1.
By www.ProfitableInvestingTips.com
Investor’s Guide to Choosing
Stocks and Bonds

2.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
If you have your retirement money in a
mutual fund you probably don’t know
the real cost.

3.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
When you find out how much of your
profit is going to fund overhead you
may want to simply pick your own
stocks and bonds to invest in.

4.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
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5.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
First let’s look at the cost of a mutual
fund and then look at an investor’s
guide to choosing stocks and bonds.

6.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Hidden Cost of Mutual Funds

7.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Forbes published an insightful article
about the real cost of owning a
mutual fund.

8.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
In over 25 years of business, our firm
has never had an initial meeting with
an investor who completely
understood the total costs of the
mutual funds they owned.

9.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
The following article seeks to simplify
the many complexities of mutual fund
expenses so investors are able to
discover the true costs associated
with mutual fund ownership.

10.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
To simplify this topic, six different
costs will be evaluated:

11.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
expense ratio, transaction costs
(brokerage commissions, market
impact cost, and spread cost), tax
costs, cash drag, soft dollar cost and
advisory fees.

12.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Most investors are only aware of the
expense ratio which is an ongoing
yearly charge of about 0.9% to pay
marketing costs, distribution costs and
management fees.

13.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Addition costs of a mutual fund
include transaction fees at about
1.44% per year.

14.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Then there are tax costs or about
1.2% a year and the cash drag of
cash held to maintain fund liquidity at
about 0.83% a year.

15.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
A soft dollar cost hide expenses but
costs you money and advisory fees
can run from 0.25% to 2.5%.

16.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
The total cost of having a mutual fund
invest your money comes to about 3%
in a non-taxed account and about 4%
in a taxed account.

17.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
In our article, When to Start
Investing in Stocks, we noted that a
7% per year appreciation can be
expected with solid stocks and long
term investing.

18.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
If you are investing via a mutual fund
you can cut that in half. So, what is
your alternative?

19.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Picking Your Own
Investments

20.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
US News looks a choosing stocks
and bonds instead of going with a
mutual fund.

21.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
A couple of generations ago investing
in stocks meant buying shares of a
big-name company like Ma Bell,
keeping them forever and enjoying
dividend income along the way.

22.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
But the boom in mutual funds in
recent decades has created legions of
investors who’ve never owned an
individual stock. Are they missing
something?

23.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
In some respects, it’s easier to trade
individual stocks now than in the good
old days.

24.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
A trade that once cost hundreds of
dollars in commissions can be done
online with a deep discount broker for
$5 or $10.

25.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
You can track prices, do research and
place orders on your laptop, tablet or
cellphone.

26.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
They quote the legendary fund
manage Peter Lynch as saying that
you need to be able to invest for at
least three to ten years and have the
math skills of a fourth grader to be
successful in stocks.

27.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
The advantages of picking your own
stocks is that you get all or the gains
with a winner.

28.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
You have control over your
investments. And you can respond
quickly when opportunities arise.

29.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
Also you will not be paying capital
gains on stocks being bought and sold
by a mutual fund if you simply buy and
hold a set of well-chosen stocks.

30.
http://profitableinvestingtips.com/stock-investing/investors-guide-to-choosing-stocks-and-
bonds
If you want to broad based
investments seen in a mutual fund
with a lot more transparency, consider
an exchange traded fund.