March 13, 2014
It is critical that you focus on your return on investment AFTER costs, rather than BEFORE. Why? Options?
It is critical that you focus on your return on investment AFTER costs, rather than BEFORE. Why? Options?
This involves simple math, if you are making lets say 5% on your investments over the year and the place is charging you 3% a year to hold on to YOUR money then you would only be making 2% a year, this is not even keeping up with inflation. It doesnt matter what you make before costs, it matters whats after. Why should the firm be getting more money from your money than you are, you are the one taking all the risk with it, you should use a place such as vanguard who charge on an average of .1% for their accounts, your costs could be lower depending on what you buy in to there.
That was a great answer, Garrett. Well done! Let’s review.
Before costs is pretty much what the financial industry wants you to look at, not after costs. Why? You will see just how much they are costing you! Do yourself a favor and get rid of all loads (commissions) and reduce your yearly fees to the lowest possible amount (index funds). Go to vanguard.com to identify the lowest cost index funds.
Go to the investing tab on this website and hear what Burton Malkiel, John Bogle, and Warren Buffett have to say on the matter. Educate and ACT!