Wednesday, July 21, 2010, AM | 1 Comment
Before you start investing, reduce and minimize your high-cost debt obligations first. It should not make sense to invest while your credit card continuously collect high interest. That debt has definite loss of cash attached with it in the form of your partial income going to the credit card companies. In contrast, investing can potentially go either way – the way of profit or the way of loss. However, over a long period of time, investing in stocks has proven time and again to be on the profit side.
It is easy to save money by reducing or eliminating altogether annual financial fees.
30%-40% off commission Stocks
If you are an active investor and you make your own investment decisions, consider using a discount broker – Charles Schwab, Fidelity, and many others. It can drastically reduce your commissions. Some of these brokers offer free investment research.
However, what you save in commissions depends on how many trades you make each year. The greater the number of trades, the greater the savings.
No-load Mutual Funds
Mutual funds sold by brokers generally carry sales charges, or loads, of 2% to 5%. These charges are used to compensate the brokers who sell them to individual investors.
Choose no-load funds, such as those sold by Fidelity, T. Rowe Price and Vanguard. On a $1,000 investment, you could potentially save as much as $50. Avoid the high annual fees that some funds charge. Choose stock and bond funds with annual fees of 1% or less. Your potential savings could be roughly $150 on an investment in mutual funds of $10,000 annually.
In a Nutshell
You should do your own research and then invest with a discount broker.