Here's part 8 of a Money magazine series on 10 rules for building wealth that I'll be covering over the next few days. Today their suggestion is to hold down fees. The details:
Be wary of any mutual fund charging a management fee higher than 1 percent (a few stellar managers may be worth it; most are not). A manager with a high buying and selling rate (called "turnover") should also set off warning bells. If you aren't interested in watching your fund manager like a hawk, stick with an index fund, like one from Vanguard, where expenses are typically around 0.2 percent. And if you're trading stocks, don't be fooled by low commissions: They add up.
Good, solid advice. I've talked about both of the major issues they point out here: 1) costs matter BIG TIME if you want to maximize investment returns and 2) index funds are great investments because they provide a good return by (in part) minimizing costs.
Comments