In the world of investing, there is a common saying that goes, "It's not about how much you make, but how much you keep." This statement holds true when it comes to the often overlooked aspect of investment fees. While many investors focus on maximizing their returns, they may not realize that high fees can significantly eat into their profits over time.
One of the key wealth wisdom strategies that savvy investors use to smartly reduce their investment fees is by emphasizing value. By understanding the value that different investment options offer and being willing to pay a reasonable fee for that value, investors can ensure that they are getting the most bang for their buck.
So, how can you apply this wealth wisdom to your own investment strategy? Here are a few tips to help you reduce your investment fees while still maximizing your returns:
1. Understand what you are paying for: Before investing in any fund or investment product, make sure you understand what fees you will be charged and what services you will receive in return. Some fees, such as management fees and expense ratios, are necessary and reasonable, while others may be excessive and unnecessary.
2. Compare fees across different investment options: When considering different investment options, be sure to compare the fees associated with each option. Look for funds or products that offer competitive fees while still providing the value and performance you are looking for.
3. Consider low cost index funds or ETFs: Index funds and exchange traded funds (ETFs) are known for their low fees and can be a cost effective way to diversify your portfolio. By investing in these types of funds, you can reduce your investment fees while still gaining exposure to a broad range of assets.
4. Avoid unnecessary trading and turnover: One of the biggest sources of fees for investors is excessive trading and turnover. By adopting a long term investment strategy and avoiding unnecessary buying and selling, you can reduce the fees associated with trading and increase your overall returns.
5. Work with a fee only financial advisor: If you work with a financial advisor, make sure they are fee only and have a fiduciary duty to act in your best interests. Fee only advisors are typically more transparent about their fees and can help you minimize unnecessary costs while still providing valuable advice and guidance.
By emphasizing value and being smart about reducing your investment fees, you can ensure that you are keeping more of your hard earned money in your pocket. Remember, it's not just about how much you make, but how much you keep.