The other day I was talking to a good friend about retirement investing. He mentioned Dave Ramsey, who has a show about helping people do the right thing financially. I’m sure Dave Ramsey has a lot to offer when it comes to getting out of debt and budgeting, but when it comes to investing, I’m not so sure. Remember, even smart people can be duped by the financial industry.
Following Ramsey’s advice, my friend got into five different low fee mutual funds. Because of the lower than average fees, he is doing better than the average mutual fund investor. Here are the funds and their results along with the S & P results.
Average returns: 2015 5 year 10 year
Euro Pacific Growth Fund ® (AEPGX) -13.84% 1.22% 2.98%
Victory Sycamore Small Company Opportunity Fund (GOGFX) -1.24% 8.35% 7.12%
MM S&P Mid Cap (MDKAX) -9.80% NA NA
Ridgeworth Large Cap Value (SVIIX) -8.07% 7.68% 5.83%
Alger Capital Appreciation (ALARX) -2.10% 11.41% 9.76%
S & P (Benchmark) 1.35% 11.58% 7.01%
Investing $10,000 equally into each fund over the last five years under performed the S & P. Investing in just the S & P would have significantly saved on fees which plays a major factor in the results. Bellow are the comparisons. I used five years of return numbers and cut out the MM S&P Mid Cap Fund (MDKAX) because the fund doesn’t have a five year track record.
Euro Pacific Growth Fund ® (AEPGX) $10,000 at 1.22% for 5 years = $10,628
Victory Sycamore Small Company Opp (GOGFX) $10,000 at 8.35% for 5 years = $15,159
Ridgeworth Large Cap Value (SVIIX) $10,000 at 7.68% for 5 years = $14,663
Alger Capital Appreciation (ALARX) $10,000 at 11.41% for 5 years = $17,643
TOTAL = $58,093
S & P (Benchmark) $40,000 at 11.58% for 5 years TOTAL = $71,172
By investing $40,000 in low fee mutual funds for five years, the account is worth $58,093. By investing $40,000 in the S & P for five years, the account is worth $71,172.
