Unnecessary fees reduce your total return. It’s that simple. That is why, when it makes sense for your portfolio, we use low expense and no-commission fee investments. This can make a significant difference in your long term returns.
Mutual fund companies can have many classes of shares. These different share classes charge different rates for the exact same underlying holdings in the fund. One of the largest mutual funds in America charges 5.75% for its’ Class A shares. Their R Class shares charge as little as 0.36%. On a hypothetical $10,000 investment over 20 years, the difference in end balances is almost $4,000 between the two funds. So why would we use the the costlier class of shares? We wouldn’t.