This week’s theme is the immutable principles of successful investing.  Successful investing for the long-term requires discipline and sticking to a set of unchanging principles. Today’s immutable, unchanging principle is: make sure your fees are reasonable.

Fees do matter when it comes to your investment portfolio, but cheaper isn’t always better.

Here’s how I want you to think about fees instead. There is no free lunch when it comes to investing your money. So it’s important to understand what your fees are. How much are you paying in trading costs or commissions? How much are you paying per year in the underlying investment fees of the mutual funds or ETFs you invest your money in? And if you use a financial advisor, how much are you paying him or her?

My point is, while investing isn’t free and cheaper doesn’t automatically equal better, what you pay should be reasonable. That’s the key word: Reasonable.

So what is reasonable? If you’re a DIY investor, your all-in annual costs shouldn’t exceed .75% annually. If you use professional help from a financial advisor, your fees should not exceed 1.5%. In practice, I’ve found that if clients’ all-in fees were less than 1.5% per year, we didn't have issues with underperformance, plus they were able to take advantage of all of the advice and planning that comes with having a trusted advisor, all while saving themselves a lot of time and effort trying to do everything on their own.

That’s it for today. Thanks for listening!

Before you go, I have a favor to ask. Would you take a minute to leave an honest review for the One Minute Retirement Tip in Amazon? Amazon uses reviews as social proof that this flash briefing is useful, so it’s the best way for you to spread the word if you’re getting any value from these tips on retirement. Thanks in advance if you leave a review. I do a little happy dance every time I read a new review.

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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