Assessing the Costs of an Investment
Wednesday, July 11th, 2007When you are offered an investment opportunity, get out your calculator and your eyeglasses - you’ll need it to read the fine print.
First ask for a detailed break down of the costs. This may be a fixed amount, or a percentage that’s deducted from your total investment, and how all those deductions will reduce your investment once it matures. Check the commissions of your financial adviser, especially if the institution is offering ‘linked investments’. Not only is this heavy on the pocket, but it may prompt your adviser to go on a selling/buying frenzy. Another warning sign: if the costs turn out to exceed 6% per entry, then add up to an annual cost of 2% or more.