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$20,389 to taxes, while the Morningstar Large Blend category lost $50,606. Looking at another index at the bottom of the chart, the DFA Total International Index Fund lost $31,738 to taxes, while the Morningstar Foreign Large Blend category lost $42,525. It is important to note that the annualized returns for the Morningstar categories are upwardly biased due to the impact of survivorship bias. Such contrasts in taxes reveal why index funds investing makes for one very sad Uncle Sam, as seen in the painting.

turnover Is costly In tAxAble Accounts

The average active mutual fund has higher turnover rates than index funds, creating tax liabilities that erode returns. Figure 7-4 shows six Morningstar categories, which are Figure 7-4

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...

Index Funds: The 12-Step Recovery Program for Active Investors  

This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...