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Chapter 12. At the Scene of the Crime: F... > Red Flag 11: High Fees That Suck Up ...

Red Flag 11: High Fees That Suck Up Returns, Especially in a Bear Market

Losing two to three percentage points in fees to mutual funds may not have hurt much in the heady days of the bull market when some technology funds were more than doubling in value. But, try taking that off if, as some investors fear, returns settle down to a 5–7 percent average annual level for a prolonged period. Add in transaction costs for funds that have rapid turnover and taxes on distributions, and you would almost be better sticking the money under your mattress. (At the time of writing, bank deposit rates are extraordinarily low.)


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