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.”