If you invest $100,000 for 20 years, the difference of 1% in annual fee can amount to $55,400. Here is how it works out.
Assume that the average yield on the fund is 7%.
If the net yield is 6% (ie deduct 1% fee), you will get $320,700.
If the net yield is 5% (ie deduct 2% fee), you will get $265,300.
The difference is $55,400.
Wow! That is a lot of money!
Is there a difference in the quality of fund managers?
If you invest in a large, well diversified and properly managed fund, the different funds should earn nearly the same yield over a long period. The higher fee goes to increase profits for shareholders.
So, take my advice. Choose a fund that charges an annual fee of 1% (instead of 2%).
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Here are the figures available from the website: www.askdrmoney.com
Best ILP (single premium)
Average Expense Ratio of equity fund
NTUC Income 1.0%
Company G 1.4 %
Company P 1.5 %
Company A 1.9 %
Other insurers 1.7%-2.2%
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