Solitude Canyon Investment Advisors

Investing is hard.  A quick look at the massive volatility in the markets today make that easy to understand.  However, there's one thing that you can control that will have a definite, positive impact on your long-term investment returns:  fees.  Whether it's brokerage trading fees, financial advisor fees or mutual fund operating expenses, the less you pay in fees the more you'll have during your retirement years. 

Take a look at this chart...I assumed this investor was 40 years old, started with $500,000 and would generate an 8% investment return (before fees) over the next 30 years.  I calculated the value of the nest-egg after 30 years using 1% fees and 1.3% fees.  As you can see, this slight change makes a massive difference over the course of 30 years.  By getting the fees down by just .3%, the investor ends up with $3.8 million at retirement instead of $3.5 million.  That's an extra $300,000!! 

There are three obvious and easy ways to reduce fees:

1. Use low-cost and no-load mutual funds.  The data has been proven over and over...the vast majority of mutual fund managers cannot outperform the market over long periods of time.  Paying a mutual fund manager extra to pick stocks is like flushing money down the toilet.  Don't buy their hype.
2. Use a low-cost broker like Schwab.  If you're an active trader, using a company like Schwab or Scottrade can save you major money over the long-term.  These low-cost brokers charge under $10/trade.  Compare this to a firm like Merrill Lynch who charges several multiples more per trade and you begin to understand how much you can save.
3. Hire a Financial Advisor that has low fees.  The big financial advisory firms like Edward Jones can charge very high money management fees, upwards of 1.5% to 2%.  I'm unconvinced investors are getting their money's worth.  At Solitude Canyon Investment Advisors we feel so strongly about the importance of minimizing fees, we charge some of the lowest fees in the industry.