Every individual must pay fees to invest in securities. The inescapable fees are:
- Brokerage fees
- Taxes
Additional fees can erode investment returns. They are:
- Middle managers’ fees (e.g., fund managers, investment advisers)
- Subscriptions (e.g., journals, non-profit investment groups, tool kits, data bases)
Tips for minimizing costs:
- Discount brokerage firms charge lower trading fees than full service firms. The discount firm should provide tax information such as cost basis and annual tax reports.
- Reduce taxes by opening tax-deferred retirement savings accounts
- Passively managed funds typically charge lower fees than actively managed funds
- Avoid investment advisors by doing your own research. Start at the library and use search engines.
- Choose your subscriptions wisely. Use a free-trial first. Seek ratings and recommendations.
