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Costs

In: Investment Beliefs

Author

Listed:
  • Kees Koedijk

    (Tilburg University)

  • Alfred Slager

    (Tilburg University
    Stork Pension Fund)

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.

Suggested Citation

  • Kees Koedijk & Alfred Slager, 2011. "Costs," Palgrave Macmillan Books, in: Investment Beliefs, chapter 12, pages 115-120, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-30757-5_12
    DOI: 10.1057/9780230307575_12
    as

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