Foundation

10 April 2019

Let's reflect for a moment on the costs you pay when you invest money.

In previous blog posts we have talked about the importance of getting more value than what you're spending, but today we'll talk about an area where that is not always the case which is in the area of investments.

If an accountant charges you £3000 but saves you £15,000 it is easy to recognise the value, but where costs are hidden it is not so easy to see.

From our experience of those people holding financial products such as ISA's and pensions - which are often used by people in the U.K to build their wealth, there are commonly fees from the custodian, fund manager, advisors for the investments held within these protective wrappers ...and when you add it up this can come to 2% which on face of it may not sound a lot, but if the average gross return you're getting is 6% -  it means you could be paying a 3rd in professional fees.

If the financial industry is removing 1/3 of your profit without putting any of their own money in, or taking any of the risk, and the markets begin to fall - then you may need to give this area some attention if you've been ignoring it (which most people are).

Support costs are the sixth and final component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there - no matter what stage of your wealth-building journey you are at.

If you're not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

You may well currently work with an Independent Financial Advisor [IFA], and indeed I am one myself - however my mind does not work in the same way of most IFA's whom I have met.

Rather than recommending products for which I may or may not receive a commission should you choose to invest in them - my preference is to empower you with the knowledge to be in control of your own investment decisions. 

There are many ways you can buy very low-cost tracker funds or even things known as ETFs or (exchange-traded funds) where the cost of buying into investments is a fraction of the cost of paying for a fund manager.

And, if you've got an advisor, are you sure you're getting real value? Have they plugged a siphon into your life and taken money out, or are they giving you real value for money back? Well, that's for you to determine.

At WealthBuilders we believe that there are 7 ways [and only 7] to build wealth. We refer to these 7 ways as 'pillars' - and each pillar is an asset class which can be used to direct a flow of money into your life. If this concept is new to you, I recommend you take a listen to Episode 007 of WealthTalk: The 7 Pillars Of Wealth to learn more.

One pillar in particular where costs can very often be reduced is Pillar 2: Pensions.

Every week at WealthBuilders we meet people who are dissatisfied with the performance and future outlook of their pension(s), and it usually doesn't take very much to instantly identify some ways to reduce their current fees as an immediate way to help save money.

We call this process a 'Pension CPR' and if you would like to speak to a member of the WealthBuilders team to find out more then please send us an email.