​​Why expenses matter

Keep more of what you earn!

Offering members access to low-cost investment options has always been a key part of the Scarborough philosophy. Different than other products where the more you spend, the better quality you may get, a mutual fund’s costs do not necessarily purchase superior returns. In fact, Morningstar, an independent mutual fund rating agency, did a study on how expenses predict success. In every asset class over every time period tested, low cost funds beat high cost funds.

The following examples show the dramatic impact that investment expenses can have over time. The math is based on a simple principle: Lower expenses mean that you keep more of the money your investments earn. 

In the example below, three investors each start with a $500,000 deposit and need to withdraw $2,100 per month. One selects a hypothetical investment with 1% investment expenses, another chooses a product with 2% expenses, and one chooses an investment with 3% expenses.

This chart assumes that all three investors receive the same 6% return before investment expenses are deducted. The only difference is the amount of fees charged. You can see the dramatic difference expenses make over time.