Tip For Lowering Your Mutual Fund Fees - Buy ETFs Instead
Investors are now paying an average of 0.93 percent in fees on their assets in mutual funds for the U.S. stock market. These expenses may not look like much for the first year, but compounded over 30 years, you are looking at thousands of dollars in expenses paid to a mutual fund company from your pocket.
The average investor has recently seen some mutual fund fees lowered. This is mostly because of their competition from exchange-traded funds, or ETFs. Most ETFs are similar to index mutual funds but usually charge very low fees (as low as 0.10 percent). But ETFs trade like a stock, and can be bought or sold through a brokerage at any time during the day. The many other advantages (and some disadvantages) of ETFs are outlined in Seeking Alpha's Guide to ETF Investing, and you can research expert opinion on the various ETFs on our ETF Investor site.
To see the impact of mutual fund expenses, look for the expense ratio. You can find it in the fund's prospectus or call your mutual fund company and ask. To calculate the amount of your expenses over time use a calculator such as, DinkyTown's. Be prepared to feel some pain. Then buy ETFs instead.