Principle 8: Keep your financial costs low

A gents, brokers, financial analysts; practically everyone in the financial world is making money on their investors’ cash. When you buy insurance, your agent gets a portion of your payment. When you join mutual funds, fund managers take money out of the sum that you choose to give. When you buy a home through a broker, that broker gets a certain percentage.This setup is perfectly alright. Nothing is wrong when an agent gets a commission—it is, after all the way they make money to support themselves and their families. While it may sound as if everyone is just out for your money, this dynamic can be turned around and taken advantage of.According to internationally acclaimed financial analyst Andrew Stotz, the ideal rate for management fees is 2%. Anything above that cap should be considered expensive. If you feel like every available mutual fund or ETF for you charges a rate higher than what Mr. Stotz suggests, I recommend that you do not lose hope. It would be important to look into why their rates are priced as such. For example, fees might differ substantially in different countries. Do a little research and see if a particular investment vehicle’s performance has been excellent and if it has been, chances are the management fee, and all other fees such as sales load and the like, will be worth it.Since you are paying fees anyway, stick to the most credible companies that you can find. It is paramount to avoid fraud when investing your money, and dealing with trusted, longstanding institutions can go a long way in this regard.Another commonly neglected thing is the tax. An old saying goes: “Nothing in this world is permanent and certain, except tax.” Tax-efficient investing can yield significant benefits. Invest time, money and effort to learn more about the various tax strategies available to you. In the meantime, make sure you are actively considering taxes when you make your payments, trades, and purchases.Danielle covered the three-day university tour of Andrew Stotz in the Philippines from October 2 to 4, 2014. She will discuss each of Andrew’s 12 investment principles from her perspective. All articles will be posted here on