Choose a fund that charges an annual fee of 1% (instead of
2%).
Here are the figures available from the website:
www.askdrmoney.com
Best ILP (single premium)
Average Expense Ratio of equity fund
| NTUC Income |
1.0% |
| Company G |
1.4 % |
| Company P |
1.5 % |
| Company A |
1.9 % |
| Other insurers |
1.7%-2.2% |
|