The sixth part of our Investor's Alpha series focuses on the importance of reducing or eliminating common fees investor incur in the management of their portfolio. A majority of these fees can be avoided almost entirely or lowered through investor action.
- Account Service Fees
- Brokerage Commissions
- Expense Ratios
- Advisor Fees
Reducing investment management expenses is a simple, easy method to improve portfolio performance. In investment management, the less you pay, the more you keep. Reducing investment expenses by $1,000 annually combined with a 3% rate of return is ~$49,000 after thirty years.
Investors through their own actions have the ability to control the outcome of their portfolios compensating for the inability to control the markets. Managing the cost of investing is one of the investor controlled inputs that drives the wealth equation:
Wealth = Factors You Control + Investment Return