07 Nov 2014 The One Guarantee

I got my first job when I was 8, selling The Pilot (Moore County’s local newspaper) to businesses near my home 50 or so miles south of Raleigh. The gig was super simple in those times: I bought each paper for 30 cents and sold it for 50 cents. For four years, I sold the paper three days a week, earning a profit of 20 cents on every paper I sold.

If only investing in the stock market were so easy.

But it’s not. It’s full of complicated, unpredictable, ever-changing, often random variables that keep us from simply deciding what sort of return we want and then making it happen.

There is, however, one guarantee: Expenses. They make portfolios less efficient, and decrease the amount of dollars we can ultimately spend, or give, or put to work in the market.

But expenses are knowable. And you can easily control your choice to pay higher expenses or lower ones. This is one of the many reasons why we use the low-cost ETFs that we use, the most costly of which has an expense ratio of 0.15%. But there are many mutual funds and other investment vehicles that have much higher operating expenses, often over 1%. Over long periods of time, these higher expenses can have a huge impact on your lifestyle and ability to meet goals, especially when the funds with the highest expenses often underperform. This is burning the candle at both ends.

So do you know what your fund expenses are? It’s very easy to find out if you don’t. Our good friend and fellow financial advisor Russ Thornton recently put together a very intuitive and helpful video to show how you can look up fund expenses in less than a minute.  And don’t hesitate to let us know if you have any questions about what you find. We’re a call away.