The Arithmetic of Investment Expenses

March/April 2013
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Financial Analysts Journal
March/April 2013 | Vol. 69 | No. 2 | 8 pages
Source: CFA Institute
William F. Sharpe

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Recent regulatory changes have brought a renewed focus on the impact of investment expenses on investors’ financial well-being. The author offers methods for calculating relative terminal wealth levels for those investing in funds with different expense ratios. Under plausible conditions, a person saving for retirement who chooses low-cost investments could have a standard of living throughout retirement more than 20% higher than that of a comparable investor in high-cost investments.


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