Today many people have become very skeptical about the current market and economy when it comes to saving for retirement. In fact the market seems to have become very volatile over the last few years and some are wondering what they could do to protect themselves today. While you can’t control what the market is going to do you can control where you invest your money and the fees that you pay and in this article we’re going to see which is better fee based investing or traditional investing.
The Traditional Way To Invest
For most people we invest our money in mutual funds. However, most mutual funds will contain as many as three main fees that could cost you a lot over the years. The first fee is the sales charge fee. This fee can run as much as 5% to 6% of every dollar you invest into the account. So if you invest $1000 and have a 5.5% sales charge you will end up paying around $55 in fees upfront.
The second fee that you will have to pay is an annual fee to maintain the account. The money from this fee will go to pay the fund manager, and make trades within the fund itself. Typical fees will range from as little as 0.19% to as high as 1.48%.
Finally, the last fee you may have to pay is a 12b-1 fee. This fee is a junk fee that goes to pay for advertising cost in most cases; however my suggestion is to stay away from these companies that charge this fee.
Fee Based Investing
Mutual funds can still be a good investment option but the problem with them is once you’ve set up the account and invested your money you won’t typically hear much from the representative after that. In fact most of them will enter the witness protection program never to be seen or heard from again because they’ve made their money and moved on.
So you might be wondering what is the best way to go then? The answer is investment advisers. An investment advisor is different because they are fee based and charge a flat fee up front. This fee typically runs around 2% annually. So if you have $10,000 in your account you could pay $200 over the course of a year’s time. On top of that the investment adviser has a vested interest in your account to earn more, because if when you earn more they will earn more as well.
Where To Get Started
So now that we know the difference between traditional investing and fee based investing you might be wondering where should I get started? One of the best IRA companies that does fee based investing is Foxhall Capital. This company deals within a global market place and believes that their is always a bull market somewhere in the world, and as a result they are always striving to keep you there.
So what are your thoughts, is fee based investing better or is it better to stick with the traditional method such as mutual funds?
Do you want to invest your money in an IRA but don’t want to get hit up with the high fees that they often carry? This seems to be the problem with most people who are investing their money for retirement. In fact some people have no clue as to how much they are paying in fees or what a good fee is. So in this article I’m going to show just exactly what you need to do see how much your paying on your retirement and were to find the cheaper rates at.
First you’ll want to see how big of a sales charge the mutual fund company is charging. A typical sales charge for an IRA retirement investment will run anywhere from 4.5% to as high as 6%. This means every dollar you put into your account 6% will be be paid out to the representative. However their are companies that do charge 0% and at the end of this article I will show you just which company does this.
The next fee that is typically found in an IRA account is an annual fee. An annual fee is charged to help maintain the fund. Typical fees run around 1% to 1.20% but some companies will charge as low as 0.23% which is a lot cheaper than most companies.
Finally, the last fee some companies will charge is a 12b-1 fee. This fee is typically referred to as a junk fee. This fee usually covers advertising cost for the company which is passed on to consumers. However not every company charges this fee in fact I recommend that you stay away from these fees altogether.
In the end it’s easy to see that a no fee IRA is one of the best ways to go when it comes to retirement. So who should you invest your money with when it comes to an IRA? I suggest Vanguard because they carry no sales charge, no 12b-1 fees, and a very low annual fee around 0.30%.
Do you want to invest your money for retirement but don’t want to get hit up with the high fees? This is why I suggest Lending Club because they have one of the be no fee IRA programs around, and in this article I’m going to show you three simple reason why it’s better to go with Lending Club over other investment programs.
First off, by going with Lending Club you are not investing money in the traditional sense like you do with mutual funds, stocks, and bonds. Instead with Lending Club you are investing your money and lending it out to others who are being charged and interest rate. In fact this method is very similar to how banks earn money but with Lending Club they are managing all of your loans for you.
Secondly, with Lending Club you won’t face the volatility like you do with mutual funds. Mutual funds go up and down everyday from the constant buying and selling of stocks. However with Lending Club you are their is no constant volatility, instead you can invest your money and know that it won’t be bouncing all over the place. In fact I even believe Lending Club can be recession proof since over 40% of the borrowers are using the money to pay off credit card debt.
Finally the last reason you should choose Lending Clubs No Fee IRA program is because they don’t charge any fee to invest. With a typical mutual fund they will charge an initial sales charge which can run around 5% to 6% and they also charge an annual fee that will usually be around 1% to 1.20%. When you compare a mutual fund that invest $5000 in it with the fees I’ve mentioned Lending Club will earn nearly $30,000 more over 30 years than the mutual fund.
In the end a no fee IRA or Roth IRA are the best way to save for your retirement. In fact the best Roth IRA advice I can give you is to avoid the high cost fees and you will earn far more for your retirement than anywhere else.