When it comes to building a strong financial foundation, one of the key factors to consider is the impact of investment fees on your long term success. While it may seem like a small detail, the fees you pay on your investments can have a significant impact on your overall returns over time.
One smart financial move you can make to ensure long term success is to focus on cutting investment fees. Here's why this strategy is so important and how you can go about reducing the fees you pay on your investments.
The Impact of Investment Fees
Investment fees may seem like a minor detail, but they can add up quickly over time. Even seemingly small fees can have a big impact on your overall returns, especially when compounded over many years. For example, if you pay just 1% in fees on a $100,000 investment, you would end up paying $10,000 in fees over a 10 year period.
Reducing Investment Fees
There are several strategies you can use to reduce the fees you pay on your investments. One option is to consider investing in low cost index funds or exchange traded funds (ETFs) instead of actively managed mutual funds. These types of investments typically have lower fees because they are passively managed and track a specific index or market.
Another option is to shop around for a brokerage or investment platform that offers lower fees. Many online brokers now offer commission free trading on certain investments, which can help lower your overall costs.
Finally, consider working with a financial advisor who is fee only or fee based rather than commission based. This can help ensure that your advisor is working in your best interest and not just trying to sell you high fee investments.
By taking the time to evaluate and reduce the fees you pay on your investments, you can set yourself up for long term financial success. Cutting investment fees may seem like a small detail, but it can have a big impact on your overall returns over time. By making smart financial moves like this, you can build a stronger financial foundation and achieve your long term financial goals.