Over 30 years it is 3 times this amount or $3,750 plus interest and the interest actually ends up higher than the amount I pay the company. If I could invest $125 a year at 5% for 30 years I would have $8,304!! This is just one example of how fees can add up over time and become a threat to your financial well-being. Read on for more examples.
Hefty advisory fees – whether it is trading fees or a so-called advisory fee, they will add up over time. If you do a lot of trades as a result of advice from your adviser, you are going to pay much more than the $125 we discussed earlier. Some consumers will do a lot of trades every month and these fees just shave money off your financial retirement health. Another area is the fees that mutual funds charge every year in addition to either front end fees or rear-ended fees. In both cases, consumers pay these fees when they make a purchase of a fund. In addition, any trades that completed in the fund, and there are lots, generate trading fees that are deduced before any dividends or distributions are paid. Did you ever notice that the fund managers always get paid regardless of whether the fund does well or not?
Investment-related tax bills – triggering income tax as a result of selling an investment can rob you of thousands of dollars. Manage your trades in such a way to minimize taxes. Sometimes selling a stock at a loss to minimize tax might just be the best answer. You need to do the math for your situation.
Failing to buy life, health, and disability insurance – not having insurance to cover you when you get sick or disabled, or not having life insurance to cover your debts can be the single largest threat to your family and to yourself.
Holding a badly diversified investment portfolio – all of your eggs in one basket is not the best approach. If that mutual fund or stock goes down, you will need to work for a long time to recover. Just consider those people who were invested in GM when it went bankrupt. They lost everything.
Wagering on one or two heavily mortgaged rental properties – the same issue as above. Diversity is key to a good investment strategy. Risking everything on one or two properties can really jeopardize your retirement if they go south or you lose your job.
Betting big on stocks when you don’t really have the stomach for it – can you sleep at night? All stocks will go up and down, some will pay dividends. Can you handle the volatility or should you stick with blue-chip bonds, GIC’s, etc?
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Or, perhaps you're one of those students who desires a challenge,
or even a good addition to your résumé for Grad school.
As with everything else, it is only the mindset of the entrepreneur that dictates the success and failure of a company.
When travelling, for instance, it would be possible to login to your accounting database and
enter transactions on the road.