Costs

Kees Koedijk and Alfred Slager
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Kees Koedijk: Tilburg University
Alfred Slager: Tilburg University

Chapter 12 in Investment Beliefs, 2011, pp 115-120 from Palgrave Macmillan

Abstract: “To pay no attention to costs is probably the biggest dumb mistake investors can make.”1 The words strike home from the mouth of John (“Jack”) Bogle, a veteran in the investment industry, widely known as the founder of one trillion dollar asset management firm Vanguard Group. He estimates that total costs in 2007 amounted to $528 billion in the US alone (Bogle 2008). Bogle knows better than anyone else the long-term impact of fees, commissions, taxes and other kind of costs on the net return of investments, advertising this as “the Magic of Compounding vs. the Tyranny of Compounding Costs”:2 the “magical” impact of combining a reasonable rate of return with the concept of time alone, versus the adverse effect that costs have on this process.

Keywords: Mutual Fund; Pension Fund; Hedge Fund; Market Return; Private Equity (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30757-5_12

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DOI: 10.1057/9780230307575_12

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