In today's fast paced world of investing, it can be easy to get caught up in the excitement of chasing high returns and flashy investments. However, one of the key principles of building long term wealth is through the practice of prudence and diligence in managing investment expenses.
Lowering investment expenses may not sound as exciting as picking the next hot stock or fund, but it is a crucial factor in determining your overall investment returns. The less you pay in fees and expenses, the more money you get to keep in your pocket. And over time, those savings can add up to significant sums that can greatly impact your wealth accumulation.
So, how can you go about lowering your investment expenses? The first step is to carefully review and understand the fees associated with your investments. This includes not only the management fees charged by mutual funds or ETFs, but also any transaction costs, account maintenance fees, and advisory fees if you work with a financial advisor.
Once you have a clear understanding of the fees you are currently paying, you can start to look for ways to lower them. One strategy is to switch to low cost index funds or ETFs, which typically have much lower fees than actively managed funds. Another option is to consolidate your investments with a single provider to take advantage of lower overall costs.
Additionally, consider working with a fee only financial advisor who is transparent about their fees and puts your best interests first. By paying a flat fee for financial advice rather than a percentage of your assets under management, you can potentially save a significant amount in fees over time.
Finally, remember that every dollar you save in investment expenses is a dollar that can be reinvested and put to work for you. By practicing prudence and diligence in managing your investment expenses, you can set yourself up for long term prosperity and financial success.