Why Does It Make Sense to Avoid Paying High Fees

question 270

Multiple Choice

Why does it make sense to avoid paying high fees when investing with mutual funds or stock brokers?

• A) The funds with high fees are too expensive.
• B) The funds with high fees likely hire managers who are not experts.
• C) The funds with high fees do not perform any better than other funds.
• D) It does make sense, since you should pay high fees to get access to experts.

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Definitions:

Basic Trust

A concept in psychology describing the fundamental sense of safety and reliability in the world, often developed in early childhood.

Conscious Memory

The ability to recall and recognize information and past experiences that one can consciously acknowledge and describe.

Schemas Associated

Mental structures that represent aspects of the world and influence understanding, recognition, and recall by organizing information.

Chinese Language

A group of languages used in China, of which Mandarin is the most widely spoken variety.