Check the Fees Before You Check the Returns

A fund that returns eight percent but charges two percent in fees is not an eight percent fund — it is a six percent fund. Over decades, that difference is enormous. High fees are the most reliable predictor of lower net returns, because fees are guaranteed costs while returns are not. A one percent difference in annual fees can cost you a third of your final portfolio over a thirty-year period.

Before investing in any fund or financial product, find the total expense ratio and compare it to low-cost alternatives. Index funds often charge a fraction of what actively managed funds do, and the data consistently shows that most active managers fail to outperform the index after fees. The best returns are often the ones you keep by not paying unnecessary costs.