Foregone Earnings

Investors...like most of us...are in the game of making money. While mutual funds and exchange-traded funds are great options for their diversity (since they’re “baskets” of stocks), there is a downside to them: fees.

Foregone earnings is often used in reference to management fees that come with mutual funds and ETFs. The implication is that if you invest in a fund with high management fees, that’s lost money you could have invested elsewhere...and reaped more interest as a result. Finding low-fee funds is key to minimizing your foregone earnings.

Foregone earnings is also used sometimes in a more general sense, like in situations where money could have been invested earlier (earning interest) than it was. Foregone earnings is the lost money from choosing the non-optimal path...an opportunity cost, you could say. Don’t worry...heels are all wounded over time. Er...time heals all wounds.