When it comes to investing, one of the most common pieces of advice is to "buy low, sell high." While this is certainly a sound strategy, there are many other time tested principles that can help you outsmart the market and improve your investment returns. One key aspect of successful investing is minimizing fees and expenses, as these can eat into your overall returns over time.
One way to lower your fees is to invest in low cost index funds or exchange traded funds (ETFs) instead of actively managed mutual funds. Index funds and ETFs typically have lower expense ratios than actively managed funds, which means you'll keep more of your returns. Additionally, actively managed funds often have higher trading costs, which can further erode your returns.
Another strategy to lower your fees is to avoid frequent trading. Each time you buy or sell a security, you incur transaction costs, which can add up over time. Instead, consider a buy and hold strategy, where you invest in a diversified portfolio of assets and hold onto them for the long term. This can help reduce your trading costs and increase your overall returns.
Diversification is another key principle of successful investing. By spreading your investments across different asset classes, industries, and geographies, you can reduce your risk of loss and improve your chances of long term success. Diversification can also help lower your fees, as you won't be overly reliant on any single investment or sector.
Lastly, consider working with a fee only financial advisor who acts as a fiduciary, meaning they are legally obligated to act in your best interests. Fee only advisors typically charge a flat fee or a percentage of assets under management, rather than earning commissions on the products they recommend. This can help ensure that your advisor is focused on helping you reach your financial goals, rather than maximizing their own profits.
By following these time tested strategies to lower your fees and outsmart the market, you can improve your investment returns and build a more secure financial future. Remember, investing is a long term endeavor, so stay patient and disciplined, and you'll be on your way to financial success.