Monday, 23 March 2015

How to Pay Less for your Investments



According to TrasingEconomics.com, the Indonesian Stock Market (JCI) saw an increase in index points in February 2015. The mark of 5289.40 index points, recorded in January 2015, rose to 5400.10 index points in February 2015. Looking at the overall performance of the stock market, the average performance index stood at 1235.50 during 1983-2015. The index points in February 2015 are said to be the highest recorded performance of the market so far.
The above data just intensifies the fact that investment in shares (Investasi saham) is a very lucrative investment option available today. Many of us choose managed funds, since it is simpler. However, have you ever wondered if you are paying more for your investments than you ideally should?
After all, if other ancillary expenses are eating into your gains, the whole point of investing becomes null and void. So how do you know whether you are overpaying for the investments you make? Here are a few ways by which you can identify these areas.

Three Areas where you can Reduce your Costs

1.      Loaded Funds: There are thousands of investment fund options to choose from in the market. Take mutual funds, for instance. Since only a marginal percentage is offered to brokers, general investors have access to most of these funds. So when there are so many choices at your disposal, why choose front-end or back-end load funds? Look for no load funds to minimize the extra fees that you will otherwise have to pay.

2.      Taxes: When investments are not planned from a taxation outlook, these tend to attract hefty taxes. Investments under a year are categorized as short term capital gains. These attract more taxes than long term ones. You can reduce your taxes by holding your investments for a period that amounts to more than one year (long-term). Also, the services of a financial consultant and planner can help you manage your taxes better.

3.      Expense Ratio: For managed investment funds, it obviously means that a company is managing your investment bundle. The expense ratio will reveal the amount that is deducted as fund management fees. Look for low ratios, unless the product is worth the extra cost. Although all managed investment funds (investasi reksadana) cost a little extra, it is important to understand that some are more expensive than necessary. This is why it is essential to pick a reputed and transparent fund company. A little research can go a long way here.