In the last episode, I explained how one’s investment can compound and grow like magic, and costs can also compound and grow like crazy. We can’t control our investment returns, but we can certainly control our costs to make sure you, not our broker, bank, or fund manager, get most of the investment returns. 3 tips I’d like to share:
Know What Fees You Are Paying
Be very clear about what fees are you paying for each transaction, and if there are any recurring fees that you are being charged. Brokerage fee, platform fee, management fee, foreign currency exchange fee, etc. Rank them from the highest to the lowest, and think about what you can do to reduce the cost. If you are paying 1 or 2% fees for any fund, it’s a big red alarm. Long-term return on stocks is only 4~6% percent per year, if you are giving 1~2% to your fund manager or broker, you are losing a quarter of your returns easily!
Don’t Forget About the Tax
Besides all the fees you are paying, another thing you need to take note of is the tax implication. In Singapore, unlike the US, we are very fortunate that we do not have a capital appreciation tax or dividend tax. But there are still things to consider to make your tax payment more efficient. E.g. invest in your SRS (supplementary retirement scheme) to reduce your income tax, or invest in an Ireland-domiciled fund instead US-domiciled fund for better tax. I will cover this in future episodes.
Be Brave When Making Changes
You find you are paying too many fees or taxes and wish to make a change, but it’s too much trouble or too costly to make a change. You might need to transfer your shares to the new broker (which costs money), or sell your old funds and buy new funds (which can be hard to execute). What I want to say is, be brave and make the change. Make a plan and execute it. The longer you delay it, the more fees you will pay.
上一章我讲了我们的投资可以像变魔术一样复利增长，我们的投资费用也会疯狂地复利增长。我们不可以控制我们的投资回报，但是我们可以控制我们的投资费用，而不是让我们的投资经纪，银行，和基金经理赚去我们大部分的投资回报。我有3个小贴士：
知道你在交什么投资费用
要非常清楚你你每一笔交易的费用，除此之外还有在交什么其他月费年费。股票经纪费，平台费，管理费，外汇费用，等等。把它们从高到低排序，想想可以怎么减少费用。如果你在哪个基金上交了1到2%的费用，是个很大的警示。股票长期收益才每年4到6%，如果你交给你的基金经理或股票经纪1到2%，你1/4的收益就不见了！
不要忘记税务
除了这些费用外，另外一个要注意的是税务上的影响。在新加坡，不像在美国，我们很幸运没有资本增值税和股息税。但是还是要很多可以让税务更有效的考量，比如说用退休辅助计划户头来投资减少个税，投资爱尔兰基金而不是美国基金。在以后的文章我会具体介绍。
勇敢地做出改变
你发现你现在花太多费用和税费在投资上，想要做出改变，可是觉得改变太麻烦或是太贵了。你可能需要把全部股票从旧经纪转去新经纪（需要花钱），甚至是卖掉你的现有股票然后再买进（比较不容易执行）。我想说的是，勇敢地去改变吧，制定一个计划然后去执行。你拖的越久，你交的费用就越多。
#financialfreedom #investmentcost
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