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Three Easy Ways to Get the Most out of Your Portfolio

Three Easy Ways to Get the Most out of Your Portfolio

1. Minimize your Trading Commissions

Your trading commissions refer to the transaction costs charged when you make a trade. These costs can add up quickly and so to minimize them will result in significant savings to your portfolio. So how do you find savings across these costs? Speak with your advisor to see if there is a set fee or percentage that you could pay regardless of the number of trades that you put through. If you are using an online broker to hold your account and process your trades, then see if there could be a better priced one by using our Instant Savings Tool. The catch with online brokers is of course is that you won’t have an advisor monitoring your portfolio when you use discount brokerage accounts.

2. Save on your Investment Management Fees

Investment Management Fees come in many shapes and sizes. They could be expressed as MERs as in the case of Mutual funds and ETFs, or as Management Fees in the case of an Advisor’s Managed Account, or simply through trade commissions paid every time you make a transaction. If you are investing in mutual funds and ETFs, try using our Instant Savings Service to find potentially cheaper and potentially better performing mutual funds and ETFs. We have built this platform to allow you to search for funds which are in similar investment categories as your current fund, but which have had a higher performance, lower risk, solid ranking by Lipper, and most importantly a lower annual fee. We allow you to see instantly how much you could be paying on your current fund and how much you could save using the potential alternative funds. Enjoy your new found monies!

3. Focus on your Portfolio’s Asset Allocation

Whether you choose to try and beat the market with an active mutual fund or just want to replicate the market’s returns using an ETF, focusing on your asset allocation will save you both time and money. Setting and sticking to a prearranged asset allocation based on your comfort level is key to prudent portfolio management. Asset allocation refers to deciding how much to invest in fixed income (cash and bonds) versus equities. Essentially, the more safe you want to be, the more in fixed income your portfolio should be invested and vice versa. Once you’ve gone through the various potential allocations and have chosen the one which you are most comfortable with, have your portfolio monitored to stay within an acceptable range of say 5% of each allocation. Once an allocation goes beyond this limit, have the investments in the over allocation state reduced and the investments in the under allocation state increased. By ensuring this type of monitoring and rebalancing takes place, you will effectively be setting up your portfolio to buy when prices are cheap and sell when prices are high. This type of preset rebalancing ends up saving your portfolio significant monies. And how do you arrive at the right asset allocation? Ask your advisor to show you how portfolios of various asset allocations performed over the past 10, 20, and 30 years. This way you can see just how well they performed and also how poorly they performed. Before deciding on your asset allocation, you need to know statistics such as: what has the worst 5 year period with a certain allocation as well as the best 5 year period. Bear in mind that most mutual funds and ETFs don’t have 10, 20 , or 30 year track records. For this reason, have your advisor use the major market index returns as indicators of returns and risk. And if you’re having difficulty getting these numbers, not to worry as our portfolio analysis tool, which is coming very soon, will provide you with this information instantly!

Some Great New Year’s Resolutions to Make More Money

Some Great New Year’s Resolutions to Make More Money

Financial resolutions, like New Year’s resolutions, can be difficult to maintain. But good financial resolutions you follow will simplify your life, and make managing and growing your investments easier. Taking some time to address these issues now—and periodically returning to them—will allow you to automatically stick to your plan without the guilt and anxiety of letting them drop by the wayside.

Like a new year’s resolution, a financial resolution takes you through similar steps. Resolving your issue usually involves feelings of regret, failure, and pushing the issue to the side altogether. When you come back to it, you establish unrealistic expectations that you penalize yourself for, thinking this will ensure you will follow through with your resolutions…this year.

Attending to your finances is just about setting realistic and honest expectations and goals. For instance, many people don’t put enough savings aside, and needlessly become penalized by cashing in investment vehicles too early. Others panic and withdraw too early when markets act unruly. Some might not review and rebalance their portfolio yearly. But fortunately, all of this is avoidable.

By beginning the year with a focused attitude, willing to honestly evaluate your financial circumstances, can start you saving money and also earning more on your investments. Avoiding penalties and higher fees involves only a few hours of research and planning. You can easily plan ahead and set a date when you and your advisor will rebalance and review your portfolio. You can also set up automatic withdrawal with payroll at your work to allocate a certain portion of your savings to your investments. Realize that the penalties and extra costs you incur over the long-term can be a significant amount. What is more troubling however, is looking at how much that money could have earned if invested.

In the end, there is no single ideal time to make these decisions. The best approach is a long-term plan with many little tweaks along the way. A fair look at your investments and savings will do more to help you than pressuring yourself and setting expectations beyond your financial capabilities. Don’t put more stress on an already delicate situation. Remaining focused, clear, and consistent with your financial decisions is probably the best thing you can do for yourself this year. Most of us know what should be done. It is following through with what you know that is the most difficult part of a resolution.