In the world of investing, there are countless strategies and approaches that individuals can take to build wealth. From day trading to long term buy and hold strategies, the options can be overwhelming. However, for the investment purist, one key principle reigns supreme: reducing fees.
Reducing fees may not sound like the most exciting or glamorous strategy for building wealth, but it is one of the most effective. Fees can eat away at your returns over time, significantly impacting the growth of your portfolio. By simplifying your investment strategy and focusing on minimizing fees, you can build lasting wealth with less effort and stress.
So, how can you reduce fees and simplify your investment strategy? Here are a few tips for the investment purist:
1. Choose low cost index funds: Instead of trying to beat the market with high fee actively managed funds, opt for low cost index funds that track the performance of a specific market index. Index funds typically have lower fees and can provide solid returns over the long term.
2. Avoid unnecessary trading: Frequent trading can lead to higher fees and taxes, eating away at your returns. Instead of constantly buying and selling stocks, focus on a long term buy and hold strategy to minimize fees and maximize growth.
3. Consider a robo advisor: Robo advisors are automated investment platforms that can help you build a diversified portfolio with minimal fees. These platforms use algorithms to manage your investments, reducing the need for human intervention and lowering costs.
4. Keep an eye on expense ratios: When choosing mutual funds or exchange traded funds (ETFs), pay attention to their expense ratios. These fees are deducted from your returns and can add up over time. Opt for funds with low expense ratios to reduce costs.
By simplifying your investment strategy and focusing on reducing fees, you can build lasting wealth without the stress and complexity of more aggressive approaches. The investment purist understands that small fees can have a big impact on long term returns, and prioritizes minimizing costs to maximize growth. So, next time you're considering your investment strategy, remember the power of simplicity and the importance of keeping fees low. Your future self will thank you for it.