If the funds perform extremely well, you might not mind those costs, but in the long run, actively managed funds are likely to yield you less profit than the overall stock market.įor one, speculating on stock prices is simply not a sustainable strategy. All those fees add up to a hefty chunk of your expected profits. As an investor, you’d pay the brokerage commissions, the fund manager’s fees and so forth. Unfortunately, that kind of investment is risky.īecause the costs of investing in such a fund are very high. Here money is pooled from several investors and then invested into stocks by a specialized fund manager, who regularly evaluates and revises the stock portfolio according to the current situation. That’s why many investors choose not to invest directly into stocks, but instead put their money in an actively managed fund. Have you ever invested in the stock market? If so, you might have realized that evaluating the attractiveness of a stock is tricky business. why you should always choose the fund with the lowest fees and.the difference between a passive fund and an actively managed fund.In this summary of The Little Book of Common Sense Investing by John C. This book summary explain why all mutual funds are not created equal, and why index funds are the only way to not get robbed by fees and expenses.

This pack will hedge the odds in your favor, laying out a straightforward case for one kind of mutual fund: The index fund.

The options can get confusing and the last thing you want is to make poor decisions with your hard-earned money! Or you could include high-risk and high-reward funds, or funds that play in particular statistics. Pool your investment along with other people’s in a low-risk fund that’s highly diversified and avoids turbulent markets. How are you supposed to decide where to invest? Mutual funds are like chocolate bars: there are so many different kinds, and new versions are always popping up.

Little book of common sense