Tips for How to Invest Efficiently

In the late 1990s, the stock market experienced a bull market in which many investments created large returns. During this time period, costs of investing were not at the forefront of investor’s minds. Fast forward to today where we have faced large market declines in 2001-2002 and 2008-2009, high unemployment and wild swings in stock market volatility. Investors are now in a totally different mindset and are trying to squeeze as much return out of their investments as possible.

As many business owners know, there are two ways to generate return — increase revenues or reduce costs. In most cases, if you reduce costs, your profits will more than likely increase. Similarly, reducing costs in investing may help to potentially enhance investment return over the long term. Here are a few steps you may be able to take.

Consolidate your accounts

If you have a 401(k)/IRA/Retirement Plan from a previous employer being held at different investment companies, it may be in your best interest to consolidate your investments into as few accounts as possible. This will not only give you a clearer picture of your financial holdings, but may also save you money in yearly custodial fees. Consider this for all your non-retirement accounts as well.

Investment cost

There are many costs during the investment management process that need to be considered by investors. Some of these costs to the investor may include annual custodial fees, investment advisory fees/commissions, account inactivity fees. Below are a few examples where possible costs saving possibilities exist. However, before making any decision to change, please make sure to consult your financial advisor as well as your tax professional before making any changes to your portfolio to avoid potential taxes and penalties.

1. Review your annuities. You want to look at the fees, returns and guaranteed provided benefits on your annuity contracts since many annuity companies have enhanced their benefits and guarantees while reducing costs as well as expanded investment choices.
2. Investment Advisor Representative versus Commission Based Representative. Consider moving your investments to an investment advisory relationship from a commission based relationship. Your advisory relationship entitles you to a higher standard of care and there may be more room to negotiate the advisory fee depending on the amount of investable assets you have. Some professional fees may be tax deductible as well. Please consult your tax advisor.

Take advantage of retirement plans

There are many advantages to putting the maximum amount of money allowed in your retirement plans. Not only do these plans help you prepare for your retirement years, they allow you to defer taxes until you take the funds. This gives your investments a better chance to grow due to the fact that you do not have to pay taxes for many years to come. There are many retirement plans available, each with unique characteristics that make them suitable for different types of businesses. Please consult with both a tax advisor and financial advisor on which plan best fits your needs.

As you can see there are many ways to potentially reduce costs to help move you closer to your retirement goals and dreams. Always remember: a penny saved is a penny earned!

Securities and advisory services offered through SII Investments, Inc. (SII), member FINRA/SIPC and a Registered Investment Advisor. SII Investments, Inc. and do not offer tax advice and are separate and unrelated companies.