Fees? What Fees?!

It’s incred­i­ble how unin­formed peo­ple are about their own finances.

This arti­cle on the cost of British mutu­al funds is a lit­tle scary:

The under­ly­ing prob­lem, at least when it comes to retail clients, is that fund man­agers do not com­pete on price at all. Part of this is due to many investors’ igno­rance. Remarkably, more than half of retail investors sur­veyed by the FCA did not know that they paid charges on invest­ment prod­ucts. Surveys show that many peo­ple are hazy about per­cent­ages or basic con­cepts such as com­pound inter­est.

In case you’re one of those hazy peo­ple… you pay these funds every sin­gle year. Year. After. Year.

What I find even more odd:

Instead, fund man­agers seem to com­pete on the basis of past per­for­mance, with some 44% of retail investors say­ing this was an influ­en­tial fac­tor in pick­ing a fund. Advertisements for funds often high­light the stel­lar returns pre­vi­ous­ly achieved.

It’s odd because what’s they first thing they dis­claim?

“Past per­for­mance isn’t an indi­ca­tor of future results.”