You are able to pay a penny on the dollar for good investment management or pay much more for asset management like some rich folks do. Does the latter guarantee good investment returns? No way. If they call themselves investment management companies or asset management firms, you lay your hard earned money down and you take your chances. Why pay more?
Investment management or asset management takes various forms for the in-patient investor. Hedge funds might charge 2% yearly plus 20% of profits, and aimc are out of bounds for the common investor. You can’t legally invest there until you are rich by normal standards. That’s fine with me because I’m not enthusiastic about paying big bucks for investment management that offers no guarantees. The good thing is that there are some very good investment companies available that work cheap in my opinion. If you are similar to people and lack the experience and skills necessary to control an investment portfolio, listen up.
Good investment skills take years to produce and few people ever develop them without losing considerable money during the training process. Miss out the aggravation and put the professionals to meet your needs on a budget. Mutual funds are the investment management alternative of preference for 10s of countless Americans. Why? That’s what they are designed to do… manage money for individual investors who are certainly not rich or financially sophisticated. Now, let’s talk about good investment management for pennies on the dollar.
Not absolutely all mutual funds, especially stock funds, are produced equal when it comes down to the price of investing. A $10,000 investment in the incorrect fund could set you back $500 off the utmost effective in sales charges plus yearly expenses of $200 a year, increasing with the worthiness of one’s investment. On the other hand, an identical fund with an even more favorable cost structure is probable available without sales charges and yearly expenses of less than ½%, total cost of investing. The sole predictable investment performance difference between the 2 is the price of investing. Every penny you spend in sales charges and fund expenses comes right from the pocket, and acts to cut back your net profit or investment return.
The very cheapest of investing are available in NO-LOAD INDEX FUNDS. You can find no loads (sales charges) here and low yearly expenses, as the investment management team simply invests in the basket of securities which can be contained in an index. For example, if you wish to own a small part of a big portfolio of major stocks, an S&P 500 INDEX fund can have you dedicated to the 500 most valuable U.S. stocks for under a penny on the dollar, less than ¼% a year if you pick the best one. Both largest fund companies in the country, Vanguard and Fidelity, offer no-load funds. One of them offers a nice variety of index funds at suprisingly low cost to investors.
I’ve followed mutual fund companies since the early 1970s; and watched as the really good investment management companies among them grew to be some of the extremely largest. In my opinion they reached the utmost effective by offering good performance, good service, and a low cost of investing.
A retired financial planner, James Leitz comes with an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.