Lofty investment expenses will drag down investment returns. Here are some tips for keeping your investment expenses in check:
- If you make your own investment decisions. First, avoid trading too frequently, which will drive up your expenses. Keep in mind that many mutual funds assess a fee if you sell the fund shortly after you buy it. Also, use discount brokers and no-load mutual funds, perhaps including some ETFs and index funds to cut fees to the bone. These are discussed in the next section.
- If you use an investment advisor. Be sure you understand how your investment advisor is compensated and don't be reticent to ask for a discount on commissions if you have quite a bit of money with a brokerage firm. Also, if you buy mutual funds through a broker, make sure the fund's share class – A class, C class, etc. – is consistent with your investment goals, and that the class is most profitable for you, not the broker.
- If you have a 401(k) or 403(b) plan. While most plans, particularly those offered by larger companies, assess very reasonable fees, some are intemperately high. While many plans are quite adept at hiding their fees, it's your right to know. If the fees are indeed gluttonous, which may also signal lousy fund performance, you and your coworkers might gently convey your displeasure to management.