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Do Investment Fees Really Matter?

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For anyone who pays attention to investment funds or stocks, you’ll notice that all of them charge fees. With all the choices and associated numbers and ratings that go along with investments, it’s no wonder that fees can be confusing or misunderstood. In the whole scheme of things, do investment fees really even matter? What Fees Am I Paying? Depending on how you invest, fees can vary greatly. These are some of the more common fees investors can expect. Administration Fees– This is the fee that plans charge to pay for day to day operations like accounting, legal bills, customer service, and website support. You can expect administrative fees with most 401(k) type plans or with other industrial accounts. Since I fund my HSA through an administrator that invests in the stock market, I have a $50 administrative fee due every year. Investment Fees– These fees cover the cost of managing a fund and are taken as a percentage of the assets invested. Investment fees can vary greatly. Low cost index funds can be less than a tenth of a percent while some actively managed funds can be several percentage points. Individual Service Fees-These are fees that come from extra ...

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