How to outperform

An Internet search for “investing” will produce a vast number of hits. Most hedge funds will manage your money for a 2 and 20 fee. They charge 2% of the size of your portfolio plus 20% of any growth with no sharing in any declines.

Many will manage your money for what seems to be a modest 1% annual fee. However, let us look at it through a hypothetical 30-year investment timeframe during which the market returns an average of 7% annually.

$10,000 invested annually for 30 years at a return on investment of 7% produces $1,086,852.96.

Subtract from the seemingly modest 1% annual fee, and you get $895,451.69.

The $191,401.27 difference is not modest.