Monday, August 27, 2012

Investment Strategies must take Risks and Fees into Account

Fees pay for the care of your investment strategy
If you have money set aside and are ready for an investment strategy, you should be aware that in addition to the inherent risk of loss when investing money, there are costs that should be considered to make sure your money gets invested to the right place at the right time. These fees need to be accounted for when you are planning on saving for anything from retirement to a new Chicago home. The Equifax Finance Blog has an article explaining many of these fees and charges called "Breaking Down Investment Fees and Commissions."

Putting together a fund, like a mutual fund or IRA, takes money and the expertise of a financial professional, or if you are working with a large brokerage, it may require many professionals to make sure
everything goes smoothly when it is supposed to.  There is a general fee for this, called a "management fee," which is often expressed as a percentage. This percentage will charge on the amount invested, and is usually taken from the investment return. Generally, you want to look for the lower expense ratio, but some brokerages may charge higher for additional services so make sure you measure these costs and pick the financial group that is right for you.