Invest in Low Cost Funds

I advocate investing in low cost funds, with an expense ratio of less than 0.7% for an equity fund.

The expense ratio of most funds in the market, including the financial adviser's fee to select and monitor the funds, is between 1.5% to 3%.

Here is the difference based on a net return (after deducting fee) of 5.5% for a low cost fund and 4.5% for a high cost fund.

                   4.5%       5.5%    Diff
$5,000 a year       
over 20 years     $157,000  $174,000   11%
$5,000 a year
over 30 years     $305,000  $362,000   19%
$50,000 single
over 10 years     $77,600    $85,400   10%
$50,000 single
over 20 years    $121,000   $146,000   21%

Conclusion: The lower charge in a low cost fund can give a return of 10% to 21% higher on your investments.