Mutual Funds: Two Words You Must Know

If you own mutual funds, here are 2 words that you need to keep your eye on…

Expense Ratio.

You see, all mutual funds and ETF’s (exchange traded funds) charge their shareholders an expense ratio to cover the fund’s operating expenses.

According to the Motley Fool, the average expense ratio for an actively managed fund is 1.5%… with that number trending upwards.

With an expense ratio of 1.5%, the fund is cutting in on 1.5% of the total money of the fund each year. And the expense ratio is taken out in good and bad years.

When analyzing a potential fund to invest in, the expense ratio should be one of the key factors to consider before investing your hard-earned money.

To help with your investing decision and calculating fees, you can use a handy free calculator by going to www.SEC.gov and searching for “calculating mutual fund fees and expenses.”

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