You can pay a cent on the dollar once and for all investment management or pay substantially 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 cash down and you take your chances. Why pay more?
Investment management or asset management takes various forms for the patient investor. Hedge funds might charge 2% yearly plus 20% of profits, and aimc are out of bounds for the average investor. You can’t legally invest there if you are rich by normal standards. That’s fine with me because I’m not thinking about paying big bucks for investment management that provides no guarantees. The good news is that there are some very good investment companies available that work cheap in my own opinion. If you’re 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 educational process. Miss the aggravation and put the professionals to meet your needs on a budget. Mutual funds would be the investment management alternative of preference for 10s of an incredible number of Americans. Why? That’s what they are designed to do… manage money for individual investors that are certainly not rich or financially sophisticated. Now, let’s discuss good investment management for pennies on the dollar.
Not all mutual funds, especially stock funds, are produced equal as it pertains right down to the price of investing. A $10,000 investment in the incorrect fund could run you $500 off the most effective in sales charges plus yearly expenses of $200 annually, increasing with the worthiness of your investment. On one other hand, the same fund with a more favorable cost structure is likely available with no sales charges and yearly expenses of less than ½%, total cost of investing. The only predictable investment performance difference between the two is the price of investing. Every penny you spend in sales charges and fund expenses comes right out of your pocket, and acts to lessen your net profit or investment return.
The very cheapest of investing can be found 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 included in an index. For instance, if you intend to own a small part of a big portfolio of major stocks, an S&P 500 INDEX fund can have you committed to the 500 most valuable U.S. stocks at under a cent on the dollar, less than ¼% annually if you select the proper one. The two largest fund companies in the country, Vanguard and Fidelity, offer no-load funds. One of them provides a nice variety of index funds at very low cost to investors.
I’ve followed mutual fund companies since early 1970s; and watched as the truly good investment management companies one of them grew to be some of the very most largest. In my opinion they reached the most effective by offering good performance, good service, and a low cost of investing.
A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to attain their financial goals.