By Rick Kahler via Iris.xyz
One of the most important factors affecting the success or failure of your investments is also one of the least visible: fees.
When it comes to selecting managed financial investments like retirement plans, mutual funds, exchange-traded funds, annuities, and private real estate investment trusts, it’s essential to know how much you will be charged in fees.
Otherwise, you could own a mutual fund or annuity with great diversification which invests in high quality securities, yet still do no better over 20 years than had you stuck your money into a bank certificate of deposit earning 1%. You could own a private real estate investment trust that owns great properties in AAA locations, yet lose your shirt. All because you didn’t pay attention to the fees.
Let me underscore that not paying attention to the fees is really easy to do. In fact, some of those selling these products often do their best to see that you don’t pay attention. Yet it is imperative to understand, in percentages and dollars, how much you are paying.
The total cost of an investment includes up-front fees and commissions, administration fees, annual management fees and commissions, and transaction fees. This information will seldom be offered, so you need to ask lots of questions. Even when you ask, the salesperson may sidestep the question, not know the answer, or give you the wrong information.
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