“Building riches the right way, is not a get-rich-quick-scheme, it’s an objective that will take tolerance and effort to accomplish. Be that as it may, by utilizing these basic methods below, you’ll have the capacity to build wealth, and have it last through retirement and into your family’s future. In the event that you view investing resources into your future as a long-term goal objective, you’ll already be on your way to building wealth.”
It’s exciting when you hear that the stock market is up about 30%, which it was for 2013 overall.
It sounds like good news for the economy, for Wall Street—but did you see a 30% return on your money?
Typically there’s a gap between what the market returns (investment returns) and what actually lands in your pocket (investor returns).
But you can close some of that gap—without taking any additional risk for your investments—by moving a few levers right now.
Whether you’re thinking of investing your tax refund or pushing your 401k or IRA to grow bigger, here are five ways to get more from your money immediately.
The following insights are based on extensive research and data analysis conducted at Betterment, the nation’s most preferred online financial advisor.
Investment fees (expense ratios, management fees, trading costs, etc.) often sound insignificant because they’re listed as a few dollars (e.g. per trade) or couched in percentages, often as low as 1%.
Yet reducing these semi-hidden fees and costs is one of the biggest—and easiest—ways to improve your take-home returns.
Over 30 years, if you pay 0.31% in money management versus 1% on a starting portfolio of $100,000, say, that savings of 0.69% could add about $161,000 to your nest egg, assuming an average 8% return over that time (and no other contributions).
How do you lower investment costs? One way is to reduce specifically what you pay for the mutual funds and other investments in your 401k or portfolio.
Actively managed funds (with a team of money managers at the helm) charge more than index funds, which mirror the performance of a certain market sector.
You might like the sound of having an active manager who’s on top of a certain mutual fund, but research published in the peer-reviewed Journal of Indexes in January 2014 demonstrated that over a 15-year period, an all index fund portfolio out performed a portfolio of active funds 83% of the time.
The median annual shortfall of the losing active portfolios was -1.25%. By using all index funds in your portfolio, you’re primed to capture that 1.25% advantage over the long term.