As an investor, maximizing your returns is always top of mind. But did you know that one of the most effective ways to boost your bottom line is by cutting costs? The fee savvy investor knows that every dollar saved on fees is a dollar earned in returns.
Here are some techniques for cutting costs without cutting corners:
1. Use low cost index funds: Instead of paying high fees for actively managed mutual funds, consider investing in low cost index funds. These funds track a specific market index, such as the S&P 500, and typically have lower fees than actively managed funds.
2. Watch out for hidden fees: Be vigilant about checking for hidden fees in your investments, such as sales charges, management fees, and 12b 1 fees. These fees can eat into your returns over time, so it's important to be aware of them and look for ways to minimize them.
3. Consider commission free trading platforms: Many online brokerages now offer commission free trading on stocks, ETFs, and options. By using a commission free platform, you can save money on trading fees and keep more of your returns.
4. Rebalance your portfolio strategically: Rebalancing your portfolio can help you maintain the desired asset allocation and reduce risk. Instead of making frequent trades that incur fees, consider rebalancing on a quarterly or annual basis to minimize costs.
5. Negotiate with your financial advisor: If you work with a financial advisor, don't be afraid to negotiate their fees. Many advisors are willing to lower their fees for clients who ask, especially if you have a substantial amount of assets under management.
By implementing these techniques, the fee savvy investor can maximize their impact and keep more of their hard earned money. Remember, cutting costs doesn't mean cutting corners – it means being smart about where you allocate your resources to achieve the best possible returns.