Keeping Costs Low

[PiggyBank]

I am starting to look a little into investment as a potential way to provide for my future. But I keep coming up against the same thing; keeping costs low. That's what everyone advises but how do you do it? Brokers all charge fees for every little this and that, and those fees cannot be avoided. So given that the biggest costs cannot be avoided, how do you keep costs down?

[Sierra]

Many times the online brokers charge lower fees. You can also lower fees by investing in passively managed funds. Because the funds are not actively managed they have lower expense ratios. If you buy individual stocks you can keep your costs low by using a buy and hold strategy. Active trading gets very expensive because every time you buy or sell you pay a fee.

[PiggyBank]

But there are times that you cannot avoid buying and selling, correct? You cannot hold onto stock that is falling in value or that you expect to fall, IF you are able to get rid of it. That cost in this case would be ok, to avoid losing more on falling stocks.

When dealing online, do you still have the same access to a broker?

[Sierra]

Of course there are times when you will need to sell, but often if you do your research and invest in solid companies you will not need to sell very often. In fact research has shown that buy and hold usually gives the best returns.

Some people are into trading, trying to make money on the short term changes in the markets. These people spend lots on fees and commisions.

You can get access to a broker at most online brokers, however you will be charged a higher fee.