To build long-term wealth you need an instrument that can track the global stock market. You also need a great financial plan and a trusted advisor to coach you through times of extreme volatility. These services don’t come free, but they add more wealth to your family than they cost in the long term.
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” – Jack Bogle
Mind the pennies
However, there are also the costs that just line someone else’s pockets, that eat away your returns and don’t give you anything tangible for your trouble.
Costs are easy to overlook, because when you start out they may seem small, even trivial percentages. That’s a mistake – remember investing is a long-term pursuit, designed to see the value of your investments increase over many years, meaning those costs will only get bigger and they’ll stick around for a very long time.
What may seem small at the start can end up making a big dent in your returns. One of the biggest investment drips to look out for are management costs. These eat into your funds over the years lowering the effective compounding returns you get.
To give you an example, if you’d invested into the markets in 2010 you’d get a real return of 9.5% per annum by the end of 2018. However, with annual charges of 1.5% investors received only 7.8% per annum. In cash terms it’s receiving €1,832 instead of €2,066. Costs are a serious business and you should aim to pay only the costs that add real value.
Becoming cost efficient
You can’t avoid costs altogether, of course. But what you can do is keep them down as much as possible by concentrating your time, money and effort on the things that will really add value over the years.
Those things don’t include trying to ‘beat the market’ or trading unnecessarily. Your future should not, must not, be decided by the efforts of a fund manager trying to maintain a personal record.
Your wealth is about you, your family and your future. You can’t predict what will happen and neither can we, but you can focus your efforts on the many years of research and evidence that underpin our investment approach. Jack Bogle also said “The math will never let you down” and we agree. You’re not here to beat anything – not the market, not your neighbour’s returns. You’re here to see your plan through to conclusion.
Let us guide you
Over the coming weeks we’ll be sharing ten tips to taking care of your future, so that you can focus on taking care of your business safe in the knowledge that it’s all under control.
If you can’t wait and want to get your hands on the guide in full now, you can download it for free here.
But let’s talk about you
We’d love to start that conversation with you, so why not set up a face-to-face meeting today?
There’s no commitment, it doesn’t cost anything to talk through your plans with us and we’ll always be honest – we’ll only get involved if you and Metis Ireland are a clear match, and where we all agree we can add real value to your life.
Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.
All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts.