Resolutions to Ensure a Smart Year of Investment

Resolutions to Ensure a Smart Year of Investment
As investors, we cannot generally control the prices of the assets we invest in. We can control only two things our risk exposure and the costs we incur. All
else being equal, minimizing these ensures better returns. With this in mind, below is a list, New Year's resolutions as it were, of things we can all do to
limit our costs and our risks.
The list is compiled from my own mistakes and those I've observed others making. I've mentioned some of these before in previous posts. They may seem
obvious, but time and again we see smart people make silly mistakes.
Costs
Are you overpaying for a service If you can do the same thing at an equally reputable broker for less than at your current broker, why wouldn't you Limit the commissions you pay as a percentage of your investment to as little as possible. If you pay $10 in commissions to buy $250 worth of stock, for
example, your stock has to go up 8% for you to break even. In other words, you pay $10 to buy and $10 to sell. Your position has to appreciate $20 in value
for you not to lose any money when you sell. Are you paying an account maintenance fee Why There are plenty of equivalent institutions that don't charge fees. If your IRA has a fee, switch to one that
doesn't. If your bank account charges you fees, get a new bank account that offers the same features and is free. If you invest in an index mutual fund or ETF, is there another index fund that is basically the same but charges less fees In most cases there is. Most
Vanguard products, for instance, charge less fees than competitors. So if you're using a competitor's products, you might be overpaying. For example, why pay
0.2% in fees with the iShares Total Market ETF (IYY) when you can pay 0.07% for a similar fund with Vanguard (VTI) Granted that in real terms the difference
is negligible and for small amounts probably unnoticeable, but the iShares ETF is almost three times as expensive for pretty much the same thing. With other
funds, such as bond funds, where yields are important, the fund fee can take a big chunk out of your returns. For mutual funds, avoid funds that charge you
fees for buying and selling. There are plenty of mutual funds out there with similar strategies that don't charge any transaction fees. For example, why go
with a growth stock mutual fund that charges a 3.5% load when you buy when you can get a growth stock mutual fund that doesn't charge you anything to buy it
With that second mutual fund you are 3.5% ahead of the first one right away. Do you subscribe to publications that you can read for free on the internet, or that you may already be paying for Is the cost of the physical product worth
it