Sarah Neudorf February 23, 2020 Mutual Fund
If you are unwilling to take much of a risk, you are likely to stick with investing in fixed funds which will not leave you in a position where you are likely to lose everything, but they are also unlikely to put you in a position where your savings will multiply low risk often equals low growth . Over Confidence - more than one employee told me that they are investing their money in only one or two funds. Consider Lifestyle Funds - lifestyle funds are an excellent option for investors who feel that they do not know enough to invest for themselves or that do not want to deal with the hassle.
READ CLOSELY: How do all these fund costs affect you? Well, with the expense ratio which averages 1.6% per year, sales charges 0.5%, turnover generated portfolio transactions costs 0.7%, and opportunity costs - when funds hold cash rather than remain fully invested in stocks - 0.3%. The average mutual fund investor loses 3.1% of their investment returns to these costs each and every year. While this might not seem like much on the surface, costs would consume 31% of a 10% market return. Add in the 1.5% capital gains tax bill that the average fund investor pays each year, and that figure shoots up to 46%, nearly half of a potential 10% return. Do you feel like you are taking one or two steps back while trying to go forward yet?
SEC Chairman Arthur levitt, Jr. warned of growing unfairness in the relationship between individual investors and mutual funds in January 2001. Mr. Levitt made the following comment: "THERE ARE A NUMBER OF INSTANCES THAT, QUITE FRANKLY, DO NOT HONOR AN INVESTOR`S RIGHTS. INSTANCES WHERE...HIDDEN COSTS HURT AN INVESTORS BOTTOM LINE, WHERE SPIN AND HYPE MAKSE THE TRUE PERFORMANCE OF A MUTUAL FUND, AND WHRE ACCOUNTING TRICKS AND SLEIGHT OF HAND DRESS UP A FUND`S FINANCIAL RESULTS"
Investing in mutual funds online are always subject fees and this can be a tricky subject. Brokers charge fees and these can widely differ depending on the broker you choose to go with. Always read the fine print with anything dealing with money exchanging hands. There could be hidden fees or fees for changing funds that are within the same fund family. Some brokers do not charge any fees and these may be the ones you should look into.
However, having real property as an investment does not mean you do not manage it. What do I mean? You have to be responsible and manage your equity that your home accrues and if you have investment properties, you have to manage those properties like an investment portfolio with precision planning so that it does not create a negative cash flow because cash is king. In the business world, businesses that fail to manage their cash flow properly often fail to survive. Similarly, where individuals or families fail to manage their cash flows properly they end up in the same place, bankruptcy court.
Along with the increased buying and selling activities of an active manager comes a higher expense charge for those trading and management costs. Most actively managed funds have a 50 to 100% higher operating expense ratio than the average index fund. If you are not getting better returns, this can cost plenty over time. Also if your quality manager leaves the fund, you may need to find a better alternative.