Index funds vs active funds: the real maths
Chapter 1 of 5
The idea
A 1% fee sounds tiny. Over 30 years it can eat about a quarter of your pot.
Two ways to invest
An index fund buys every company in a market and holds them, so costs are tiny (often 0.1–0.25% a year). An active fund pays managers to pick winners, usually for 0.75–1.5% a year. Across long periods, independent studies (like S&P's SPIVA reports) find most active funds trail their index after fees.
Predict first
$200 a month for 30 years at 7% growth. Roughly how much more does a 0.2% fee leave you than a 1.2% fee?
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