Costs

“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.