Keep costs low from "summary" of The Bogleheads' Guide to Investing by Taylor Larimore,Mel Lindauer,Michael LeBoeuf
The idea of keeping costs low is a fundamental principle of investing that is often overlooked by many individuals. When you invest in a mutual fund or exchange-traded fund, you are essentially paying for the services provided by the fund manager. These costs can eat into your returns over time, making it crucial to minimize them as much as possible. One way to keep costs low is by investing in low-cost index funds. These funds track a specific market index, such as the S&P 500, and have lower expenses compared to actively managed funds. By investing in index funds, you can reduce the amount of fees you pay, allowing you to keep more of your investment returns. Another way to lower costs is by being mindful of transaction fees. Buying and selling investments can incur fees, such as brokerage commissions, that can add up over time. By minimizing the frequency of trading and opting for low-cost brokerage platforms, you can save money on transaction costs. Additionally, being aware of the impact of taxes on your investments can help you keep costs low. Capital gains taxes can eat into your returns, so it is important to consider tax-efficient investment strategies, such as holding investments for the long term or investing in tax-advantaged accounts like IRAs or 401(k)s.- The key to successful investing is to focus on keeping costs low. By choosing low-cost investment options, minimizing transaction fees, and being tax-efficient, you can maximize your investment returns and reach your financial goals more effectively.
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