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In this episode of the Investor’s Row podcast, Kasia Baldus and Dennis Blitz, founder of IRA Club, unpack one of the most common—but least understood—investment vehicles: mutual funds. Dennis breaks down how mutual funds began nearly a century ago, why they exploded in popularity in the 1960s, and how hidden fee structures quietly chip away at investor returns.
Dennis reveals how mutual funds generate profit—not for investors, but for the mutual fund companies themselves. He contrasts this with the transparent fee model of self-directed IRAs and explores why mutual funds have historically underperformed the S&P 500.
Three Major Takeaways
1. Mutual funds contain layers of hidden fees—management costs, bookkeepers, transaction fees, attorney fees, advertising fees, and commissions—that are deducted daily inside the NAV, not invoiced to investors.
2. Historical underperformance is built into the model. Due to fee structures and profit markups, mutual funds have underperformed the S&P 500 in 39 of the last 40 years.
3. Self-directed IRAs offer dramatically lower and more transparent costs, giving investors more control and potentially stronger long-term returns compared to traditional mutual funds.
Disclaimer: IRA Club does not provide investment, tax, financial, or legal advice, nor do we endorse any products, investments, or companies that provide such advice and investments. All parties are strongly encouraged to perform due diligence and consult with the appropriate professional(s) licensed in that area before entering any investment.