As an investor, it's important to stick to your core principles and beliefs when it comes to managing your portfolio. For the investment purist, this means keeping things simple and focusing on long term growth rather than short term gains. One of the key ways to stay true to your purist ideals is by reducing fees and expenses associated with your investments.
One of the biggest drags on investment returns is fees. Whether it's management fees, trading fees, or administrative fees, these costs can eat away at your profits over time. That's why it's crucial for the investment purist to actively engage with their investment strategy and look for ways to minimize fees.
One way to do this is by opting for low cost index funds or ETFs rather than actively managed funds. Index funds seek to replicate the performance of a specific market index, such as the S&P 500, and typically have lower fees than actively managed funds. By investing in index funds, you can reduce your overall investment costs and potentially increase your long term returns.
Another way to reduce fees is by avoiding unnecessary trading. Frequent buying and selling of investments can lead to higher transaction costs and taxes, which can eat into your returns. Instead, focus on a buy and hold strategy and resist the temptation to constantly tinker with your portfolio.
Finally, consider working with a fee only financial advisor who charges a flat fee for their services rather than earning commissions on the products they recommend. By choosing a fee only advisor, you can ensure that their recommendations are in your best interest rather than driven by potential financial incentives.
In conclusion, as an investment purist, it's important to simplify your strategy by reducing fees and expenses. By actively engaging with your investments and seeking out low cost options, you can stay true to your core principles and potentially improve your long term returns. Remember, every dollar saved on fees is a dollar that can be put to work for you in the market.