The Advisor - December 2012

IMPORTANT NEWS FOR YOUR FINANCIAL AND PERSONAL FUTURE

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Why Fees Matter

Chart shows value of hypothetical account after 20 years of a $200 monthly investment earning an average annual rate of 6%, minus the deduction of various annual fees.* The calculator “How Will Fees Affect My 403(b) or 457 Plan Savings” at CTAinvest.org can help you understand the impact of fees on your particular situation.

* Rate of return is for illustration only and is not meant to represent the return of any specific investment.

Strategies to Reduce Fees

Here are some strategies available to you:

  • Avoid variable annuities. Variable annuities layer fees on top of the fees charged by the underlying investments.
  • Use direct invest options (see “All-in Fee” on page 6). By working with a registered investment advisor provided by thevendor or using online resources, you can avoid buying products that offer large commissions to sales representatives.
  • Consider passively managed funds, like index funds. Expenses tend to be less than those of actively managed fundsbecause they are not paying a fund manager to constantly buy and sell stocks or bonds for the fund.