Calculating Fund Costs

As noted, mutual funds have various costs that add up, directly taking away from net shareholder performance.

Andrew Tobias, a well-known financial writer, noted, "Imagine a race where your horse has a 20-pound jockey and the others have 100-pound and sometimes even 200-pound jockeys. Guess which horse wins. This is how it works with mutual funds. Some have 20-pound jockeys. Most have 100- and 200- pound jockeys ”hefty fees and taxes that weigh down performance. Over the long run, this makes a huge difference." ^[9]

^[9] See Andrew Tobias, "Heavy Load," Worth , October 1999, p. 83.

One interesting Web site that allows you to do some calculations of fund costs can be found at www.personalfund.com. It contains a mutual fund cost calculator that can show you the costs of your own fund or one you are interested in versus some lower costs alternatives such as an index fund.

At www.Kiplinger.com, select Funds, then look under Tools, and select Impact of Fees. You can fill in information about your fund and your tax situation that will help you analyze the impact of taxes on your mutual fund returns.