FOCUS AREA INVESTMENT CHARGES

The importance of investing is to build wealth and financial security by ensuring that the money one earns also has earning power. Simply put, you want to invest in order to create wealth. The thought of investing could be initiated by asking why one will need money and how much will be required at different points in time, coupled with one’s risk appetite.

Once these investment goals are realized, it becomes easier to identify the investment options and vehicles that will support your financial objectives. However, if you can put together even a small amount of money for investment purposes, you will be on your way to creating a much rosier financial picture in the years to come. An investment program may not be something that has been in your radar; if you are just starting out. Most saving and investment products have some fees and charges associated with them.

When you want a job done right, you usually hire a professional to get the best results. The same can be said for managing your finances. It costs money for a company that invests its clients’ pooled funds into securities that match its declared financial objectives. The costs have a significant impact on an investment outcome. The hope is that, asset management companies provide investors with more diversification and investment options than they would have by themselves. Asset management companies also allow investors the ability to invest in larger sets of securities with a smaller investment.

Investment charges can vary widely depending on the type of investment. These charges could be used to cover the costs of running the fund, including marketing and distributing it or the administration charges and other services such as maintaining the record of your investment. While you may have some ideas about what types of investments to own, a financial advisor can offer professional expertise and insight

you may not have. If an investment is done with the help of a financial advisor, a separate fee is charged for this advice. The investor and the advisor decide the amount charged.

It is of course your hope that a fund that charges higher fees is doing so because it is confident that it will perform above average, but there is no real evidence that any Fund or Fund Manager can consistently deliver superior performance. This makes it very important that, as an investor, one understands what you are paying for and is satisfied with the value of the service and the investment performance that is received or expected.

In conclusion, it is important to know that as a client (investor) you have the right to have all the associated costs explained to you before you enter into an investment agreement/contract.

Compiled by: Marlene Alfredo (Collective Investment Schemes)

“Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.”

– J. Paul Getty

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