Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
How to Pay Less and Get More: Discount Broker vs Professional > NetSparsh - Viral Content you Love & Share

How to Pay Less and Get More: Discount Broker vs Professional

How do you invest? What do you really pay? At the end of the day, what are your real results? These are questions smart investors should be asking themselves (but usually don't). In this era of more fees, misc. charges, holding periods and back end redemptions, even at discount brokers, how are you really making out?

Working with a new client brought this all to my attention. I know what I found may not apply to everyone; however it will apply to many and very likely apply to you.

I need to preface this by saying that, unlike the majority of registered investment advisors, I have built my practice over the past 15 years by dealing with "small" investors. Many of them are first timers because my minimum account size is only $5,000.

I targeted this group because I enjoy the educational part of my business. A happy side benefit has been that by providing million dollar service to these so called "small" investors, they naturally refer me to parents, relatives, friends and business associates, often with considerably more assets than the original client. What a happy consequence.

Having set the stage, here's what happened with my new client who we will call John. John was 26, newly married with a one year old son. His wife was taking care of the child and John had a good full time job. After selling his house in California and moving to Florida he had $6,000 left for starting a long-term investment program.

Though he had been reading my newsletter for about a year, John decided to manage his 401k on his own. It was a noble effort but provided less than desirable results.

He then attempted to set up a brokerage account at a major discount broker. With his $6,000 he was told that the quarterly fee would be $45, and, of course, if he sold any mutual fund within the first 180 days, there would be an early redemption fee.

$45 per quarter would be equal to an annual fee of 3% of his starting balance. John called me somewhat frustrated and said that he'd be willing to set up an account with me, but how would it make sense if in addition he'd have to pay my advisory management fee?

That was a good question because it certainly doesn't make sense to have an account in any type of market environment and pay about 6% in fixed annual fees.

However, what John didn't know was that if you have an account with a registered investment advisor who is affiliated with custodial broker, the fee structure changes.

What did that mean to him? It meant that I opened the account for him as a new client. He now has no annual fees, other than my management fee, and his 180 day holding period for mutual funds is reduced to 90 days, minimizing, if not eliminating, the likelihood of an early redemption fee.

The net result was that he would receive the benefit of my experience-which he already trusted based on my track record of pulling clients out of the market in October 2000-and it would cost him no more, and likely less, than his discount brokerage account.

Needless to say, John was very relieved. In essence, he traded broker garbage fees for professional management at no additional cost to him.

And, since he itemizes his deductions on his tax return, all fees paid are tax deductible, which is just an added bonus to factor into the equation.

It turned out to be an all around win-win situation for John. I encourage you to review your situation and see if what looks like a discount in fees is actually costing you a premium.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com; ulli@successful-investment.com

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

Barron's

The Stock Market Was Scary This Week. Here Are 5 Mutual Funds for Income Investors
Barron's
Investors have plenty of options for income-oriented mutual funds. The table below lists five such portfolios, which are also known as multi-asset income funds. “Investors really need to look a bit deeper to see exactly what the strategy is to generate ...


Investor's Business Daily

Growth Stocks That Fuel This Mutual Fund Manager's Outperformance
Investor's Business Daily
31, the fund managers had outperformed the S&P 500 for the calendar year as well as the previous three, five and 10 years. That four-for-four outperformance makes the Prudential mutual funds' portfolio an IBD Best Mutual Funds Awards winner. Merely 10% ...


Economic Times

Mutual funds' exposure to banks hits 3-month low of Rs 1.88 lakh crore in Sept
Economic Times
After banks, finance was the second-most preferred sector with fund mangers. Equity fund managers' deployment in finance software stocks was at Rs 87,519 crore, followed by software (Rs 88,453 crore), consumer non-durables (Rs 71,072 crore) and auto ...


Investor's Business Daily

Best Mutual Funds Buying CVS, United, Lowe's And These Other Top Stocks
Investor's Business Daily
Eleven stocks from the medical sector made this month's list. Thirty-seven top performing mutual funds invested just under an estimated $160 million in biotech industry leader Biogen. Abbott Laboratories (ABT) (35 funds, $258 million), HCA Healthcare ...


