We have visited this subject many times, but make no apology for doing so again. If you currently have investments in Unit Trusts, Stocks & Shares ISAs or Pensions, or are planning to do so, then reading this article could save you a small fortune over, say, 10 - 20 years. Let's take a look at the typical costs you are faced with when you invest your money: Initial Costs This is the percentage of the investment that you pay up front and is taken from the product you are investing in. If you are using a Financial Adviser, we believe that the maximum percentage you should pay is 4% of the amount you are investing, with a sliding scale down to 1% for larger sums, regardless of which type of 'product' (pension, ISA, etc) you are investing in.
Ongoing Annual Costs These are not just the Annual Management Charge (AMC), typically 1.5%, but since there are also other administrative costs such as trustee fees, legal and auditors costs etc, the figure to illustrate these is known as a Total Expense Ratio (TER). This can be, say, another 0.2%, and so you would think that the overall annual cost is therefore 1.7%. However, there is a missing cost which can double or even treble (or more) this amount, and it is very unlikely you would ever know about it, as the information tends to be buried in the paperwork you receive. These are costs that the fund incurs for trading - buying and selling stocks - known as Portfolio Transaction Costs (PTC), OR Portfolio Turnover Rate (PTR) and they are not included in the TER. The more active a fund manager is buying and selling stocks, the higher will be the costs incurred. They include: 1. Cost of Commissions - Stockbroker's charges for executing and then clearing a trade 2. Spread Costs - The bid / offer spread is the difference between the prices at which shares can be sold and bought 3. Market Impact Costs - Costs which are incurred when the price changes as a result of the effort to buy or sell that stock 4. Cost of Tax - In the UK there is stamp duty to be paid with trading 5. Opportunity Costs - This is the cost of a delayed or missed trade One of the amazing things we find is that not only do investors not know about these extra costs that have an impact on the returns you will receive, but some financial advisers do not know about them either!
Another option is investing in dividend paying stocks. People on the verge of retirement opt to invest in them as they provide a steady source of income. The income is there, but only till the company is making money.
In order to select the right high yield investment program, following are the factors that can better help you in this regard. The first point in this regard is research. If you are looking for the online investment options, make extensive research about whether the company you want to deal with is a real company or scam.
Avoiding scam is necessary, as investing your money would only bring you loss of your principal investment. If you want to invest in some real sector, research about the credibility of the company that would be investing your money. Second important point is the past performance of the company.
Carefully analyze around three to five years of past performance of a company. This would give you an idea about how a company is being performing when there was downturn in the economy or the other companies were enjoying success. - 23204
Ongoing Annual Costs These are not just the Annual Management Charge (AMC), typically 1.5%, but since there are also other administrative costs such as trustee fees, legal and auditors costs etc, the figure to illustrate these is known as a Total Expense Ratio (TER). This can be, say, another 0.2%, and so you would think that the overall annual cost is therefore 1.7%. However, there is a missing cost which can double or even treble (or more) this amount, and it is very unlikely you would ever know about it, as the information tends to be buried in the paperwork you receive. These are costs that the fund incurs for trading - buying and selling stocks - known as Portfolio Transaction Costs (PTC), OR Portfolio Turnover Rate (PTR) and they are not included in the TER. The more active a fund manager is buying and selling stocks, the higher will be the costs incurred. They include: 1. Cost of Commissions - Stockbroker's charges for executing and then clearing a trade 2. Spread Costs - The bid / offer spread is the difference between the prices at which shares can be sold and bought 3. Market Impact Costs - Costs which are incurred when the price changes as a result of the effort to buy or sell that stock 4. Cost of Tax - In the UK there is stamp duty to be paid with trading 5. Opportunity Costs - This is the cost of a delayed or missed trade One of the amazing things we find is that not only do investors not know about these extra costs that have an impact on the returns you will receive, but some financial advisers do not know about them either!
Another option is investing in dividend paying stocks. People on the verge of retirement opt to invest in them as they provide a steady source of income. The income is there, but only till the company is making money.
In order to select the right high yield investment program, following are the factors that can better help you in this regard. The first point in this regard is research. If you are looking for the online investment options, make extensive research about whether the company you want to deal with is a real company or scam.
Avoiding scam is necessary, as investing your money would only bring you loss of your principal investment. If you want to invest in some real sector, research about the credibility of the company that would be investing your money. Second important point is the past performance of the company.
Carefully analyze around three to five years of past performance of a company. This would give you an idea about how a company is being performing when there was downturn in the economy or the other companies were enjoying success. - 23204
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