There’s little you can do about death and taxes, but there is something you can do about the fees you pay on investments.
Many people don’t pay attention to fees. A new survey, 2017 Financial Trust Report, from Personal Capital, conducted by Harris Poll of more than 2,000 American adults, found that 21 percent of those with at least one investment account said they know they pay investment fees, but do not know how much.
Twenty-eight percent said they don’t pay attention to fees when selecting investment accounts — a rate that went up to 47 percent among 18- to 34-year-olds.
Then there’s the costly misunderstanding. Thirty-two percent polled said they believe higher fees for investment accounts generally result in higher returns, yet research shows otherwise.
The impact of fees is huge. Every time a fee is deducted from your account, it decreases your balance, and the next time a fee is deducted, it’s further reduced. Over time, this adds up to a vacuum sucking up your wealth.
Do the math
It doesn’t take much to hurt. According to the Department of Labor, fees of only 1 percent per year can slash the value of your savings by 28 percent over 35 years.
“Don’t be afraid to ask your financial adviser what the fees are,” said Stanley Teitelbaum, a psychologist and financial therapist in Manhattan. “Fees are negotiable.”
Less expensive choices
Look for less expensive alternatives such as no-load mutual funds with low annual expense ratios, or exchange traded funds (ETFs).