- Advisory fees and broker commissions are typically the primary targets when addressing the costs of managing a self-directed investment portfolio.
- Keeping fees and commissions well below 1% are paramount to a cost-effective investment portfolio.
- But Main Street Value Investor gauges at least five other significant threats to a portfolio’s total return.
The churning of fees and commissions is the Wall Street way to a beach house in the Hamptons. How about returns on capital invested? That is certainly an added benefit of the financial elite's output when it occurs.
However, the individual investor on Main Street must be wary of a myriad of other portfolio expenses that eat away at total returns.
Regardless of level, whether professional or personal, investing full-time, part-time, or in your spare time, all investors should focus on keeping portfolio costs as low as possible.
As defensive investors, we have developed a model to measure the real costs of managing and sustaining a profitable investment portfolio.
Here is Main Street Value Investor's primer on keeping portfolio costs as low as possible. Surprisingly, it involves more than just pursuing reasonable advisory fees or discount brokerage commissions.