Cost vs. Cost-Justification

Most of us want to save money wherever we can, but blindly pursuing low-cost investments, such as index mutual funds or exchange-traded funds, can be costly. As with many of life's matters, investments should be more about cost-justification than simply cost.

To be sure, most investors are better-off using index funds or "ETFs" instead of actively-managed funds, since most of the latter underperform their benchmarks over the long-haul, and the benchmarks can be "had" via an index fund or an ETF.

However, savvy investors, or investors aided by diligent financial advisors or brokers, can find the mutual funds that have consistently and significantly outperformed their benchmarks on a risk-adjusted and cost-justified basis.

In short, if you can find a fund that does 3% per year better than your index fund, only charges 1% more per year, and has about the same risk measurements, wouldn't you rather have that extra 2% per year of growth?