Zacks.com

3 Mutual Funds to Ride the Surge in Industrial Production
Zacks.com
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in ...


US fund investors pull most cash since June from stocks: Lipper
Reuters
Domestic stock mutual funds and exchange-traded funds (ETFs) posted $18.2 billion in withdrawals, only marginally offset by $648 million moving into equity funds focused abroad, according to data from the research service that covers the seven days ...


Zacks.com

Buy These 3 Hartford Mutual Funds for Striking Returns
Zacks.com
HIALX invests more than 65% of its assets in common stocks of growth companies based in different countries, including the United States. The fund may also invest almost one-fourth of its assets in securities of companies located in emerging markets.

and more »

Bloomberg

Goldman Sachs Defends Tech Stocks, Says Many Now Look Cheap
Bloomberg
The same is true for mutual funds. At an average 158 basis points underweight, large-cap core funds have never shunned the industry like this in the past five years. Tech shares have tumbled 7 percent this month, trailing the S&P 500 by 2 percentage ...


Zacks.com

Consider These 3 T. Rowe Price Mutual Funds
Zacks.com
RPBAX invests around 65% of its assets in common stocks and about 35% in fixed income securities. The fund also invests a minimum of one-fourth of its assets in fixed income senior securities. T. Rowe Price Balanced has returned 7.2% over the last ...

and more »

Livemint

Mutual funds' exposure to banks hits 3-month low in September
Livemint
New Delhi: Mutual funds' holding of banking stocks declined by over Rs 21,600 crore to Rs 1.88 lakh crore in September, driven by the correction in equity markets. Overall deployment of equity funds in bank stocks stood at Rs 1,88,620 crore at the end ...

Google News

Investing in the Stock Market

From the book 'The Stockopoly Plan' by the author Charles... Read More

What Our Investment Advisor Wont Say Off The Bat

Most advisors will tell you they can beat the market.... Read More

Investment Lawyers and Trash Stocks

The trash business in its efforts to cook their books... Read More

Duck

Duck! No I don't mean a quack, quack. I meant... Read More

What To Buy Now

I am sure that if you have a brokerage account... Read More

Managing Investing and Stock Market Risks

Reduce your investing and stock market risks by:Setting your sights... Read More

What the SEC Really Thinks About Mutual Funds!

Let's go into the details of why non-indexed mutual funds... Read More

True Investment Road Maps

If you don't know where you are going any road... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Successful Trading ? Taking Profits - Part 1

So you're started trading, you bought some positions with your... Read More

Play another Day

Money management starts with protecting your capital, realizing profits and... Read More

Selling Strategies - Setting a Stop Loss

Sometimes the best way of lowering exposure to risk is... Read More

Stuff

I continually hear from economists, talking heads, other market letter... Read More

The Cub; II

We keep hearing about this bear market and that the... Read More

A Good Fund Manager

Every Wall Street analyst, financial planner and broker will tell... Read More

Investing in Trash Company Stocks

Refuse is a serious issue in any society, about as... Read More

Time Out

Are you paying any attention to your retirement savings? Do... Read More

Struggling Stocks, Booming Commodities

04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More

How To Pick A Mutual Fund

Mutual funds by definition are a mixed bag of stocks,... Read More

The Stock Market is a Roller Coaster: Prepare for the Ups and Downs

IT'S REMINISCENT OF THE OLD children's tale about an old... Read More

Starbucks Stock is Up

Starbucks earnings are up again and so is their stock... Read More

What is Involved in Peak Performance Trading?

There is so much involved in developing peak performance, that... Read More

Ignore Stock Market Talking Heads

You should ignore analysts on TV, the radio, the newspaper... Read More

Perfect Storm

Having lived aboard a sailboat for 2 years I was... Read More

The Stock Market Investor?s Worst Enemy

Every stock market investor faces one primal enemy. An enemy... Read More