Investing: Avoid the Fees!

stocks

Rule of thumb: You should put your money in index funds with very low fees.

What’s an index fund? It’s a way of investing in a bunch of different stocks and bonds at once. That way, is one of them goes down, you’re still OK. This is called “diversification.”

What’s a “very low fee”? You should be paying less than 0.25% in fees per year – hopefully a lot less.

Our favorite: Wealthfront. It’s completely free for the first $10,000 you invest. After that, Wealthfront has very low fees (0.25%), automated diversification, and an easy website. Wealthfront automatically allocates your investment across a number of low-cost index funds.

You can open a Wealthfront account for free in about 7 minutes here.

Other good ones are Vanguard and Betterment.

Many people get ripped off by letting high-fee money managers or financial advisers invest their money. “High fee” to us means anything higher than 0.25% per year. Don’t do this.

Here are three more things to remember.

  • Don’t check your investment account every day. Once every few months is fine. Once you have it set up, don’t change anything, even if it goes up or down.
  • Picking individual stocks is for geniuses and idiots. If you are not a genius, do not pick individual stocks.
  • Remember that this money in your investment account is for long-term goals like retirement. Put money in, don’t take it out!

Questions? Ask us at help@asktrim.com.

 

 

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