October 19, 2013
There are two primary costs the investor should worry about, loads and fees. How do you eliminate and reduce them?
There are two primary costs the investor should worry about, loads and fees. How do you eliminate and reduce them?
NEVER pay a commission (load); stick with no-load index mutual funds. All fees (expense ratio) should be under .3%. You can find no-load index mutual funds and fees that meet the previous criteria at Vanguard.
Right again, Katherine. Let’s recap.
A load (commission) is paid to a financial advisor, broker, life insurance agent when you use them to buy your investments. This is a mistake and it should not be done. By going around these “helpers” you will avoid paying commissions. Follow Katherine’s advice: NEVER pay a commission.
Fees are how large investment financial companies make a living so to speak. An easy approach is to identify the cheapest funds (no-load index funds) and steer clear of the more expensive ones (everything else). Just as Katherine stated, Vanguard.com does this better than anyone I know of. Keep those yearly costs (expense ratio) below .3% (30 basis points) and I would encourage you to work at getting them down to .1% (10 basis points) or less. Your future returns will thank you!